say Gorik Ooms and Dave McCoy

The global financial crisis will affect hundreds of thousands of households worldwide, adding to the millions of people already living in poverty.

This crisis will affect households among the ‘top billion’ people as well – those mainly living in high-income countries. But on the whole, most of these people can rely on social protection. Social protection (or welfare or social security) is one of the key developments of modern western society, helping to provide a basic minimum standard for all. Such social protection is usually funded through some form of taxation, which also allows the fruits of economic development to be more evenly and fairly spread across society. Social protection can be seen as a defining characteristic of the modern and progressive state as well as of democratic citizenship and an essential element of a truly inclusive society.

For most of the world, life is much more precarious. Social security nets are at best patchy, if not non-existent. The effects of the financial crisis and subsequent economic recession and unemployment will be severe. Levels of absolute household poverty will rise with limited or no social security, and we can expect this to be translated into higher rates of mortality, malnutrition and disease.

Free market competition is the economic model that dominates the global economy, and it produces ‘winners’ and ‘losers’ not only within states, but also among states. Unfortunately, unlike the case within countries, there is no mechanism at the global level to redistribute wealth and protect the most vulnerable, or to compensate for the inequities resulting from global economic competition.

The best that we currently have is charity, either in the form of official development assistance or through mainly private non-government organisations. However, although the Organisation for Economic Co-operation and Development reported that 2008 witnessed the ‘highest development aid level ever’, the actual volumes of development assistance are inadequate to meet basic human needs. When development assistance is balanced against the various resource transfers from poor to rich states, it becomes clear that aid in its present form is not an effective means of global redistribution.

Even if we would, for the sake of the argument, consider development aid as a form of redistribution of wealth between rich and poor states, it pales when compared with redistribution within rich states. For example, high-income countries spend on average 10% of their Gross Domestic Product (GDP) on health, and on average 70% of total health expenditure is public health expenditure: raised in accordance with means and distributed according to needs. Combined, that makes 7% of GDP that can be qualified as national solidarity in health. By contrast, the same high-income countries allocate on average 0.35% of their GDP to official development assistance, of which 10% is directed at the health sector. Combined, that makes 0.035% of GDP. Citizens of high-income countries therefore seem to care about 200 times more about the health of their compatriots living in rich countries than about the health of poor people living in poor countries.               

Recently in Brazil, Prime Minister Gordon Brown declared: “by working together to solve these global challenges, I believe that we can and will create what you might call the first truly global society.” If social protection is a defining characteristic of an inclusive society, then some form of global social protection should be high on the agenda of the Prime Minister, and should have been on the agenda of the meeting of the 20 largest economies he was hosting in London. As far as we can tell, it is neither on Gordon Brown’s agenda, nor on the G20 agenda.

The global financial crisis doesn’t just herald the need for a new system of global financial management and regulation. It also calls for a new and bold vision of global governance and for the construction of practical building blocks for the global society that Prime Minister Brown espouses. It is a stretch too far to be thinking about a global government, but raising discussion about a global social security net, financed internationally and progressively, and building upon national social protection mechanisms, is not out of reach of today’s global leaders, particularly in the wake of the current financial, developmental and environmental crises.

 Is it unrealistic? The Global Fund to fight AIDS, Tuberculosis and Malaria and the Global Alliance for Vaccines and Immunisation provide models of innovative, transparent and accountable mechanisms to channel global finance into meeting social objectives. The airline ticket levy that has been implemented voluntarily by some countries also provides an important precedent – a tax that countries apply for the specific purpose of funding health improvement. The improved prospects of agreement on a currency transaction tax or levy gives further hope to the idea that global public finance can be raised without being overly dependent on bilateral aid.

What we now need is the United Nations system to live up to its ideals and help create the multilateral will to institutionalise the concept of global social security.

 Gorik Ooms, Institute of Tropical Medicine, Antwerp and Dave McCoy, Ecominic Governance for Health (EG4Health)