By David Barrett
This piece was first published on 25 October as a contribution to the openGlobalRights debate on economic inequality and human rights.
Samuel Moyn recently argued that even “perfectly realized human rights are compatible with radical inequality.” Indeed, while realizing human rights often involves the redistribution of resources to the poorest individuals in a society, these resources do not necessarily need to come from the richest individuals in that society. But the rising problem of inequality does require an examination of how such a small percentage of people became so rich in the first place, and systemic discrimination is arguably a key factor. What are the mechanisms in place that allow the rich to get richer while the poor stay as they are, or worse? While, as Moyn argues, redistributing money from rich to poor may not be required to realize human rights, the human rights community still has an important role in tackling economic inequality by protecting the right to non-discrimination.
The rise of economic inequality
As all the contributions in this debate have made clear, economic inequality is at record levels globally. After the United States, the United Kingdom has the second highest level of economic inequality in the developed world. According to Thomas Piketty, the top 1% of earners in the UK receive 15% of income and the top 1% of capital holders hold around 25-30% of capital. These top earners have their salary set by boards composed of individuals with similar characteristics, perpetuating the inequality: 62% of Financial Times Stock Exchange (FTSE) 100 companies have all-white boards and only 22.8% of FTSE 100 board members are women.
Capital inequality, on the other hand, has arisen partly due to weak regulatory and taxation regimes established by governments. For example, the UK Government has cut both the top rate of income tax and corporation tax, meaning that the richest 10% of society lost the least during the recession (5% of wealth compared to 38% for the poorest 10%). As with the FTSE 100 companies, members of the government possess similar backgrounds both to each other and to the wealthiest individuals in the UK, creating a feedback loop in which the powerful stay powerful and rarely let outsiders come in. In fact, a Sutton Trust report found that 60% of members of the 2010 Liberal Democrat-Conservative Coalition government attended a private school (compared to 7% of society) and 50% attended Oxford or Cambridge.
The benefits of diversity
The problem with these decisions being made largely by individuals with similar characteristics is that they are likely to have been exposed to (and thus share) a limited range of background assumptions, beliefs and experiences. In relation to board room diversity, research shows that an increased representation of women brings a wealth of advantages, as women are more willing to encourage greater discussions over board decisions and to champion difficult issues. Women are particularly effective monitors of management and are much more willing to challenge CEO and senior management pay levels—key in tackling economic inequality.
In relation to public official diversity, successive UK Governments have been, like many other governments, pursuing austerity policies, drastically cutting welfare. As a result of these welfare cuts, in the future the poorest individuals in society will be unable to keep pace with rising incomes and consequently poverty levels are predicted to rise: the Institute for Fiscal Studies estimates that an additional 800,000 children (which amounts to a quarter of all children) and 1.5 million adults will be living in poverty by 2020 as a result of the UK’s austerity policies. This forecast begs the question: would a more diverse government—with a proportionate number of members that had grown up in poverty—be so willing to drastically increase poverty levels while cutting taxation for the richest individuals?
The right to non-discrimination
The right to non-discrimination has an important role to play in achieving greater diversity in boardrooms and in government, which in turn can contribute to reducing economic inequality. There are three aspects of equality, formal equality, substantive equality and transformative equality, all of which are incorporated within the right to non-discrimination. Formal equality requires that identically suited individuals, apart from a protected characteristic, should be treated identically—for example, a prohibition on laws that prevent women from being board members or standing for public office. Substantive equality requires real equality by ensuring disadvantaged groups have equal opportunities and/or obtain equal results. This could necessitate measures to improve the schooling of the poorest children to ensure they are equipped to perform elite jobs in the future (equality of opportunity) or require quotas to increase the number of women on boards (equality of results).
Finally, transformative equality recognises that there are barriers (e.g., practices and cultural attitudes) that prevent well-qualified members of disadvantaged groups from succeeding. For example, currently the poorest children in the UK need to be more qualified than individuals who attended private or selective schools in order to obtain an elite job—often due to employers only recruiting from a small number of elite universities and utilising prejudiced middle-class recruitment criteria such as drive, resilience and “polish”. Transformative equality requires efforts to remove these barriers, by requiring employers to recruit from a wider range of universities and to question whether all the recruitment criteria are essential for the role.
Arguably, rising salaries and lax tax and regulatory regimes are contributing to rising inequality, and these decisions primarily come from a very narrow class of individuals. More diversity in senior positions, both in the public and private sector, is important to challenge and counter these decisions. The human rights community could pursue these changes in a number of ways. First, organizations could undertake campaigns to bring about positive legal change (for example, the introduction of boardrooms quotas as in Norway). Second, they could encourage political parties to select more diverse candidates (e.g., in the UK the Labour Party utilises all-women shortlists in order to increase the number of female MPs). Third, organizations could conduct and utilise research to draw attention to the barriers in society and encourage the relevant actors to take positive action to remove these (such as pressuring the government to improve the schooling of the poorest children and employers to remove prejudicial recruitment criteria). In this way, the human rights community could utilise the right to non-discrimination to require influential bodies in society to ensure greater diversity in their composition, which in turn should reduce rising inequality. The right to non-discrimination is thus a potentially powerful weapon in the fight against economic inequality.
David Barrett is a lecturer at the Nottingham Law School at Nottingham Trent University in the UK.