Persistent inequality: disputing the legacy of the pink tide in Latin America

Under the title 'Persistent inequality' we have launched a series of articles that analysed why the advances in the struggle against inequality in the pink tide cycle have been much more limited than expected. Español

Sérgio Costa Francesc Badia i Dalmases
22 January 2018

People watch the opening ceremony of the Rio 2016 Olympic Games via television in Mangueira favela in Rio de Janeiro, Brazil, Aug. 5, 2016. Photo: Xinhua/SIPA USA/PA Images. All rights reserved

In this election year in Latin America, when it is possible that the tide will confirm its turn and may strengthen conservative forces, time is ripe to reflect on how progressive governments failed to reduce inequality during the virtuous decade of progressive governments throughout the region that managed to remove millions of citizens from extreme poverty.

But new measurements, no longer based on household surveys but on income tax declarations, have shown that the impacts of leftist governments in Latin America on income redistribution and wealth were less than assumed.

It has been found that these governments were able to significantly reduce poverty, but not decrease the concentration of income and wealth among thesmall group of millionaires located at the peak of the social pyramid in each country. This argument has been used to undermine the credibility of the leftist governments, alleging that they were not efficient, not even in the objective for which they have said they are essential, which is the reduction of inequality.

To address this controversial question, and on the year of key presidential elections in major Latin American countries like Colombia, Mexico and Brazil,The Institute of Latin American Studies of the Freie Universität Berlin and DemocraciaAbierta are launching a series of articles.

The objective is to propose solid arguments and analysis to be considered and discussed in the Latin American and international public sphere in times of rapid political change that often neglect the lessons of the recent Pink Tide.

The pink tide and the struggle against inequality

It is true that inequalities and poverty have decreased more in the countries that, in recent years, were or continue to be governed by leftist forces, and particularly Argentina, Brazil, Bolivia, Chile, Ecuador, El Salvador, Nicaragua, Paraguay, Uruguay and Venezuela, than in the Latin American countries not governed by leftist forces.

Nevertheless, it cannot be denied that advances in the struggle against inequality in the pink tide cycle has been much more limited than expected from governments that were elected based on a promise of reverting inequalities accumulated since the colonial period.

The explanations for this modest performance normally combine external andinternal factors. In terms of external factors, it is alleged that the cycle of economic growth that helped finance spending on the social policies of leftist governments was based on the exports of raw materials and agricultural products whose volatile prices have been largely declining on international markets in recent times.

The leftist governments were not able to create progressive tax structures that could redistribute income from the top to the base of the social pyramid.

From an internal perspective, the social central policy adopted by practically all the leftist governments has been criticized, that is, cash transfers to the poorest. It is known that these policies, unlike policies aimed at the formation of long-lasting structures of a welfare state (quality education and healthcare provided by state, public investments in professional training, etc.) have by the strength of their own design, a very limited redistributive impact.

The tax question has also been highly debated. After all, except in isolated cases, the leftist governments were not able to create progressive tax structures that could redistribute income from the top to the base of the social pyramid.

These explanations are solid and pertinent and deserve to be considered. Nevertheless, they only reveal the surface of the phenomenon that they study and do not elucidate the ultimate reasons for which the leftist governments tonot have gone much beyond the programs for distribution of money to the poor.

To understand these reasons, it is necessary to articulate the analysis of social inequalities with the study of power relations in each case. That is, it is necessary to understand the political circumstances that caused the leftist governments to be unable to go further in their concern for promoting income redistribution.

Six factors to be addressed

1. The exhaustion of grand national narratives that at other moments of recent Latin American history have allowed uniting a nation around common objectives: This was the case, for example, of the national-developmentalist discourse that in the mid twentieth century helped to legitimate the decisive participation of the state in the socio-economic development of countries such as Argentina and Brazil.

Something similar is observed during the democratization process at the end of the last century, when groups with quite diverse interests joined around the common objective of re-establishing democracies in countries such as Argentina, Brazil, Paraguay, Uruguay or Chile.

The leftist forces that reached power in the twentieth-first century, even if they had been capable of winning elections, were not able to transform the fight against inequality into a national hegemonic project.

2. The erosion of the national public spheres: In the context of democratization in the various countries, public spaces were formed that were capable of promoting the effective interchange of ideas, interpretations and arguments of various social groups.

These arenas of debate allowed the governments to both promote and defend their policies as well as re-adjust them according to public reactions.

In recent years, the intensified concentration, and the increased partisan nature of mass communication media coupled with the rise of a multiplicity of forums and blogs that do not communicate with each other, have transformed the public sphere into a space of struggle in which insults and fake news have more weight than good arguments.

This new context creates insurmountable difficulties for the legitimation of proposals of substantive changes as are the profound programs for income redistribution that the Latin American left intended to implement.

3. Volatile parliamentary base: Most of the leftist governments were only able to be established at the cost of alliances with conservative forces. If these alliances guarantee the formation of a legislative majority necessary to govern, they very often impeded projects for tax reform or bolder redistributive plans.

4. Emergence of the so called new middle classes that demonstrated greater commitment to individual upward mobility and to the broadening of their opportunities for consumption than with the promotion of social justice.

The rise of the so-called new middle classes, forced these governments to correct their discourse and their more radical redistributive intentions.

This obviously does not involve a moral condemnation of these strata for wanting material prosperity.

What it indicates is that the rise of the so-called new middle classes, typical voters for the leftist governments, forced these governments to correct their discourse and their more radical redistributive intentions, in favor of measures aimed at expanding the consumption possibilities and upward mobility of this segment.

5. Resistance of the established middle classes: in many countries, the growing consumption capacity of the new middle classes was seen by the established middle classes as a threat to their class reproduction.

After all, their common marks of social distinction such as access to certain goods and services (cars, domestic employees, university education, etc.) were either no longer guaranteed or failed to be a privilege of the established middle classes.

This transformed the established middle classes into a large and powerful opponent of the leftist governments and their redistributive plans.

6. Appropriation of the state and of politics by economic elites: in recent years, the wealthiest groups in Latin America were able to extend and consolidate their control over the states in the region, including those governed by the left.

Through strong and often corrupt influence over politicians and governments, these elites were able to instrumentalize portions of the state to serve their interests, as well as obstruct, in the legislative realm, laws and reforms that could limit their economic power.

The peak of the social pyramid was able to broaden their participation in the appropriation of the wealth and income even in the countries governed by the left.

This explains, at least in part, the inexistence in many countries of a fair taxation of capital gains or of large fortunes. It also explains why the peak of the social pyramid (the wealthiest 1% of each country) was able to broaden their participation in the appropriation of the wealth and income even in the countries governed by the left.

The combination of these six factors, and others that prove to be relevant for each country in particular, allow interpreting in a deeper and better-articulated manner the modest results of the leftist governments of Latin America in terms of the promotion of the distribution of income and wealth.

The meager results are not due to a lack of political will, technical incompetence or ignorance of the effective mechanisms for promotion of greater equality. Given the circumstances in which the governments took power, it seems that until now the leftist forces have lacked enough power to promote more radical reforms.


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