InterAmerican Wiki

Social Inequality

The Americas are one of the most socially unequal regions compared with the rest of the world. This is made clear by a comparative view of the Gini coefficients of the distribution of income. The Gini coefficient is a statistically generated value which measures the distributions of inequality between the minimum and maximum values of 0 and 1, respectively. With respect to the distribution of income, the value 0 means that the capital or income of a certain unit (here: nation states) is equally distributed, whereas the value 1 means that the entire capital is concentrated in the hands of a single inhabitant.

In 2009, the Gini coefficient in the USA was 0.47 according to the U.S. Bureau of the Census. In Latin America, the Gini coefficient of income distribution during the 1990s was even 0.522, while in Western Europe it was 0.342 and in Asia 0.412. The unequal distribution of income becomes even more evident on a global scale with a Gini coefficient of 0.85, meaning that 1% of the world's population – including the Mexican multi-billionaire Carlos Slim (with assets of an estimated 68 billion US-Dollars in 2007) – possesses approximately 40% of assets worldwide. The poorer half of the global population, on the other hand, owns just a total of 1% of global assets.

Contrasting with the discourse on modernization, progress and development, an increase in social inequality can be seen in the Americas in the 20th century. This is particularly true of Latin America. While the Gini coefficient in Argentina was only 0.37 in the 1950s, the value for 1994 was 0.54. In Chile, a rise can be distinguished from 0.44 in the 1950s – with a short improvement during the Popular Front government under Salvador Allende – to 0.52 in 1992. For the second half of the 20th century it can generally be deduced that the social gap has widened further in relation to the distribution of income in Latin America since the 1970s after there had been a marked improvement in the distributive justice of income in the 1960s and 1970s. This can be seen within the context of the global economic crisis and debt crises of the 1980s (the "lost decade") and of the subsequent neoliberal structural adjustment. At the start of the 1990s, the richest 10% of households in Latin America received 48% of the total income, while the poorest 10% generated only 1.6%. The richest 20% of the populated owned 62% of the income. Although social inequality demonstrates a transnational constant in Latin America, differences can be identified. Although nations such as Brazil, Chile and Colombia stand out as having the largest social inequality in the 1990s, countries such as Uruguay, Costa Rica and Venezuela belong to the Latin American nations in which the distribution of income is more even, albeit without reaching the level of distribution of the nations of Western Europe.

In the USA, on the other hand, a enduring, wide social inequality is visible. The Gini coefficient for the distribution of income sank from 0.45 to 0.38 between 1929 and 1947 due to the New Deal. This level could be maintained until the start of the neoliberal reform policies of the Reaganomics in the 1980s. In 1990, the Gini coefficient for the distribution of income was back at 0.43. In 2010, 14,3% of the population was living under the poverty line, while between 1980 and 2001 the assets remained in the possession of approx. 3% of the US adult population, who together owned 28% of the total assets of the individual states.

In the USA, a financial and industrial elite had emerged in the period of industrialization between 1880 and 1930 which has - through a small number of families such as the Rockefellers - lasted until today. Just between 1910 and 1929, the proportion of income of the richest rose from 33.9% to 39%, whereas the share of the poorest tenth fell from 3.4% to 1.8% within the same time span. In addition, the ideology based on the protestant work ethics and on an individualistic interpretation of freedom restricts the implementation of far-reaching and sustainable state social security programs. Even today, the American Dream, according to which a social rise from a dishwasher to a millionaire is possible through initiative, is the leading societal ideology.

In Latin America, the historical foundations of the extreme social inequalities is explained by the deeply-rooted colonial structure of Latin American societies, especially the occupation of land. The concentration of land ownership was also by far the highest in the 1990s with a Gini coefficient of 0.81 worldwide – from the 19th century until the last four months of the 20th century in the form of the Hacienda. Hence, agricultural reforms of the 1960s and 1970s did not bring about any fundamental redistribution of land, but rather a modernization of the agricultural structure in the existing inequality relationships.

Social equality is not, however, solely based on income. Factors such as education, health, housing, infrastructure, quality of life, etc. are involved in a differentiated and multidimensional term such as social inequality. In this context, an attempt at operationalization is revealed by the Human Development Index (HDI) of the United Nations. When reading the data, the mistake of methodological nationalism, according to which the data would have to be projected homogenously over the entire national territory, must not be made. Rather, there are immense regional disparities, which is made clear through the example of Chile: while at the start of the 1990s the HDI of Vitacura, the richest quarter of Santiago de Chile, corresponded to that of the Netherlands, the index of the rural areas, with a high proportion of Mapuche population, corresponded to the HDI of Botswana. Thus, the fact that the USA traditionally take up a top position above the average of the OECD nations on the HDI can be explained. The regional disparities between the northern and southern states are taken just as little into account here as the differences at a smaller-scale district level. Already in 1945, only 4% of the inhabitants of New York City owned 66% of the total assets of the metropolis, whereas the African-American population - as well as other ethnic minorities - found itself in slums.

Accordingly, the overlapping of dimensions of social inequality should be pointed out in an intersectional analysis. Here, along with the aspects of gender, disability and age, especially the question of ethnicity is of central importance. In Bolivia, 74 %, in Ecuador 87 % and in Peru 62,8 % of the indigenous populations are classified as being poor, whereas the figure for the Mestizo-white population is considerably lower. In the USA, the risk of poverty is especially high for Afro-Americans, adolescents, families with female heads of household, and illegal immigrants, especially those from Central America.

Through the empirical data collection and the historical dimensionalization of social inequality, the questions of overcoming social injustices, but also of producing social cohesion, arise, especially in Latin America. From the liberal perspective, the emphasis is mainly placed on modernization and development. The thesis here in simple terms is that more development leads to fighting poverty. Structuralist approaches, however, have pointed out that a profound redistribution policy would be needed in order to overcome extreme social inequality with repercussions for the social structure. This dimension of redistribution is in a way as embedded in the concept of social inequality as it deals with a relational concept which views poverty, for example, as always being in relation to wealth.

Olaf Kaltmeier

Please cite as:
Kaltmeier, Olaf. 2012. “Social Inequality.” InterAmerican Wiki: Terms - Concepts - Critical Perspectives. /einrichtungen/cias/wiki/s/social-inequality.xml.

Bibliography

Balzer, Sarah / Lorenz, Tina / Sawadsky, Viktoria / Schulz, Christine. 2011. Vom Tellerwäscher zum Millionär? Über die Realität des American Dream. Die Entwicklung sozialer Ungleichheit in den USA von 1880 bis heute.

Beeghley, Leonard. 1989. The Structure of Social Stratification in the United States, Boston, London, Sydney.

de Ferranti, David / Perry, Guillermo / Ferreira, Francisco / Walton, Michael. 2004. Inequality in Latin America. Breaking with History?, World Bank, Washington D.C.

Thorp, Rosemary. 1998. Progress, Poverty and Exclusion. An Economic History of Latin America in the 20th Century. New York.