LATIN AMERICA: Ethics and Equity Powerful Anti-Poverty Weapons

By Humberto Márquez Reprint | | Print |

Humberto Márquez

CARACAS, Mar 30 2004 (IPS) - In determining the causes of rising poverty in Latin America we must look at the existence of profound inequalities, something that generally is not adequately done, says Argentine expert Bernardo Kliksberg. He believes a push in the social arena would reverse the situation.

As a region, Latin America and the Caribbean hold some of the world’s largest reserves of strategic raw materials, cheap energy sources, optimal possibilities for agricultural production, enormous tourism assets and a very good position in terms of economic geography.

However, more than 43 percent of the region’s 505 million inhabitants are poor, more than a third of its young people are unemployed, the maternal death rate is 20 times that of the industrialised world, and social exclusion continues to rise.

One example of this: from 2000 to 2002 the number of poor people in Latin America and the Caribbean grew 15 million, and the percentage of the overall population living in poverty is higher than it was in 1980.

“The central reason, one not sufficiently studied by economists, is found in the inequality” existing in Latin America, home to greatest disparity on the planet, sociologist and economist Kliksberg, head of the Initiative on Social Capital, Ethics and Development, of the Inter-American Development Bank (IDB), said in an IPS interview.

But Kliksberg, author of some 30 books related to these issues, says he is optimistic. Today’s reality can be changed by deepening democracy, encouraging civil society, taking advantage of the region’s potential for material development and, above all, by taking advantage of Latin American capacity to generate social capital and infuse ethics into economic activities.

– In the first place, through the unequal distribution of the wealth that is produced. The richest 20 percent of the population receives 60 percent of national income in Latin America, and the poorest 20 percent receives just three percent of that income.

– And how is that inequality manifest?

– In access to productive assets, like land, for example. A huge part of the rural population does not have access to the most basic asset of production. There is inequality in education, because the wealthiest 10 percent has a minimum of 12 years of schooling, and the 30 percent with lowest income barely reaches five years of schooling. That translates into lower salaries, because the gap between skilled and unskilled workers in the region is one of the biggest in the world. There are big inequalities in health, evident in the lower life expectancy and higher maternal and infant death rates. In 2003, diseases associated with poverty caused the deaths of 190,000 children in Latin America.

– How did you measure the relationship between inequality and poverty?

– A study by the U.S. economist Nancy Birdsall made an econometric projection to compare Latin America in the late 1960s to the Latin America that emerged after the military dictatorships (of the 1970s and early 1980s), and the application of orthodox (neoliberal) economic policies.

– What would the poverty level be if the region had continued to apply the economic policy of the 1960s?

– Poverty would be half what it is today. The increase in inequality has doubled poverty. It is what we refer to as needless poverty, caused only by more inequality.

– So it was a failure of the market liberalising recipe, the so-called Washington Consensus, imposed on Latin America in the 1990s?

– It was inefficient for reducing inequalities and, in cases like Argentina, it polarised society and led to the destruction of the middle class. Growth is essential, as are competitive policies and low inflation, but a study (coordinated by the Economic Commission for Latin America and the Caribbean, ECLAC) shows that higher growth rates would take a very long time – 30 to 50 years – to achieve a moderate reduction of poverty, which affects 221 million people in Latin America and the Caribbean. Improving equality, however, would have a stronger impact in a shorter time.

– What concrete policies or measures should be applied towards that end?

– Access to credit, for example. There are 60 million small and medium enterprises in Latin America, which are the main source of employment and which could generate many more jobs, but which receive just five percent of all loans made by the regional financial system.

– Do you think the new governments in Latin America are headed in that direction?

– New governments have emerged precisely with the expanding clamour against inequality and poverty because politics is a very active factor in the dynamic. Brazil’s “Zero Hunger” programme, for example, is absolutely anti-inequality and it is developing an original strategy by involving all of society, and not just the state, in the tasks of facilitating the basic human right to food.

– What can be said about the cases of Argentina and Venezuela? (Interviewed by IPS during a tour of several Venezuelan cities, Kliksberg declined to give an opinion on that country’s current political situation.)

– There are wonderful experiences like the people’s food fair of Barquisimeto (in western Venezuela), where 80 cooperatives and other associations of producers and consumers supply food that is up to 40 percent cheaper than the average to 50,000 of the city’s 170,000 families. And in Argentina, new fiscal revenues are being invested in the social arena. It is important for elevating the number of consumers and for making the domestic market grow, undermined by inequality.

– So there is room for optimism?

– Absolutely. There are strong winds of change in Latin America – in the push from civil society, which wants a democracy with greater equality. And the thinking about development is beginning to move beyond a strictly economic-financial vision, with its very poor results, to one that proposes an economy with a human face and environmental preservation.

– How can Latin American societies encourage new approaches like this?

– We must discuss the widely forgotten dimension of development: the creation of social and ethical capital. They are not a magic solution, but any comparison amongst societies that are more and less unequal proves the importance of the climate of trust within a society, the capacity for citizen association, civic conscience and ethical values.

– What can the Latin American example offer in this respect?

– The remittances sent by Latin American immigrants in Europe and North America, based on family and ethical values, to support those who remained in the home country, represented 32 billion dollars in 2002 and 40 billion dollars in 2003. This flow of resources did not enter into traditional economic calculations, and is a sort of perfect capital, one that doesn’t generate foreign debt, goes to the neediest sectors and has an important multiplier effect.

– What should other economic actors be doing?

– The economy definitely should be in the service of ethical values, such as the rights of families and of children, or the right of young people to work and of the elderly to be protected. Little is said about the fact that 40 percent of the Latin Americans older than 60 have no income at all. There should be ethical responsibility in public policies and in the actions of private enterprise.

– But all governments claim they have included the ethical and social component in their policies.

– Yes, but corruption still devours up to 10 percent of Latin America’s gross domestic product. That is why initiatives like that of the state legislature of Rio Grande do Sul (southern Brazil) are so important. It is working on accompanying the annual economic budget with a social budget, including quantifiable objectives, and for which the executive must give an annual report.

– Isn’t it rather idealistic to make this sort of demand on the private sector?

– Absolutely not. Look at the cases of Enron (the U.S.-based energy giant that went bankrupt amidst fraud charges in 2002) or Parmalat (the Italian dairy product transnational, caught up in a similar scandal this year), but especially the studies that say at least 50 million are already categorised as ethic consumers, that is, a rich market of buyers who focus their purchases on products from companies that behave as good citizens with respect for consumers, their employees, the environment and other countries.

– This ethical turnaround is a return to the roots.

– That’s it. To the economic duty as the Bible stated it, translated in statements by Pope John Paul II, who insists on a code of ethics for globalisation. And the founding fathers of modern economics, beginning with Adam Smith, always believed that ethics were an essential requisite for economic activity.