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Inequality in Latin America

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Submitted By ngregory
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Although Latin America has faced many social, political, and economic issues within the last three centuries, inequality remains one of the most important, historical, and omnipresent aspects of the region’s culture. As Europeans took over Latin America during the time of colonization, they implemented many elitist social structures that have held strong and are evident today (Harris). Income inequality is the most visible and greatest disparity that the region faces; yet inequality between gender, ethnicities, and education remain strong and significant problems with a necessity for improvement. Inequality of wealth and disparity of power and influence are Latin American’s greatest curses and are at the root of many of the developmental, social, criminal, and political problems that continue to plague the region (De Ferranti). Since inequality has pervaded into every feature of Latin American society, it is important to measure inequality accurately in order to obstruct the causes of the discrimination and prevent new ones from beginning. The Gini Coefficient is an effective way that people indicate the inequality of a country by measuring a frequency distribution of income or wealth. Using the "Gini Index" of inequality in the distribution of income and consumption, the researchers found that Latin America and the Caribbean, from the 1970s through the 1990s, measured nearly 10 points more unequal than Asia, 17.5 points more unequal than the 30 countries in the Organization for Economic Cooperation and Development, and 20.4 points more unequal than Eastern Europe (De Ferranti). After inequality rose in the 1990s, the Gini coefficient for Latin America as a whole, declined from an average of 0.529 in 2000 to 50.9 in 2009. Of the 17 countries for which comparable data exist, 13 experienced a decline in their Gini coefficient during this period. When studying three of the most developed Latin American countries, Brazil, Mexico, and Argentina, it seems the decline in inequality over the last decade is due to a decrease in an earning gap between skilled and low-skilled workers and an increase in government transfers to the poor (Lustig). Although inequality is declining, history offers evidence that inequality was on an uphill rise for the majority of Latin America’s life. The imperative issue of inequality can be traced back to unequal land distribution that originated from colonization, and furthermore carrying into the 19th and 20th centuries. Before Latin economies industrialized, land ownership was the most important and concentrated source of wealth. Since land depreciated less than other means of capital, the ability to pass down the ownership of land through later generations sustained the inequality in Latin America. The lack of strong political and social structures allowed Europeans to fulfill the colonization take over quickly and effectively (Harris). As mother countries settled in Latin America during colonial times, they redistributed land from the Creole people to elites in exchange for political support. However, many different factors attributed to determining where they would colonize. Climate, soil, population density, and location all contributed to the distribution of concentrated income. Geographic location often indirectly affected where encomiendas or plantations were established, depending on climate or sites of mineral resources. Many slaves, indigenous people or blacks, worked on cash crop estates of sugar, tobacco, coffee, cocoa, and bananas. In Spanish America, they especially exploited slaves in the mines of silver, gold and diamonds, assuring a supply to the Iberian Peninsula (Harris). The relationship between initial land inequality and income inequality appear to be very strong when controlled for mineral resource exports (Klasen). The “burden of history” leaves many political scientists questioning if the past will ever tolerate equality and rights that people have been longing for in Latin America (De Ferranti). Income inequality stems from the region’s land inequality as the elite and landowners hold the majority of each country’s wealth (Klasen). Only few Europeans came over to colonize, but their human capital, technology, wealth, and legal and economic institutions made it effortless to take control. Spain emerged as the leader in colonizing the New World and implemented encomiendas, aiding certain elites and giving little to the rest of the population. The Catholic Church, fueling Spain and Portugal’s exclusive ownership of land, led to social mobility and acquisition of titles. Led by elites, the Church had favorable settler condition and acquired land in order to gain immense wealth and express their position of elitism (Harris). The prompt initial land inequality fostered concentrated political power as well. Elites controlled the governments in order to protect their interests and diminish all possibilities of shifts of power to the lower classes (De Ferranti). After many countries in Latin America received their independence, limited change of conditions occurred and the elite maintained control in the new republics. The basis for economic inequality remained the same and the patterns persisted. In the early 19th century, the majority of countries had developed republican democracies yet the upper class still had the power to act in their own interests. A direct bearing established the extent of the elite’s ability to influence the formation of government policies. Landowners opposed any institutional change that could transfer power from the elites to the majority. Fraud in elections occurred frequently and the persistence of radical disparities in distribution of political power was evident by the laws governing who was entitled to vote. Only a small fraction of the population enjoyed the grant of suffrage, allocating the desires of the elite into the political system (De Ferranti). Since the governments controlled the land in the new colonies, the upper class influenced the distribution of wealth and implemented policies controlling the ownership of land, prices and acreages. Many immigrants from Europe moved to Latin America as sharecroppers or tenant farmers. Historically, peasants and peones of the plantations working for the colonizers experienced the worst mistreatment. With an abundance of eager immigrants willing to take on the farming jobs, a scarcity for good labor was a crucial element in determining the initial level of inequality in the New World colonies. The upper class implemented new market opportunities, increased the value and price of land, and influenced land policies in order to keep the ownership of land and power throughout the colony even after they had reached independence (Harris). Latin America entered the 20th century with high and persistent levels of inequality. A study done in Colombia by Londoño argued, “Inequality in the 1990s was about the same level as it was in 1938.” Although the countries instated little policies or systems to improve inequality, other aspects of Latin America were advancing industrially and politically (De Ferranti). The growth of urbanization was increasing as agriculture’s was decreasing. The impact of democracy was advancing and many countries partook in La Violencia, or the period of violence and dramatic social revolutions in the 1950s. The appetite for political rights and social equality was on the rise (De Ferranti). As the implement of import substitution isolated Latin American countries from the world market, it reduced incentives for investments in education, skill building, and individual entrepreneurship. It led to lack of development and underinvestment in agricultural sectors, which in turn intensified inequality in non-land assets. It posed barriers to individual entrepreneurship in human capital. Education lagged behind North America, but many believed creating a good education system would educate the younger generation that could correct many of the region’s issues. However, inequality in education strengthened as only upper class families could afford sending their children to school (De Ferranti). A definite hierarchal period of inequality existed and still stands today in Latin America. The ratio of landholders to non-landholders is extremely small. In Brazil, less than 1% of largest landowners own 78% of all agricultural land. Similarly in Mexico, 1% of the landholders own 60% of Mexican land (Harris). Due to expansion of commercial agriculture, underemployed rural workers have been displaced from their formal plots of land. The root of rural poverty is meager size and poor quality of land, scarcity of sources for technical and financial support for small farmers, low crop prices, displacement of food crops, and limited supply of permanent jobs in the countryside. As population growth rises, more people seek successful jobs in the cities, shifting wealth from the farms and concentrating it in metropolises (Harris). The impact of land inequality of colonization on income and social inequality is evident in the comparison of rural inequality to total inequality (Klasen). Rural poverty has remained much higher than urban poverty due in part to lower productivity of agricultural labor force, which is one-third as productive as non-agricultural labor. There have been two major shifts from success in the agricultural field to success in industrialization. During the ISI period from the 1940s to 1980s, government policies of protectionism and urbanization shifted from exports of agriculture to more exports of industrialization. Peasant movements with agrarian reforms challenged to a greater or lesser extent the traditional large landlord system. In the second period, they shifted to neoliberal policies, integrating the Latin American economies into the world economy (Harris). Through almost every aspect of life in Latin America, it is evident that white, nonindigenous males have retained the most income, jobs, assets, and education while females of indigenous or Afro descent are the most discriminated against. Race signifies a person’s class, political power, and status within the community. Ethnic and cultural groups publicly raise their voices to obtain equal rights and opportunities. Black-based social movements have picked up speed and are challenging inequality before law and democratic reform. Although black movements have not received the exact social and economic position that they would like to obtain, they have made many strides such as adequate Afro-Brazilian admissions to universities, raised consciousness of separation from the rest of the population, and appointment of blacks to key positions of PMBD. As political groups continue to make strides in diminishing inequality between the upper class and minorities, Latin America will no longer be triumphed by just mestizos. African descendants and indigenous people will keep activating for their equality of rights.
Today, landless, poor people and peasants are among the other groups experiencing harsh oppression. Although women’s recognition grows daily, they still are one of the most underrepresented groups within the region, too. Another large problem in Latin America is the inequality in the distribution of education. Although the gap between school attendance rates between the rich and poor have narrowed since the 1990s, the rates have a positive correlation with household income. Even though illiteracy has decreased, it is still exceptionally high and is unequally evident between countries in Latin America. Argentina, Cuba and Uruguay have illiteracy rates less than 5%, but 13% of Brazil cannot read or write. Rural populations have rates of illiteracy over 50-70% greater than urban population, where access to doctors, medicine and hospitals are more abundant (Harris). The white or nonindigenous populations have higher levels of education than the indigenous and African descents in the region. It is believed that parents who have low education levels often pass on a lower level of education to their kids, leaving the incoming generations with less hope to a better future. This may be due to parents’ lack of value towards education, shortage of income to send children to school, or inability to receive a job after an education (De Ferranti). In the age group of twelve and below, the gap between attendance of the lower and upper class is not extremely prominent. However, it widens from the age group 13-17 and widens even more for upper level education. A positive correlation also exists between higher education and the increase in school dropouts. The dropout rate is often caused by the inability to pay for school or women’s idea that preparation for the marriage market can be more applicable for the future than receiving a good education (De Ferranti). Quality health care also concentrated in regions resided by the upper class. The best physicians and medical facilities are designated for the wealthy and middle class. The poor distribution of medical attention negatively affects the poor because the greatest doctors are mostly established in capitals and large, urban cities. Many people in the lower class suffer and sometimes die due to the fact of lack of good medical attention. The distribution of physical and mental disabilities illustrate where the inequality of health care. Lack of health care can be linked to poverty and is negatively correlated with education and permanent incomes. The poorest areas represent the largest shares of disabled people. Black people have a higher rate of disabilities at 17.5, where as white people’s only is 13. 8 (De Ferranti). Gender inequality has been extremely prominent since the beginning of the history of Latin America and remained implemented until today. One of the biggest cultural aspects of Latin America is the patriarchal family. Originally, it was only common for women to stay in the home and take care of the family. As it became more acceptable for women to work outside the home, job offers equivalent to men’s were never offered. Roles of women have been undermined historically in this region and are being taken seriously in the professional world, including the inauguration of women as presidents (Vanden). In most countries in Latin America, the large gap of inequality of women in the work field is demonstrated by the statistic that men hold 80% of the jobs (De Ferranti). However, financial pressures are causing women to leave the house and seek jobs in order to provide a second income for their families. Women’s organizations and feminist movements have broken through the stereotype of inabilities for women to have higher valued jobs. Women recently have shown their growing anger of subordination by working outside the home, having a relationship without a spouse, holding political positions, publishing feminist views, and organizing national women’s movements (Vanden). As the elite continue to be superior to the poor, political systems and policies represent another aspect of Latin American culture that is subjugated by the wealthy. In countries where industrialization advanced more rapidly, like Argentina, Brazil, and Mexico, significant processes of incorporation of the working classes into political structures have occurred. However, it perpetuates relationships based on patronage, which interests middle class groups and elites (De Ferranti). In countries with deep social divisions, such as Bolivia, Ecuador, and Peru, the inclusion of a working class has been marked with conflict. The political exclusion offered fertile ground for populism, evidenced by periodic indigenous insurrections or movements of withdrawal. However, populist leaders were often ineffective due to their inability to change overall institutional processes and were only in position due to charisma and status. In the case of Velasco in Ecuador, Conaghan comments, “Velasco’s early success was the product of his close ties to traditional elites. Unlike classic populism in Latin America, Velasco never produced real material and political advances for lower class supporters… He did, however, school an entire generation of politicians in how to win political power without building organizations or refining party platforms.” Similarly, Perón’s personal relations with the government were based on his charismatic appeal rather than institutionalized mechanisms of representation (De Ferranti). The unequal social relations between the elite and lower classes depend on clientelist relations, where the poor give favors or benefits to the elite in exchange for political support. In the mid 20th century, governments brought the subordinate groups into national, patronage-based systems utilizing co-option. However, Clientelism also has left a damaging legacy in terms of political organization. Unlike the United States and Europe, it has hindered the creation of parties that represent the working classes. In surveys of firms and public officials in Peru in 2001, “80% of respondents judged that there was a ‘high impact’ of bribes given to parliamentarians to shape laws, the judiciary to influence decisions, and to public officials to shape ministerial decrees (De Ferranti).” The threat of a transfer of power as new economic sectors emerge cause elites to even willingly bear costs of violence or conflict that may deem necessary to fight for their power back. Property rights specifically are of particular interest due to their potent influence on investment and growth. Elites focus on the general protection of their land in order to keep the majority of it concentrated between them (Klasen). Although democratization alone has not transformed social relations and political structures, it remains an important catalyst for change in the future. Democratization established an important shift in political opportunity structure, but however did not create the sufficient change necessary for the population. Since the democracy interrelated with unequal social relation structures and weak states, the subordinate and middle class groups were still influenced by the elites. Weak states, with low capacities to deliver public goods and economic stability, ensured property and citizenship rights, subsequently developing inequality as weak states appeal to the upper class. The domination of the elite and inability of the poor to hold political representation resulted in a weak effective demand for change. As democratization continues, success will depend on developing institutions that are resilient to the predations of the rich and powerful and the ability to tackle vested interests. Even though Clientelism can exist in democracy, the formation of programmatic parties can foster a more effective and redistributive state. Chile is a good example of how the pre-existence of these parties combined with relative bureaucratic autonomy facilitated a transition toward political equilibrium. Where pre-conditions are weak, change has occurred either because of the internal mobilization of new parties or “outsider” movements (De Ferranti). Latin American’s history has been cursed with the reoccurring theme of inequality tracing back to the sixteenth century. The very unequal social hierarchal latter implemented during colonization can still be felt in almost every aspect of Latin American life today. The strong political systems, heavily unequal land distribution, and strong class and gender divisions endured hundreds of years worth of history and continue to affect the lives of the wealthy and the poor. Even after independence and the adoption of democracy, Latin American still faces the disproportion of wealth, status, and opportunities. Although more women and ethnic groups have made progress in broadcasting their opinions and integrating themselves into the professional world, enormous strides will need to take place in order to see genuine equality in the Latin American societies.

Works Cited
De Ferranti, David M., Guillermo E. Perry, Francisco H. G. Ferreira, and Michael Walton. Inequality in Latin America: Breaking with History? Washington, DC: World Bank, 2004. Print.
Harris, Richard L., and Jorge Nef. Capital, Power, and Inequality in Latin America and the Caribbean. Lanham: Rowman & Littlefield, 2008. Print.
Klasen, Stephan, and D., Felicitas. Nowak-Lehmann. Poverty, Inequality, and Policy in Latin America. Cambridge, MA: MIT, 2009. Print.
Lustig, Nora, Luis F. Lopez- Calva, and Eduardo Ortiz-Juarez. "The Decline in Inequality in Latin America: How Much, Since When and Why." Tulane University, Apr. 2011. Web. 9 Nov. 2012. <>.
Vanden, Harry E., and Gary Prevost. Politics of Latin America: The Power Game. New York: Oxford UP, 2002. Print.

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