Movements like “Occupy Wall Street” have brought to attention the role of the financial sector in bolstering the fortunes of “the 1 %”. That inequality could not be reduced without dramatic reforms of financial regulation seems a no-brainer. But should financial regulation be part of the global development framework that will replace the Millennium Development Goals? And how? A paper submitted for the post-2015 consultation on inequality tries to give answers to these questions.
The first decade since the adoption of commitments to implement the Millennium Development Goals has also been an intense decade for compiling experience on financial regulation and inequality. The financial boom and the Great Moderation under a prevailing philosophy of limiting the role of government in financial markets was followed by the Great Recession in 2008-09, whose aftershocks continue to impact several MDGs. There is a growing consensus that reduction of inequality would be a desirable goal in a post-2015 development agenda. However, reducing inequality would be extremely hard without factoring in financial regulatory reforms. In fact, if there had been an MDG target on income and wealth inequality set in 2000, it would have surely been set back by the financial events of that decade.
At the same time, addressing financial regulation in a new development agenda would be tantamount to the inclusion of “means” in an agenda that some, justifiably, contend should only be concerned with “ends.” Moreover, the inclusion of financial regulation in a post-2015 agenda would have to be done in a way that builds on lessons learned from the inclusion of policy “means” in the current MDG framework – that is, the commitments under Goal 8.