Earlier this week, the Pew Research Center published a report on the decrease in income inequality in Latin America:
While economic growth was the most important factor in both reducing poverty and raising people into the middle class (accounting for 74% of middle-class gains from 1995 to 2010, according to one study), income redistribution policies and the decline of income inequality also helped expand the middle-income population, accounting for the remaining 26% of middle-class gains in those 15 years.
The decline in inequality in Latin America was spurred in part by social programs designed to aid the poor, through investments in health, education and other sectors. Conditional Cash Transfer programs, for example – like Bolsa Familia in Brazil or Oportunidades in Mexico – provided cash assistance to the poor if they met certain conditions, such as sending their kids to school.
While such trends bode well for the region as a whole, Pew points out that, ironically enough, the drop in income inequality hasn’t occurred evenly across Latin America. Put another way, Latin America suffers from an inequality in its decreases in inequality.
South America and Mexico have done far better at growing their middle classes and lowering poverty than Central America and the Caribbean. Between 2001 and 2011, South America’s middle class grew from 16 percent of the population to 27 percent, and its share of people living on less than $2 a day fell from 17 percent to 7 percent.
Compare these figures to those of Central America and the Caribbean, where the middle class rose from 19 percent to a mere 21 percent and poverty shrank by 3 percent.
But the region is in for a reversal of fortunes, according to the International Monetary Fund. A drop in global prices and China’s current economic slump should hurt South America, whose economies rely on commodity exports and solid trade with China. Central America and Mexico, on the other hand, should benefit from their strong ties to the resurgent U.S. economy.
In a related story published by Business Insider, Latin America is producing billionaires at a faster rate than any other place on the planet. Home to 600 million people, the region has around 151 billionaires and 15,000 people worth at least $30 million each. Only the United States buys more private jets than Mexico, though the Brazilians may outstrip their Mexican cousins in the coming years.
Latin America seems to be in the midst of a gilded age:
But the superrich also face growing scrutiny in countries such as Nicaragua, where 42.5% of the country lives below the poverty line but 210 ultrawealthy individuals control a combined fortune of $30 billion, equal to 2.5 times the country’s annual economic output.
“The main characteristic of inequality in Latin America is not that there are a lot of poor people, but that there are a few people who have a lot,” said Juan Pablo Jimenez, an economist at the UN’s Economic Commission for Latin America.
Past efforts by Latin American governments to provide for the poor have met with internal turmoil and foreign agitation. Regimes have been toppled and leaders either assassinated or banished.
When President Hugo Chávez implemented programs and policies meant to eliminate poverty and redistribute wealth across Venezuelan society, the second Bush administration pulled every string in an attempt to overthrow him in 2002.
After President Mel Zelaya moved to the left of his center-right Liberal Party – raising the minimum wage by 80 percent, instituting free education for all children, and agreeing to review the land claims of dispossessed campesinos, among other actions – the Obama administration did all it could to keep him out of power after a military coup removed Zelaya from office in 2009.
As another omen, Business Insider mentions the trials of Rafael Correa, the president of Ecuador who recently faced massive protests by the country’s upper class after proposing a progressive inheritance tax for estates over $35,400.
The mainstream press can rap all it wants about the machinations of socialists and other leftists in Latin America, but the region’s political history has shown ad nauseam that the greatest threat to the vast majority of its peoples springs from its small, monied elites.
Unfortunately, money not only talks, it also keeps others from hearing the truth.
[Photo: Daniel Zanini H via Flickr]