As we mark International Women’s Day 2018, there has never been a more critical time to invest in people, especially in women and girls.
Skills, knowledge, and know-how – collectively called human capital – have become an enormous share of global wealth, bigger than produced capital such as factories or industry, or natural resources.
But human capital wealth is not evenly distributed around the world, and it’s a larger slice of wealth as countries develop. How, then, can developing countries build their human capital and prepare for a more technologically demanding future?
The answer is they must invest much more in the building blocks of human capital – in nutrition, health, education, social protection, and jobs. And the biggest returns will come from educating and nurturing girls, empowering women, and ensuring that social safety nets increase their resilience.
According to UNESCO estimates, 130 million girls between the age of 6 and 17 are out of school, and 15 million girls of primary-school age – half of them in sub-Saharan Africa – will never enter a classroom. Women’s participation in the global labor market is nearly 27 percentage points lower than for men, and women’s labor force participation fell from 52 percent in 1990 to 49 percent in 2016.
What if we could fix this?
Business and the Law
When terms like “criminal conspiracy” and “felony” appear in confessions and plea bargains, the criminal-justice system sits up and takes notice. And when the confessed felons are some of the world’s largest corporations, the private sector ought to be jolted into action, too.
The continuing shame of confessed corporate misconduct – in this case, lawbreaking conducted with such a degree of guile that the U.S. Attorney General called it “breathtaking flagrancy” and that the FBI labeled it criminality “on a massive scale” – reached a new intensity this month: Four of the world’s largest banks confessed to taking part in a five-year-long conspiracy to manipulate the world’s foreign-exchange markets.
This latest in a series of stern legal judgments has damaged the corporate reputations of some of the world’s most pivotal financial institutions – with guilty pleas, to felony charges no less, entered by Citicorp, JPMorgan Chase & Co., Barclays PLC and The Royal Bank of Scotland PLC. A separate guilty plea by UBS – along with earlier fines against Bank of America and HSBC in separate settlements in related cases – has brought the total of fines against those once-trusted, now-tarnished firms to about $6 billion.
The corporate confessions of deliberate lawbreaking, pursued with systematic and sinister stealth – at the very center of the international financial system – vividly validate the recent exhortation of Christine Lagarde of the International Monetary Fund: that corporate governance must be strengthened and that a higher standard of individual ethics must prevail, especially in the financial sector.
Lagarde wisely linked skewed incentives and a short-term profit-maximization mindset to the risk of financial instability, in an eloquent recent address to the Institute for New Economic Thinking’s conference on “Finance and Society”: “There is still work to be done to address distorted incentives in the financial system. Indeed, actions that precipitated the [global financial] crisis were – mostly – not so much fraudulent as driven by short-term profit motivation. This suggests to me that we need to build a financial system that is both more ethical and oriented more to the needs of the real economy – a financial system that serves society, and not the other way round.”
Those who champion the creative potential of the private sector (including, I imagine, the regular readers of this blog) have a particular reason – one might even say, a special responsibility – to voice their anger about the foreign-exchange-rigging scandal and other acts of lawlessness.
Idealists who esteem the private sector’s ingenuity in delivering growth and jobs sans frontières know that business' creativity will be indispensable in achieving the vital development goals of eliminating extreme poverty and promoting shared prosperity. Society thus rightly expects that the full measure of corporate energies should be focused on companies’ central mission of generating wealth that benefits all of society. Whenever any of those energies are diverted – especially toward criminal schemes that put short-term personal plunder ahead of long-term economic growth – the lawbreakers undermine public confidence (or what little remains of it, in the wake of the global financial crisis) in the fairness of the economic system.
Moreover, lawbreakers provide ammunition to critics who allege that today’s economic system is irredeemably corrupt, through-and-through – thus making it even more difficult for law-abiding companies, holding true to the values of honest business behavior, to make the case for policies that liberate private-sector dynamism.
The phrase “gender gap” may be well known – but what about the gender gap for data? Today at an event at the Gallup Organization in Washington, D.C., U.S. Secretary of State Hillary Clinton and World Bank Group President Jim Yong Kim called for better data-gathering on girls and women as an essential way to boost women’s empowerment and economic growth.
“Gender equality is vital for growth and competitiveness,” said Dr. Kim at “Evidence and Impact: Closing the Gender Data Gap” in Washington, co-hosted by the State Department and the Gallup Organization.
But the lack of gender-disaggregated data hampers development efforts in many countries, Dr. Kim said.
“We need to find this missing data. We need to make women count.”