"Even the most progressive Latin American countries were a whopping 75 years behind the U.S. and Canada in education development, which, in turn, delayed literacy rates exponentially."
This past week, I went to “the happiest place on Earth”—Disney World. A far cry from the country I was in just a few months ago, I found myself thinking about how different America and Ecuador are in comparison. Amidst the overpriced souvenirs, endless food options, and widespread happiness true to Disney’s slogan, I couldn’t help but think about how unfair it is that the beautiful Ecuadorian children I was playing soccer with in January will never get to experience this.
On my first day at Disney, I had to buy a last-minute bottle of sunblock. Much to my surprise (and much to the dismay of my wallet), it cost $14. As I sadly shelled out the cash, I thought of how much cheaper it would have been if I bought it off Disney property. Any family who’s had a magical time with Mickey knows that the skewed prices there are ridiculous. But anyone who’s been to Ecuador or South America knows that skewed wealth there is an entirely different story, one on a whole new level.
In my last blog post, I outlined just how bad the (unequal) distribution of wealth has gotten to be in Ecuador and in South America. But after I finished, posted it, and shut my laptop, I realized I had left out a big part of the issue, a part I don’t understand myself: how the distribution got to be that way. What caused a system that impoverishes so many? Who deemed these drastic differences in living fair?
So I decided to do a little investigating…
On my first day at Disney, I had to buy a last-minute bottle of sunblock. Much to my surprise (and much to the dismay of my wallet), it cost $14. As I sadly shelled out the cash, I thought of how much cheaper it would have been if I bought it off Disney property. Any family who’s had a magical time with Mickey knows that the skewed prices there are ridiculous. But anyone who’s been to Ecuador or South America knows that skewed wealth there is an entirely different story, one on a whole new level.
In my last blog post, I outlined just how bad the (unequal) distribution of wealth has gotten to be in Ecuador and in South America. But after I finished, posted it, and shut my laptop, I realized I had left out a big part of the issue, a part I don’t understand myself: how the distribution got to be that way. What caused a system that impoverishes so many? Who deemed these drastic differences in living fair?
So I decided to do a little investigating…
Before I got into any numbers that my English-major self would surely struggle with, I went back to the basics. My trusty friend Wikipedia defines wealth distribution as “a comparison of the wealth of various members or groups in a society. It differs from the distribution of income in that it looks at the distribution of ownership of the assets in a society, rather than the current income of members of that society.” On the other hand, it defines wealth disparity as “the difference between individuals or populations in the distribution of their assets, wealth, or income; the gap between rich and poor.” What Ecuador and South America suffer from, then, is almost a clever combination of the two: there is great disparity in the countries’ wealth distributions. But why?
In the book Inequality in Latin America: Breaking with History?, the commonly turned-to idea of colonialism is explored. After colonizing much of Africa at the height of its power, the British Empire eventually left the region—and left many problematic power structures and economic situations that persist even today. Although they also colonized parts of South America, the authors of the aforementioned book don’t believe that the Europeans’ presence and influence alone are the reason for modern wealth disparity problems on the continent. In the following quote from Chapter Four, the authors begin to explore that idea:
"There is no doubt that the colonies established by the Europeans in South and Central America were characterized by extreme inequality from the beginning, but institutions ultimately account for its persistence. The basis for the initial inequality is in some ways easy to understand. There were very few Europeans among much larger populations of indigenous peoples and slaves, but they were greatly advantaged by their higher levels of human capital (that is, knowledge of technology and the sorts of legal and economic institutions established in the colonies), wealth, and legal standing. However, it is institutions that must be considered to gain understanding of why this inequality persisted for nearly 500 years and generated patterns that can still be seen today."
In the book Inequality in Latin America: Breaking with History?, the commonly turned-to idea of colonialism is explored. After colonizing much of Africa at the height of its power, the British Empire eventually left the region—and left many problematic power structures and economic situations that persist even today. Although they also colonized parts of South America, the authors of the aforementioned book don’t believe that the Europeans’ presence and influence alone are the reason for modern wealth disparity problems on the continent. In the following quote from Chapter Four, the authors begin to explore that idea:
"There is no doubt that the colonies established by the Europeans in South and Central America were characterized by extreme inequality from the beginning, but institutions ultimately account for its persistence. The basis for the initial inequality is in some ways easy to understand. There were very few Europeans among much larger populations of indigenous peoples and slaves, but they were greatly advantaged by their higher levels of human capital (that is, knowledge of technology and the sorts of legal and economic institutions established in the colonies), wealth, and legal standing. However, it is institutions that must be considered to gain understanding of why this inequality persisted for nearly 500 years and generated patterns that can still be seen today."
The institutions that were set up by Europeans still allow and perpetuate the wealth disparity in today’s South America. A number of examples exist here and can be more clearly understood when compared to the U.S.
Voting rights. Up until the 20th century, most “New World” countries, including the U.S., hadn’t granted the right to vote to anyone but white males. But after initial changes in voting restrictions started happening, the U.S. was one of the first countries to do away with restrictions based on wealth or literacy, and was also a leader in adopting the secret ballot system. The chart below shows the progression of granted rights in both South and North America, and helps to explain why the populations of each area live the way they do today.
Education. As the establishment of primary and public school systems began, the United States and Canada lead the world in the education arena. However, the contrast between North and South America in this area was astronomical. According to Inequality, even the most progressive Latin American countries were a whopping 75 years behind the U.S. and Canada in education development, which, in turn, delayed literacy rates exponentially. For example, in 1870, 80 percent of the total population of the United States was literate. Conversely, only 22.2 percent of Mexico’s population was literate by 1900, and only 38 percent of Peruvians were by 1925.
Land policy. The authors of Inequality explain how land policy in South America is another example of an institution that is perpetuating wealth disparity in the following quote:
"Virtually all the economies in the Americas had ample supplies of public land well into the 19th century and beyond. Since the respective governments of each colony, province, or nation were regarded as owners of this resource, they were able to influence the distribution of wealth—as well as the pace of settlement for effective production—by implementing policies to control the availability of land, set prices, establish minimum or maximum acreages, provide credit for such purposes, and design tax systems."
In the U.S. and Canada, land distribution was open to public settlers. Conversely, in South America, distribution was done more privately. Argentina’s policies, it’s said, can be used as examples for other South American countries. The lands, once in private hands in Argentina, would set the prices too high for immigrants or those who would normally be farmers to afford.
Voting rights. Up until the 20th century, most “New World” countries, including the U.S., hadn’t granted the right to vote to anyone but white males. But after initial changes in voting restrictions started happening, the U.S. was one of the first countries to do away with restrictions based on wealth or literacy, and was also a leader in adopting the secret ballot system. The chart below shows the progression of granted rights in both South and North America, and helps to explain why the populations of each area live the way they do today.
Education. As the establishment of primary and public school systems began, the United States and Canada lead the world in the education arena. However, the contrast between North and South America in this area was astronomical. According to Inequality, even the most progressive Latin American countries were a whopping 75 years behind the U.S. and Canada in education development, which, in turn, delayed literacy rates exponentially. For example, in 1870, 80 percent of the total population of the United States was literate. Conversely, only 22.2 percent of Mexico’s population was literate by 1900, and only 38 percent of Peruvians were by 1925.
Land policy. The authors of Inequality explain how land policy in South America is another example of an institution that is perpetuating wealth disparity in the following quote:
"Virtually all the economies in the Americas had ample supplies of public land well into the 19th century and beyond. Since the respective governments of each colony, province, or nation were regarded as owners of this resource, they were able to influence the distribution of wealth—as well as the pace of settlement for effective production—by implementing policies to control the availability of land, set prices, establish minimum or maximum acreages, provide credit for such purposes, and design tax systems."
In the U.S. and Canada, land distribution was open to public settlers. Conversely, in South America, distribution was done more privately. Argentina’s policies, it’s said, can be used as examples for other South American countries. The lands, once in private hands in Argentina, would set the prices too high for immigrants or those who would normally be farmers to afford.
The combinations of these issues create a structure that keeps the wealth with certain groups of people and away from others. These post-colonial-inspired issues alongside wars and depressions provide a window (even if it is a mini window) into why wealth disparity is so prominent in Latin America, and in Ecuador. When I was in Guayaquil, I almost didn’t realize that this issue affected plagued the area until the day we crossed the bridge. The contrast between Durán and downtown Guayaquil slaps you in the face. The bridge between them definitively separates two separate worlds within the same city—a dust-filled, dilapidated one on one side and a bustling, metropolitan one on the other. Two worlds that leave me wondering—will they ever meet in the middle?
Solutions to such issues are obviously complicated. The World Bank has outlined four general areas for Latin American governments to address in order to begin to break the wealth disparity. They are as follows:
1) Build more open political and social institutions, that allow the poor and historically subordinate groups, such as Afro-descendants and indigenous people, to gain a greater share of agency, voice and power in society.
2) Ensure that economic institutions and policies seek greater equity, through sound macroeconomic management and equitable, efficient crisis resolution institutions, that avoid the large regressive redistributions that occur during crises, and that allow for saving in good times to enhance access by the poor to social safety nets in bad times.
3) Increase access by the poor to high-quality public services, especially education, health, water and electricity, as well as access to farmland and the rural services the poor need to make it productive. Protect and enforce the property rights of the urban poor.
4) Reform income transfer programs so that they reach the poorest families, including use of measures that are conditional on keeping children in school and attending health services, so as to improve their lifelong income-earning capacity.
Solutions to such issues are obviously complicated. The World Bank has outlined four general areas for Latin American governments to address in order to begin to break the wealth disparity. They are as follows:
1) Build more open political and social institutions, that allow the poor and historically subordinate groups, such as Afro-descendants and indigenous people, to gain a greater share of agency, voice and power in society.
2) Ensure that economic institutions and policies seek greater equity, through sound macroeconomic management and equitable, efficient crisis resolution institutions, that avoid the large regressive redistributions that occur during crises, and that allow for saving in good times to enhance access by the poor to social safety nets in bad times.
3) Increase access by the poor to high-quality public services, especially education, health, water and electricity, as well as access to farmland and the rural services the poor need to make it productive. Protect and enforce the property rights of the urban poor.
4) Reform income transfer programs so that they reach the poorest families, including use of measures that are conditional on keeping children in school and attending health services, so as to improve their lifelong income-earning capacity.
In 2012, the BBC reported that the UN Agency for Human Settlements found that the gap between rich and poor in Latin America is widening. The report said that Ecuador, among seven other countries, saw an increase in wealth inequality between 1990 and 2009. I will never forget the scenes I drove by and walked through during my time in Ecuador. And even though these issues have been cycling through Latin America’s history for centuries, I hope that one day the beautiful little children I spent time with can live a life closer to those beautiful little children across the bridge, those who fell on the right side of the disparity.