Nolan, A., R. O’Connell and C. Harvey (eds.) (2013). Human Rights and Public Finance. Budgets and the Promotion of Economic and Social Rights. Portland, OR: Hart Publishing.
Balakrishnan, R. and D. Elson (eds.) (2011). Economic Policy and Human Rights. Holding Governments to Account. London and New York: Zed Books.
The words ‘public finance’ and ‘government budget’ tend to call to mind images of men in grey suits, large books full of numbers and a sense of boredom. Yet, raising and spending public resources is among the most important and influential functions that governments play, and one that has important consequences on people’s well-being, including how much tax they pay and what services they get. In general, public debates around public finance and government budgets focus on dry arguments about levels of public debt and fiscal deficits, the possible reactions of financial markets to government policies, and the impact that such policies will have on economic growth. It’s no mystery, then, that regular citizens are usually not active and engaged in such debates, despite the impact that choices made during the budget process can have on their everyday lives. Just think of the austerity policies adopted by – or imposed on – a large number of governments in the aftermath of the global financial crisis that started about a decade ago, and their impact on levels of poverty and inequality.
The two books reviewed here were published a few years ago, but I decided to review them now anyway because they carry an important message. They argue that a different world is possible, in which public finance and government budgets are instead inspired by and aimed at the realization of human rights for all. They take existing international human rights laws and instruments, which have been approved and ratified by most governments, and show how the principles that they are based on – and the obligations that they create for governments – can be used to guide fiscal policy decisions. In particular, they draw on specific provisions in the International Covenant on Economic, Social and Cultural Rights (ICESCR) which have a direct bearing on the responsibilities of governments to promote people’s well-being in all its various dimensions.
Both edited volumes started as collaborative projects, bringing together academics, practitioners and advocates from different countries and different backgrounds, and attempting to bridge the gap between human rights approaches based on the disciplines of law and economics. In fact, while traditionally human rights work has mostly been a field for lawyers, in recent years an increasing number of progressive economists have started using human rights approaches and instruments to construct frameworks for economic and fiscal policy decisions that are alternative to the ones put forward by the predominant neoliberal one.
“Human Rights and Public Finance” was published two years later than “Economic Policy and Human Rights”, but I think it provides a stronger discussion of some of the theoretical and conceptual underpinnings. In fact, one of its most important contributions in my view is setting out in Part 1 of the book (Chapter 1-4) the foundations for considering the policy and budgetary implications of upholding human rights. For example, Chapter 1 clarifies what it means in practice for governments to use ‘maximum available resources’ – an expression used in Article 2(1) of the ICESCR – for the progressive realization of
human rights, based on the concept of ‘fiscal and monetary space’ and arguing that governments could do a lot more than usually recognized to generate additional resources. Chapter 2 outlines some of the key elements of human rights-based budget analysis, providing examples from two challenging areas, namely preventing backsliding in human rights realization through the use of ‘retrogressive measures’ – for example in times of crisis – and dealing with privatization and other ways to involve the private sector in the delivery of public services. Chapter 3 importantly argues for the need to open up budgetary decision-making to citizen participation and to contestation and debate, if budgets are to be an effective instrument for human rights realization. And Chapter 4 focuses on the role that taxation can play in human rights promotion, analyzing its functions in resourcing investment, addressing inequality and promoting accountability and responsive government.
Other parts of the book address some of the governance challenges of linking human rights and public finance, and some examples of applying the conceptual framework to specific groups like children and women and to social housing in Ireland and spending cuts in the UK.
“Economic Policy and Human Rights” is simpler in its structure and slightly narrower in its purpose. It looks at two countries (USA and Mexico) and at five policy areas: fiscal and monetary policies; public expenditure; taxation; trade policy; and pension reform. For each area, and in each country, chapter authors assess government policies against some criteria drawn from the literature and international economic and social rights instruments, and presented in the introductory chapter. These are: (a) progressive realization of human rights; (b) the use of ‘maximum available resources’; (c) non-retrogression; (d) the obligation of states to guarantee minimum essential levels of satisfaction of each right; (e) non-discrimination against specific groups or categories of people; and (f) the promotion of accountability, participation and transparency in the formulation and implementation of government policies.
The empirical chapters provide some pretty stark evidence of the limited efforts governments undertake to guarantee the realization of their people’s economic and social rights – rights that they themselves supported and ratified in international treaties and conventions. For example, fiscal policies are shown to care much more about fiscal deficits and debt repayments than about social spending, and to favor richer strata of the population. Central banks in both countries have prioritized keeping inflation very low – lower than probably justified in economic terms – over stimulating the creation of more jobs. The chapters on taxation also show how the two governments under scrutiny tend to tax little (compared to similar countries), do so in ways that often favor rich individuals and corporations, and allow for significant tax evasion and avoidance to go undetected and unpunished. In most areas, while some level of transparency exists, opportunities for participation are few, and existing accountability mechanisms are less effective than desired.
In summary, I think that the two books really helped break new ground in linking topics that are often treated separately, and do so in ways that provide interesting conceptual discussions and empirical evidence on matters that are of the utmost importance in thinking about government policies and their impact on people’s lives. They question the predominant paradigm underpinning fiscal and economic policies across many countries, and provide an alternative vision that at least deserves to be looked at and discussed.
Two important issues seem to be mostly missing from the two books. The first one is the lack of a clear analysis of why most governments have not yet incorporated human rights concerns in their fiscal policy decision making processes, despite the fact that they have ratified the relevant treaties and conventions decades ago. Considering and tackling the technical and political challenges that prevent governments from taking a more direct and concerted approach in the realization of economic and social rights could have helped generate a better understanding of how to turn the authors’ vision into practice. The second issue relates to addressing the challenge of assessing trade-offs and making choices in a world of limited resources. Human rights are universal and indivisible, but what if even ‘maximum available resources’ are insufficient? Which rights should be given priority? And which other areas of public spending should be the first ones to be singled out for reductions and reallocations?
In any case, these two volumes introduce ideas and debates that deserve to be further researched and brought into the public finance mainstream, if we are to ensure that public resources are used for the public good.