NEW HAVEN — As the Millennium Development Goals reach their deadline of 2015, the United Nations, international policy partners and governments are already tasked with creating a set of new goals to continue to work toward ending poverty worldwide. They ought to learn four crucial lessons from the MDG experience:
1. The targets and monitoring methods must be defined in advance and not be revised during the plan period, as was done repeatedly with the poverty and hunger targets, always resulting in a rosier trend line.
2. The monitoring of progress must be left to groups of independent experts and not to international agencies (such as the World Bank and the Food and Agriculture Organization) that are politically exposed and also tasked with achieving progress.
3. While the MDGs were a wish list unattached to specified agents, the new goals should contain a clear reference to whose goals they are supposed to be, clearly noting the responsibilities of competent agents.
4. Aid is not an effective way of eradicating poverty. It is far more useful to reform national and supranational institutional arrangements that are now greatly hurting development.
Given the last point, it would be highly desirable for some institutional reform goals, or IRGs, to be included in the new list. Here are eight examples, ranging from deterring trade barriers to setting up pharmaceutical innovation trusts:
Protectionist trade barriers distort trade and diminish trading opportunities for poor populations. To deter such barriers and help offset their effects, rich countries providing subsidies or export credits will commit to paying a share of the value of such subventions into a Human Development Fund. This share would be 2 percent in 2016 and rise to 20 percent in 2025, yielding about $6 billion to $60 billion a year.
Pollution and climate change impose huge costs on current and future poor populations. To deter pollution and help offset its effects, all countries will pay a fee to the Human Development Fund, based on per capita carbon dioxideemissions that exceed four metric tons a person a year. This fee would be 50 cents per excess metric ton in 2016 and rise to $5 in 2025. The yield is about $7 billion to $70 billion annually.
Arms exports into the developing world fuel conflicts, civil wars and repression. To help deter such sales and offset the dangers they create, rich arms-exporting countries agree to pay a share of the value of such exports into the Human Development Fund. This share would be 5 percent in 2016, rising to 50 percent in 2025, yielding around $1.4 billion to $14 billion annually.
Mispriced trade among subsidiaries of the same multinational corporation enables it to realize profits in jurisdictions where tax rates are low or zero. To help address the effects of lost corporate tax revenues on poor populations, multinational corporations will pay to the Human Development Fund an alternative minimum tax (ATM) equal to the amount by which all national taxes they pay fall short of a minimum percentage of their worldwide profits. This minimum percentage would be 5.5 percent in 2016 and increase to 10 percent in 2025. All countries commit to cooperate in enforcing the ATM against any companies operating in their jurisdiction.
To attract capital, some jurisdictions allow the maintenance of secret bank accounts, whose owners and beneficiaries remain anonymous. Because such accounts enable corruption, embezzlement, drug trading, terrorism and human trafficking, all governments commit to ending this practice as soon as reasonably possible by imposing collective sanctions on the relevant banks and countries. Funds whose beneficial owners remain undisclosed are to be regarded as ownerless.
The populations of many developing countries are burdened by large debts accumulated by their rulers for purposes that were not approved by or beneficial to the general public. Any future such loans are to be recognized as the recipient country’s genuine obligation only if the loan was ratified in real time by a Southern Debt Expert Committee. Lenders and their home countries commit to not exerting pressure on countries to service debts that previous governments incurred without approval from the committee.
The populations of many developing countries suffer huge natural resource outflows that are not approved by or beneficial to the people. Future such exports would be vetted by a Southern Resource Export Expert Committee to determine whether the outflow is acceptable to or serves the interest of the population. Should the committee find that neither condition is met, subsequent buyers must pay 20 percent of the purchase price into the Human Development Fund.
To stimulate pharmaceutical innovation to fight diseases of the poor and to improve access to new medicines, the Human Development Fund will finance a new program, the Health Impact Fund, which offers to reward any new medical advance based on its health impact, provided it is sold at cost. The fund will be financed initially at $6 billion annually.
To eradicate poverty, we must understand how it is reproduced on such a huge scale in an affluent world. The poorer half of humanity has been reduced to below 3 percent of global household income by national and supranational institutional arrangements, whose design only the rich can influence. To wipe out poverty, we must do more than mitigate the effects of such unjust arrangements — we must change them.