How Anti-Inequality Policies Can Help Latin America

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HOT SPRINGS, Arkansas — The past two years witnessed numerous widespread uprisings in Latin America. To mention a few, protests in Chile, Ecuador and Bolivia drew international attention. Each nation has different political processes and social challenges, but they all share a common factor. Before the pandemic, many nations in Latin America were suffering economically from the end of a commodity boom and ranging inequalities. With COVID-19, the region needs anti-inequality measures to mitigate its lasting economic and social effects.

The 2000 Commodity Boom

Although known as the most unequal region in the world, Latin America saw a significant decrease in inequality and poverty during a commodity boom from 2000 to 2014 as prices for fuels, minerals and crops rose. Emerging market economies in China and India increased the demand for oil and metals. The boom in commodities led to the expansion of labor and higher wages. The increased revenue allowed for increased public spending and employment in other sectors.

During the boom, inequality decreased by almost 11% and poverty decreased from approximately 27% to 12%. Millions rose out of poverty, but it was not enough to sustain the Latin American economies after the boom ended. Poverty rates began to rise again in some countries, frustrating many and leading to uprisings in Latin America.

Protests in Latin America

Protests in Ecuador lasted from early to mid-October in 2019. They began shortly after President Lenin Moreno announced a cut to fuel subsidies along with reforms in tax revenue and labor in order to receive a $4.2 billion loan with the International Monetary Fund (IMF). For decades, the Ecuadorian government intervened in the market to keep oil prices low. Sparked by transportation unions, the indigenous and student groups amplified the protests and pressured the government into canceling the austerity package on October 14.

Chile is known as Latin America’s success story. It is a wealthy nation that observed a significant reduction in poverty during and even after the commodity boom. That being said, the nation has one of the largest income gaps in the region. The wealthiest Chileans earn 14 times more in income than the poorest Chileans. What started as a protest against a hike in bus fares morphed into massive youth-led protests against income inequality and the high cost of living.

Bolivia elected a new president, Luis Acre, after a year of political turmoil and polarization. Protests broke out following the 2019 election results when former President Evo Morales claimed a fourth term in the office despite already having served for 14 years. His opposition cited election fraud. After Morales resigned, his supporters cried that it was a coup d’etat. The following interim president divided the nation further and responded poorly to the pandemic.

COVID-19 and Inequality in Latin America

Oxfam is a global humanitarian organization fighting against the injustices of poverty through groundwork and advocacy. In collaboration with Development Finance International (DFI), Oxfam cultivated a Commitment to Reducing Inequality (CRI) Index. The CRI does not measure inequality, but instead, the efforts countries are making to decrease inequality. The 2020 report shows that most countries provided very low levels of public healthcare spending, labor rights and social protection policies. Out of 158 countries surveyed, only 26 spent the recommended 15% of their national budgets on healthcare. In Latin America, Chile has the highest regional ranking in CRI. However, as the report mentions, even the wealthiest nations have areas to improve.

Although controversial, Morales was able to improve Bolivia’s economy and slash extreme poverty by more than half. This was mostly due to the commodity boom and good policing. However, poverty remains prevalent in the rural, predominantly indigenous areas of the nation. Morales left behind a fragmented health system that now faces shortages in tests, equipment and hospital beds to combat COVID-19.
Ecuador, hard-hit in April during the pandemic when healthcare and burial services collapsed, was “advised by the IMF to backtrack on increases in healthcare spending and stop cash transfers” to the unemployed. Rights organizations and activists argue the vulnerable population is facing the brunt of austerity measures since they rely on public services and subsidies.

Anti-Inequality Policies for Post-COVID

The COVID-19 crisis exposed how vulnerable institutions in Latin America are. Although it is too early to tell, the U.N. has stated the economy in Latin America and the Caribbean could lower by 9.1% and regional trade by 14%. As a region proven to rely on trade and its resources, this is detrimental. The gaping socioeconomic inequalities in Latin American countries make a rise in unemployment and poverty heavy burdens to the already vulnerable: women, young people, indigenous, Afro-descendants and migrants. As a result, uprisings in Latin America will continue.

Governments can only do so much to remedy uprisings in Latin America. The sustainable solution requires adequate integration of anti-inequality policies. The poor have to be a priority. The ECLAC proposes an emergency basic income, universal health, alleviating interest payments and increased investment in health and infrastructure among other things. Oxfam and DFI also made recommendations.

Making Further Improvements

Latin America, like the rest of the world, was unprepared for the health crisis and economic devastation of the global pandemic. This is due largely to rooted economic, social inequalities and weak public institutions in the aftermath of an end to a commodity boom. Inequality will only lead to more uprisings in Latin America if not addressed in a sustainable, conscious manner.

Johana Vazquez
Photo: Flickr

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