Inequality won’t take care of itself

In their recently launched report on inequality in Latin America, Christian Aid describes the situation as scandalous, and they’re right. Latin America is by no means poor. With very few exceptions, most Latin American countries qualify as middle income. Yet the region remains the most unequal in the world, a dubious honor it has held for decades. Throughout Latin America, inequality remains rooted in highly unequal patterns of land distribution and other forms of wealth and power that are deeply entrenched and reproduce themselves from generation to generation. By one estimate, the richest 10 percent of the population in Latin America captures as much as 40 percent of total income, while the poorest 10 percent receives a mere 1 percent.

Enduring inequality has brought into sharp relief important limitations of the Millennium Development Goals (MDGs), the set of targets for global economic and social development laid out by the UN in 2000. While many middle-income countries, in Latin America and elsewhere, are well positioned to meet those benchmarks by the 2015 deadline, inequality has continued to spawn multiple social ills (including poverty, crime, and poor access to basic services, to mention but a few). Given the shortcomings of the MDGs, it is not surprising that much of the ongoing debate on a new, post-2015 global consensus on development now centers on inequality. There is clear recognition that inequality has retarded development and limited the ability of large sectors of the population to participate meaningfully in political, social, or economic processes — a problem that has to be addressed head-on if it is to be solved.

As the history of the region suggests, inequality, and the patterns of exclusion it generates, is most pernicious when it is identity-based. In Latin America, certain groups have been systematically excluded and discriminated against on the basis of ethnicity, class, gender, or territory. Over time, in countries as diverse as Colombia, Peru, Guatemala, and El Salvador, this kind of inequality has undermined the fabric that holds a society together, and it has been a leading driver of social polarization and sometimes violent conflict.

The problem of inequality in Latin America is not one of a lack of growth. Growth can help, but it does not by itself lead to broad-based human development. Where progress has been made – and the Christian Aid report does show that some progress has been made, especially in the last decade — the role of public policy has been instrumental. Over the past few years, Brazil, Bolivia, and Chile have all made some progress in reducing poverty and closing the equality gap. The reasons have much to do with targeted social protection programs like Brazil’s Bolsa Familia and Mexico’s Oportunidades, which have helped to reduce the gap between rich and poor, as well as government investments in education and minimum wage legislation.

But while such initiatives are important and meaningful, they have barely scratched the surface. Inequality is fundamentally a political phenomenon rooted in the concentration of wealth and entrenched patterns of political, economic, and social power. Change is possible when proposed reforms are supported by broad coalitions, including not only intended beneficiaries but also, crucially, political leaders and other well-placed allies. Targeted social programs intended to benefit the deserving poor (especially women and children) can be quite successful because they are difficult to oppose. But some issues have proven more intractable, especially when they challenge established power structures. Land distribution is a prime example. Tentative efforts to make tax systems less regressive have triggered sharp resistance. Thus one of the key challenges for democrats is to figure out how efforts to tackle the roots of inequality and social exclusion can overcome entrenched opposition.

The Third Wave of democratization that swept throughout the region beginning in the 1980s raised expectations. People assumed that democracy would deliver greater equality and more substantive citizenship. Three decades later, that enthusiasm has given way to a growing sense of frustration and disillusionment about the nature, quality, and efficiency of Latin American democracies. At stake is the ability of democratic systems in the region to become more cohesive and resilient.

Latin America is not alone in this. Lessons emerging from its experience are as relevant as ever to the global struggle for democracy and development. In particular they offer a cautionary note to the countries of the Arab Spring. They, too, are middle-income countries with pronounced levels of inequality and exclusion that are now embarking on a rocky road towards democratization. We can only hope that they will learn from the countries that have traveled that path before them.

Alina Rocha Menocal is a Research Fellow in the Politics and Governance Program at the Overseas Development Institute in London.