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Can ethics and development coexist?

Ethics and economics? Virtually incompatible, say many, like trying to mix oil and water.

But what about linking ethics and development? Difficult, but not impossible, at least according to the 30 participants who attended an IDB meeting to examine how moral considerations could be infused into the "new economy" that sometimes leaves too many by the wayside.

Amartya Sen, the Indian economist and winner of the 1998 Nobel Prize for economics, emphasized the value of nonmaterialistic aspects of development.

"Development can scarcely be seen merely in terms of enhancement of inanimate objects of convenience, such as an increase in the GNP, or the process of industrialization or technological advance, or social modernization," he said.

"There are, of course, valuable–often crucially important–accomplishments. But their value must depend on their effect on the life and freedom of the people involved."

The two-day conference was organized by the IDB’s Inter-American Institute for Social Development and sponsored by the government of Norway. The panel of speakers included prominent economists, political figures and philosophers.

Enrique V. Iglesias, president of the IDB, noted in his opening address that the computer age had exacerbated already existing inequity, and that now "unmet needs and the gap between rich and poor are growing."

At the crux of the problem is "the right not to be excluded," said Iglesias, noting that statistics on the distribution of wealth show that Latin America is the most unequal region in the world.

The inexorable reform and modernization of the economy in the region has torn down the trade protections that the private sector used to enjoy, and it has dismantled or privatized a large part of the government apparatus. In its wake it has left a level of unemployment never before seen in certain countries.

The subsequent worsening of inequity reflects the differences in education–or in wisdom–in people’s ability to take advantage of the opportunities the "new economy" has created or otherwise be left behind. Not even the United States has escaped this increase in inequity.

Ex-president Patricio Aylwin indicated in his address that since the United Nations Summit Meeting on Social Development held in Copenhagen in 1995, the number of people living in poverty in Latin America and the Caribbean has increased from 196 million to 224 million.

In his view, the current market-oriented culture in the West has led to the predominance of individualism reflected in "egocentrism, consumerism, and competitiveness."

"Although the international economy is growing at never-before-seen rates, this growth is affecting the worldwide population in an abysmally unequal manner," he noted. "The free-market economy in this globalized world is very efficient in creating wealth, but very unfair in distributing it," he stated.

Economic fundamentalism.
Argentine ex-president Raúl Alfonsín denounced "economic fundamentalism," which he claimed inspires those wishing to dismantle the state. This objective, he said, undermines social achievements "and leaves millions of people defenseless, even though they only aspire to live with dignity, to have food, education, housing, and health care."

"The old inefficient state has become an irresponsible state: irresponsible toward the poor, the sick, the uneducated, the marginalized, the elderly, and the young," Alfonsín stated in his address. "It may have been an obese state, but now it is a defenseless state," he said.

Stanford University economist Joseph Stiglitz, emphasized the special role of economists who advise senior government officials in developing countries. He argued that such advisors should abide by rules that ensure transparency and consistency. Philosopher Peter Singer, of Princeton University, argued the need for ethical conduct by rich nations and international financial organizations.

George A. O. Alleyne, director of the Pan American Health Organization (PAHO), addressed the issue of health. In his opinion, a comprehensive approach to this aspect of development is crucial for poverty alleviation.

"In very few situations is the vulnerability that characterizes poverty so marked as it is in the field of health," said Alleyne, noting that investment in public health is a way to promote growth.

Sigrun Møgedal, the secretary of state for international development of Norway, which sponsored the meeting, outlined what she considers the moral responsibilities of all the players in the economy.

"Governments do have a moral responsibility to guide development toward what is just and equitable," she said. "Putting equity, inclusion, and participation at the center of our common agenda is the strongest ethical imperative in development."

Bernardo Kliksberg, meeting organizer and coordinator of the IDB's Inter-American Institute for Social Development, analyzed the impact of the region's acute social problems on children and the family. In particular, he noted that 36 percent of children under two years of age suffer from malnutrition. He highlighted the effect of poverty and unemployment in destroying numerous families.

The agenda for the meeting addressed various ethical dilemmas raised by the development process, especially in Latin America, with emphasis on the impact of globalization and technological progress on poverty and inequality. This is expected to generate a multidisciplinary discussion on these issues.

Iglesias closed the discussion saying that the meeting reflected the essence of the IDB as "something more than a bank that transfers resources and provides technical cooperation." The purpose of the event, he said, "was not to provide solutions, because we have none, but to stimulate and legitimize discussion of the issues."

Sen, who gave the closing address, rejected the notion that seeking equity in development undermined efforts to achieve efficiency, particularly by affecting the use of incentives.

"In fact, paying attention to equity may, in many circumstances, help to promote efficiency … because people’s behavior may be dependent on their sense of fairness and their reading as to whether others are behaving fairly," said the Nobel laureate.

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