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Blogs, Crisis response (stimulus and austerity measures)

The US Financial Crisis, Post-2015 Development Agenda, and Human Rights

The Center for Women’s Global Leadership (CWGL) along with Political Economy Research Institute (PERI) had the opportunity to make a stakeholder submission (UPR report) to the United Nations Human Rights Council as a part of the 2015 Universal Periodic Review of the human rights compliance of the United States. This provided an opportunity to reflect on the US experience of the 2008 global economic crisis. Following are insights from the submission and thoughts on the lessons for the Post 2015 Sustainable Development Goals and Financing for Development processes.

“The ongoing global economic crisis has its origins in US financial markets and was a consequence of deliberate legislative changes, the erosion of regulatory protections, and the failure to extend oversight to new financial products that contributed to excess systemic risk. Three of the five largest investment banks failed or nearly collapsed in 2008, sending shockwaves throughout the world. The economic downturn destroyed jobs, reduced standards of living, heightened risks for ordinary people and has driven families deeper into poverty, especially women and people of color.” These actions compromised US human rights obligations and protections, such as (1) nondiscrimination and equality; (2) progressive realization and non-retrogression of rights; (3) right to work and an adequate standard of living; and (4) right to social protection.

One of the clearest examples of the impact on rights of US financial policies resulting from the 2008 crisis has to do with the obligations of nondiscrimination and equality. The subprime mortgage crisis involved insufficiently regulated, questionable, and even fraudulent lending practices by banks and other lending institutions within a sanction of weak US regulatory policies. Predatory lenders deliberately targeted low-income minority and women borrowers for higher mortgage rates and unsustainable loans (minority and women borrowers were up to 256 times more likely to receive these unsustainable loans – to buy homes and borrow, at exorbitant rates). Millions lost their homes and must still deal with the long term effects of a poor credit record. Yet, financial institutions were bailed out through a series of government actions. It brings to mind the other crises in credit markets: the European sovereign debt crisis, the Latin American debt crisis, and capital flight out of sub-Saharan African countries when the debt burden fell on borrowers.

Another area of human rights crisis was related to poverty, food security, and the right to an adequate standard of living. The UPR report concluded that women continued to experience higher rates of poverty and continue to make less money for comparable work than males throughout the recession and recovery periods. The gender poverty gap expanded during the recovery. Mandatory cuts in food assistance programs could affect 22 million children in the US in 2014. The USDA reported that in 2012, 14.5 per cent of US households were once food insecure. Food insecurity was disproportionately higher for Black and Hispanic families and single parent households, specifically single mother-headed households compared to White households.

The financial crisis and economic recovery policies have greatly impacted the right to work, free choice of employment, just and favorable work conditions, and protection from unemployment. While large corporations like the auto industry received government assistance to prevent collapse, relief for unemployed workers was not at the same level. The numbers of unemployed and underemployed workers increased during the crisis period. Many new jobs in the market are lower paying or part-time. Time limits for government financial support of unemployed workers were imposed to meet political demands for national deficit reduction. These workers have seen a retrogression of their rights to work. African American and Latino men and women faced higher rates of unemployment during the recession than White and Asian men. African Americans and Hispanic individuals were among those hardest hit by this recession, as were single mothers, younger workers, and those with less education.

Even where there were ‘relief’ policies, the obligation of ensuring progressive realization of rights was at stake . On average, female workers in the US make less than males. Efforts to contribute to the economic recovery, including federal job training programs, however,failed to address these issues of gender pay gap and industry segregation. Women were more likely to receive training for low-wage service jobs, while men were more likely to receive training in higher paying jobs.

The human rights affected in the US response to the 2008 financial crisis are also at stake in the post-2015 sustainable development/financing for development processes. One of the most important questions in the process will be whether the post-2015 goals will be goals for sustainable development for all countries of the world. Can the post-2015 sustainable development goals reflect the global partnership and uphold the obligation to protect? Can Sustainable Development targets reflect the connections between national fiscal policies and global economic institutions and actors? The UPR report calls attention again to the Maastrict principles on extraterritorial obligations of states which provide a model for policies that honor obligations to use maximum available resources for progressive realization of economic, social, and cultural rights. The obligations include the conduct of macro policy in such areas as government spending, tax policy, public debt, and the role of official development assistance and monetary policy. Equally important will be the establishment of mechanisms to monitor global financial actors, including private sector actors. States have an obligation to create mechanisms of accountability regarding human rights obligations; including transparency and evidence that funds are being used to prevent the retrogression of rights, not simply further the realization of private sector profits.

Proposed Sustainable Development Goal (SDG) 10 calls for efforts to reduce inequality within and among countries, and the right to non-discrimination/equality. Monitoring of job creation strategies to meet SDGs must include disaggregated identification of beneficiaries of programs to ensure jobs are of decent quality and employment opportunities are provided in a non-discriminatory and gender-sensitive way with special attention to protecting those most vulnerable and disadvantaged.  Sustainable development strategies must support policies that promote workplace gender equity. Ratification and implementation of CEDAW is an important step in this direction.

Proposed SDG 10 would ensure that fiscal policy promotes human rights, including the right to work and the right to an adequate standard of living. Fiscal policy should play a direct role in investing in education, health care and other social spending and infrastructure to support sustainable employment gains.

Proposed SDG 8 aims to promote sustained, inclusive and sustainable economic growth, full of productive employment and decent work for all and the right to work and the right to an adequate standard of living. Macro policies instituted as part of a sustainable development process must be monitored to ensure that these policies aimed at ending poverty and enhancing livelihoods fulfill the standards of decent work (as defined by the ILO) and that employment opportunities are equitably distributed. Targets must link employment and social protections for workers. Policies should work toward a Social Protection Floor that offers at least minimal standards of living for all as an important first step toward progressive realization.

The connections and interdependency of the proposed SDG(s) 1-5 must be recognized – poverty, hunger, food security, health, education, and gender equality and their connection to the human rights obligation for progressive realization and non-retrogression. Fiscal policies, targets, and strategies must make the achievement of these goals mutually reinforcing rather than competitive and leading to regression of social and economic rights. The honoring, ratification, and implementation of ICESCR commitments and other relevant international human rights documents will be a critical part of this process.

Recently, CWGL participated in a meeting entitled “Ending Poverty: Why Strong Accountable Institutions Matter” sponsored by the government of the United Kingdom, Transparency International, and the Ford Foundation. The meeting’s goal was to promote the idea of a post 2015 Sustainable Development Goal on Accountability. Examples of accountability were given, such as: how aid monies are spent, how procurement is done, relationships with contractors, etc. Principal advocate, British Prime Minister David Cameron, spoke in support of common global standards, ownership, and taxation transparency. Ghanaian President Mahama spoke of the Extractive Industries Transparency Initiative between Ghana and the UK on issues of resource accountability and public procurement. The bulk of the conversation focused on links between corruption and development expressed in the familiar language of “good governance.” This placed the responsibility for weak development on national and local officials in developing countries. Once again, developed country governments’ and private sector actors’ responsibility for inequalities in the global macroeconomic framework was not raised.

Disappointingly, nobody referred to governments’ human rights obligations as a tool for monitoring accountability and transparency. None of this is new, and it is not encouraging for future discussions.

Elmira Nazombe is Economic and Social Rights Consultant at the Center for Women’s Global Leadership. This opinion piece draws heavily from “Towards a Human Rights – Centered Policy in the US: Revisited” Stakeholder Submission by the Center for Women’s Global Leadership and the Political Economy Research Institute to the United Nations Universal Periodic Review, September 15, 2014.

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