Published in El Tiempo | February 2, 2018
The challenge of inequality and the promise of democracy
A report indicates that governments tend to be increasingly poor and in debt.
Following the debates at and around the World Economic Forum, the increasingly unequal distribution of wealth around the world is increasingly relevant. A major study coordinated by the Paris School of Economics, with support from the Ford Foundation, considers wealth distribution between 1980 and 2016. The conclusions are worrying and call for urgent reflection.
The report points out that inequality has increased around the globe. In some cases, such as the United States, wealth has concentrated at an accelerated rate. During the past 35 years, the wealthiest one percent of the global population has benefited from 27 percent of growth, while the poorest 50 percent have only had a 13 percent share of that growth.
The report notes that governments tend to be increasingly poor and in debt, while individuals and private corporations increasingly tend to be richer. Even governments in European countries and the United States face unmanageable deficits, which limit their ability to implement redistributive policies, and increases pressure from individuals and firms.
If this dynamic persists, the middle class would be substantially reduced, leaving a world polarized between the extremely rich and the extremely poor. But this situation is not irreversible. Some countries have been more successful in combating inequality, especially through progressive taxes and greater investment in education, as well as increased transparency in spending, including private spending. In our region, inequality has been persistent, and even though poverty has fallen in some of our countries, income distribution indicators are harder to modify.
Unfortunately, this conversation is not part of the political debate in Latin America. Even those countries that have expanded their middle class, such as Chile or Peru, now face precarious employment, insufficient public services, and youth that feel passed over.
Many feel outraged and tired that, as the Colombian saying goes, "laws are made for the rich." Our democracies and institutions have increasingly less social backing, and these deficiencies often have to do with the perception that inequality is on the rise.
There are no magic formulas to revert this process, but the conversation about equality must change. Market logic alone will not correct the deep imbalances, since, by its own nature, wealth tends to accumulate. We need more daring politicians to put forward reform proposals based on participation and transparency. Civil society must strive harder to promote those changes.
In taking part in this conversation, Colombia has some advantages. Its economy has been traditionally stable. Its private sector is accustomed to discussing public policy, and open to social issues. Its civil society and grassroots organizations are solid. Colombia also has enormous potential because of its post-conflict context. Despite all the challenges the peace process is facing, Colombia is in a position to invest time and resources to include millions of people in its economy and politics.
The dilemma is clear. If inequality continues to rise, people will feel further disconnected from the institutions meant to serve them. New walls and razor wire fences will be put up to protect the richest countries and people. But if we take equality seriously as a guiding principle of public policy, the promise of democracy will be more attainable.
Javier Ciurlizza is the Director of the Andean Region for the Ford Foundation.