Hundreds of thousands of Brazilians are taking to the streets to protest government spending. The protests are about the billions being spent on soccer stadiums and other projects in preparation to host the World Cup and Summer Olympics, instead of on education, health care, or job training.
Why are they so unhappy? After all, the Economist June 1-7, 2013 had just written extensively about the hundreds of millions of people who had been lifted out of poverty over the last twenty years through mostly market growth in emerging economies like China and Brazil.
The Economist makes the point that it’s not just macro-economic growth that matters, but so does equitable growth. In others words, the reduction of poverty is accelerated if growth is shared broadly across an entire society.
It should be celebrated that so many have been freed from an existence that includes short life spans, disease, malnutrition, and in many cases violence. Yet, hundreds of millions moving into mega-cities still face incredibly difficult conditions like crowded unsafe housing, lack of sanitation, ineffective education systems, and infrastructure crumbling under the weight of growth. It’s actually a very small minority of people that benefit disproportionately from their country’s growth.
Just as the success of emerging markets is a core economic narrative, income inequality is a core social narrative. According to the World Bank, Brazil’s poverty rate has declined sharply in recent years, from 33.7% in 2004 to 21.4% in 2009. During that same period, despite tremendous economic growth, a significant gap in income distribution remains. The income held by the poorest 20% was 2.5% in 2004 and just 2.9% in 2009. These are the issues that people talk about over dinner, coffee or a beer.
It’s time for government and business leaders to pursue and embrace not just economic growth but inclusive economic growth as a mega-goal. After all, it’s in their self-interest over the long-term. There has never been long-term sustainable economic success without enduring broad-based human success. Investing in people and human capital creates strong marketplaces, strong workforces, and social stability. Governments should have integrated economic and human goals. For instance, why not have a national goal of 5% GDP growth that also aims to close the income gap by 10%? That would force an integrated policy discussion and set of decisions that produce wealth AND jobs.
I was at a dinner recently in the U.S. seated at a table of active members of the Republican Party, including a candidate for president during the 2012 election. The conversation was largely focused on how to rebuild, redefine, and/or re-energize their party. At one point, one of the folks at the table looked at me and said, “Well, we have at least one Democrat here,” subtly cautioning others at the table. I said, “Oh, no, I’m unaffiliated,” to which the former candidate said, “It’s the fastest growing party in the country.”
I said, if you want to re-invent your party, commit to giving all young people the opportunity to go to college. Commit to giving everyone the training they need to support themselves and their families after High School, whether they can afford it or not. It’s a “no brainer,” I said. If you want to be the party of opportunity then invest in a way that creates opportunity for everyone in our society which, by the way, will produce greater and more sustainable growth, and likely keep young people off of the streets.
The candidate turned to a particularly opinionated table mate and asked “and how many times did we discuss education during the first five, six primary debates?” “Zero.”
This isn’t about one political party or issue. It’s about committing to big – common good – ideas. That’s when political parties will begin to attract those unaffiliated voters.