September 22, 2022 12:14 p.m.
“Although during the democratic governments of the last 30 years poverty was notably reduced and there were important advances in social matters, it is undeniable that the development model that we adopted in Chile has maintained a high concentration of wealth, leading us to be one, and this hurts us, colleagues, one of the most unequal countries in the world“.
So said part of the speech that President Gabriel Boric gave at the UN on Tuesday, where he stated that Chile is among the most unequal in the world. However, experts disagree.
For the economist Felipe Balmaceda, this vision of the country that the president shows is based on data that does not consider all the information, but rather chooses certain parameters that support his thesis. “Chile is indeed an unequal country. It has a pre-pandemic Gini coefficient (2018) equal to 44.4; according to World Bank data. Brazil has one of 54; Mexico one of 46.7; United States 41.2; Nordic countries all in the 30-33 range. Chile had an index of 57% in 1990. Inequality is largely explained by the inefficiency of the State”, he affirms.
For Balmaceda, the main culprit would be the State itself, since in a scenario similar to Chile’s, other countries have changed this coefficient. “The inequality before State transfers, that is, the one generated by the operation of the private economy, in Chile is very similar and, sometimes, better than that generated by that economy in some Nordic countries. However, the Gini index after government transfers improves very little in Chile, while in Nordic countries it falls enormously. Therefore, one would have to ask what the Chilean State is doing so badly and what the government is doing for its modernization.“, Explain.
“However, looking at inequality, without looking at poverty, seems inappropriate to me. Chile had a poverty that bordered 65% in 1990 and in 2018 it was 8.5%, one of the countries with the lowest poverty. Chile’s strategy was to reduce poverty through economic growth and it succeeded. Who did not do the job is the State. The ruling coalition has a bad habit of seeing and relating reality in a Manichaean way so that she matches their beliefs, which does the country no good”, she concludes.
blame the pandemic
For Ignacio Irarrázaval, director of the UC Public Policy Center, President Boric’s analysis is correct only insofar as the Gini coefficient is used to measure inequality, which would be a partial reading.
“Only considering the Gini coefficient, Chile is among the most unequal countries in the world, ranking 28th out of 169 countries with information available from the World Bank, 2022 and compared to the group of OECD countries, it is the third most unequal country. unequal, being surpassed only by South Africa and Costa Rica”.
Although he acknowledges that there was a time when the gap was shortened, he argues that since the pandemic it has expanded again, although not only in Chile, but in much of the continent. For the same reason, the president’s phrase that it is the Chilean economic system that produces the gap would not be entirely correct. “Compared to the region, ECLAC’s Social Panorama of Latin America shows that Chile is at the average level of inequality in Latin America measured by the Gini coefficient, with Latin America being one of the regions with the worst income distribution in the world. Between 2002 and 2017 there was a marked downward trend in inequality across the continent, including Chile. However, this trend breaks for the year 2020, when a slight increase in inequality is observed in countries such as Argentina, Chile, Colombia and Peru. This change in trend can be associated with the pandemic, in which particularly people from vulnerable contexts lost or saw their income from work decrease.“, he adds.
Even so, he believes that the current scenario is due in large part to the effects of the pandemic, which have not yet fully manifested themselves in the economy, which is a problem that the current government will have to face. He does recognize that in Chile there is a concentration of wealth. “However, particularly in the case of Chile, it is important to complement this information with data on the concentration of income and wealth. According to data from the Casen 2020 survey, the monetary income, which includes state monetary transfers, of the richest decile is 27.4 times higher than that of the lowest income decile, also reflecting that the pandemic deepened inequality in the country. Other estimates indicate that the richest 1% of the country concentrates 26.5% of the country’s income and 49.6% of the country’s wealth, according to the World Inequality Report, of the year 2022, accounting for the challenges it still faces the country to tackle inequality. ”, she states.
Katia Valenzuela, a researcher at the Center for Sustainable Urban Development (Cedeus) of the Catholic University and the University of Concepción, has a different perspective from that of her colleagues. The sociologist and doctor in Political Science from the University of Nottingham, United Kingdom, believes that the Gini measurement indicates inequality as it measures income, but there are more factors to take into account. “If we place Chile in comparison with OECD countries, Chile is one of the most unequal countries, at least in Latin America, following the Gini index, which measures income. If we look at the trend of the historical Gini coefficient, that is, from the 1990s to now, Chile has reduced its inequality at least according to this indicator. However, research on inequality in Chile indicates that we not only have to pay attention to the income variable, but also in the economic case to other types of assets and capital, that perpetuate inequality between the richest and the poorest in the country,” he explains.
For this reason, he believes that it is necessary to delve deeper into other variables that consider inequality as a multidimensional phenomenon, the income factor being insufficient. “On the other hand, from my perspective of sociology, it invites us to look at other dimensions. And in that sense, the Gini coefficient measures inequality with respect to income, but this is also multidimensional. That implies access to services, social welfare, housing, health, education. Even the new multidimensional poverty measurements, such as the Casen, incorporate dimensions such as networks, environment, community. These are other factors that make it possible to measure and evaluate the living conditions of the communities,” he says.
“So, the coefficient by itself is an indicator under which it is fair to say that Chile is one of the most unequal countries, I don’t know if in the world, but in light of the results of the OECD we are indeed unequal. And if we consider that in Chile the entire welfare system is commodified, we can realize that inequality grows even more, because those who have the resources to educate themselves or enter the private health system do so and thus the chain is reproduced”, he concludes.