Human Rights in the Shadows of “Too Big To Fail”

by Gabe Lezra

Dani hasn’t had many early mornings recently. More and more, he has found himself with nowhere to be during the day; he graduated high school more than ten years ago, and began working with his father in construction. He goes weeks without work now, trying his best to find odd jobs, local contracting work, and fly-by-night dishwashing. But the phone hasn’t been ringing: he is thirty-two years old, a high-school graduate, and a member of Spain’s new lost generation.

Dani’s is a common story in Southern Spain. Hundreds of thousands of people lost their jobs during the financial crisis, as Spain, with its nascent manufacturing and construction industries, was particularly hard-hit by the credit crunch. Without banks to lend capital to companies to invest in new buildings, this generation was quite suddenly out of a job.

Most of them still are. Youth unemployment in Spain as a whole is over 50%; it’s even higher in the South where Daniel lives. The national unemployment rate hovers around 25%, the highest in the European Union; in 2005, the unemployment rate in Spain was 9.2%, only incrementally more than the EU average of 9.0%. Average income has dropped 4% while the cost of living has increased; seeing people in aging designer clothes foraging in the trash outside of grocery stores is commonplace. All of this, concludes a recent Cáritas report, has caused a “notable drop in well-being.”

The narrative in the United States has been one of recovery since the height of the crisis; in Spain, it has been one of cuts. Austerity measures imposed by Prime Minister Mariano Rajoy in conjunction with European Union officials and the European Central Bank have seen the ranks of Spain’s unemployed swell to 5.78 million people in October, up from 5.69 million in September, and 2.6 million four years ago.

If we have learned anything from the crisis in the United States it is that a financial regulatory system should not be based on outdated political policies like “too big to fail”—that regulatory regimes must be regulatory. In Spain, we can see the human cost of these failings; in Spain, we can see with particular clarity that the real effects of a financial crisis are on the day-to-day lives of the working class.

It is time for a new perspective on economic crises driven by this understanding. It is time to engage thoughtfully with the human costs of crises—of austerity measures imposed by governments that disproportionately harm the poor, of cuts to vital social services that leave young people like Dani with nowhere to turn. It is time to view the effects of financial crises through a human rights lens.

 

The Human Rights Lens: Progressive Realization and the Responsibility to Protect

The United Nations adopted the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 1966, expanding upon art. 22 of the Universal Declaration of Human Rights. The ICESCR, ratified by almost every nation including Spain (the United States is a signatory, but has not ratified the Covenant), enumerates a series of economic rights—among others, to work (art. 6-8), social security (art. 9), and an adequate standard of living (art. 11). State parties to the ICESCR have legal obligations to respect, protect and fulfill these rights.

A crucial part of the ICESCR—in addition to the enumerated rights—is the concept of “progressive realization,” which is central to this understanding of global financial crises. “Progressive realization” (art. 2) is a doctrinal recognition of the varying abilities of different states to implement the rights enumerated in the ICESCR, and by extension the acceptance that these rights might not always be fulfilled quickly. But, as Amnesty International explains, “‘progressive realization’ is . . .  not an escape clause. It includes the idea of continuous improvement and the obligation of the government to ensure that there are no regressive measures.”

In addition to “progressive realization” stands the notion from international law that sovereign nations have a responsibility to protect the rights of their citizens. While this concept has generally been applied in cases of genocide and mass atrocities—the UN adopted the norm following the 2005 UN World Summit—some authorities have begun to apply it to cases of violations of economic rights. Professors Radhika Balakrishnan and James Heintz, for example, have, on numerous occasions, suggested that economic rights must be protected in the same way:

“All governments are obliged to advance their people's human rights. One of the specific obligations under international law is to protect the rights of their residents. When an individual business or institution threatens to interfere with someone's basic rights, the government must step in to protect economic and social rights.”

 

By combining these two principles into a larger analytical structure, we can begin to shift our perception of governmental policies both before, and in the aftermath of, fiscal crises. Expanding the idea of progressive realization in conjunction with a broader responsibility to protect could pave the way for a re-conceptualization of the way leaders should be compelled to act to remove their countries from financial ruin.

The Path Forward

It is important, at this juncture, to emphasize that the purpose of this post is not to demonize or to attack the system, but rather to cast certain issues in a new light. The concepts of progressive realization and responsibility to protect are the standards par excellence; it is not that states can prevent every Dani from being unemployed, or even that there should be a re-imagining of the idea of sovereignty to accommodate for changing perceptions of economic rights (as may be necessary after giving full analytical rigor to my claim about the responsibility to protect), but rather that we should re-think their relationship to financial policy in general and austerity in particular.

So what are some potential ways forward? One possibility is that there could be a shifting of norms to allow for a theory of international legal corporate responsibility—this theory, pushed by Steven R. Ratner in the Yale Law Journal, would allow international organizations to push the limits of state sovereignty in order to expose shady business practices and enforce new global norms. Daniel Seymour, Chief of the Gender and Rights Unit at UNICEF in New York, suggests that we focus on limiting the disempowering effects of the global crisis by appealing to traditional human rights mechanisms—advocacy, education, and accountability through human rights bodies. Professor Balakrishnan makes the arguably radical suggestion of adopting a new economic system of counter-cyclical fiscal policy—that is, cutting taxes and strengthening the social safety net during periods of recession, while building up fiscal reserves during periods of growth.

These are all interesting methods of approaching the problem. But they should just be the beginning: there needs to be a larger dialogue about how to address the real, human costs of financial crises.

The Danis of the world are not just unlucky exceptions—they are a symptom of an economic landscape that has left over 50% of young Spaniards without a reason to get up in the morning, forcing mothers and children to forage through dumpsters in Madrid for rotten potatoes, and seventy year-old grandparents to sleep in building lobbies.

In Spain, the newly indigent—many forced out of their homes and into begging after losing their jobs—use a special signal to identify themselves to potential benefactors: extending their first and middle fingers on one hand to the bottoms of their eyes, they slowly trace the path of tears down the brim of their nose. Sometimes they’ll mutter “la crisis.” 

This remains a human crisis as much as a fiscal one. People like Dani, people like the grandparents forced out of their home and into their building lobby, and people like the mother forced to rummage in garbage cans for food are testaments to just how personal these abstract crises have become.