Inequality: Democracy's credibility gap
by José Miguel, Contributor
THE PROBLEM of economic and social inequality has taken centre stage lately, occupying the front pages of newspapers and the front burner of many political campaigns.
Inequality is something we understand all too well in Latin America and the Caribbean, long one of the most economically disparate regions in the world. Although we have had considerable success in reducing poverty rates in recent years - despite the global economic crisis - the gap between rich and poor is proving more stubborn. This is not just an economic or even a political problem but a threat to stability and security. Entrenched disparity makes our societies more polarised and conflictive, ultimately undermining democracy itself.
When the Western Hemisphere's presidents and prime ministers meet this month in Cartagena, Colombia, for the Sixth Summit of the Americas, poverty and inequality will again be on the agenda. Our leaders will look at what has been working and consider what additional steps the region might take to build on positive trends and expand opportunities for everyone, not just a privileged few.
Made solid gains
It is worth noting that we have made solid gains. Late last year, the United Nations Economic Commission for Latin America and the Caribbean reported that the rates of poverty and indigence in the region had fallen to their lowest levels in 20 years. Between 1990 and 2010, the poverty rate in Latin America dropped from 48.4 per cent to 31.4 per cent, while extreme poverty fell from 22.6 per cent to 12.3 per cent
Nevertheless, in a region as developed as Latin America, it is unacceptable that nearly one-third of the population - some 174 million people - still lives in poverty. In recent years, as they have worked towards fulfilling the Millennium Development Goals, many countries have been radically rethinking how to address this problem. One approach has been to institute 'conditional' cash transfer programmes to encourage steps that have been shown to contribute to future success. For example, a family might receive a financial incentive for a child's consistent school attendance or a parent's vocational training.
Two of the best known examples are Brazil's Bolsa Fam'lia and Mexico's Oportunidades. A recent UN report found that these and other similar programmes have not only helped bring down poverty rates but have also contributed to modest improvements in the inequality index.
Following the last Summit of the Americas in 2009, the OAS created the Inter-American Social Protection Network so countries could exchange experiences on how to promote more equitable access to food, health care, education, housing and jobs. In one example of collaboration, representatives of social development agencies from seven Caribbean countries worked with their counterparts in Chile to study strategies that had proved effective in that South American country, and that could be adapted to their own needs and circumstances.
As important as it is to strengthen the safety net for the neediest and lay the foundations to help people rise out of poverty, the problem of economic disparity also requires attention. It goes to the heart of much of the public resentment and discontent we have seen lately in the Americas, from the 'Occupy Wall Street' encampments in the United States to the massive student protests in Chile.
Latin America is known to have among the highest income inequality in the world with wealth largely concentrated in the hands of a small segment of the population. That is simply not compatible with democratic ideals of equality and the common good. We ignore this issue at our peril. For citizens to be truly invested in democracy, they need to be able to see the possibility of improving their own lives and feel hope for the future. And they need to sense that they are part of a common enterprise working for the general good, not merely for the benefit of a select few.
The Inter-American Democratic Charter, adopted by the OAS member states in 2001, affirms that democracy and economic and social development go hand in hand. Closing the inequality gap will require deep structural reforms in tax codes, labour laws and social policies. This cannot be solved in a two-day summit, but when the region's leaders meet in Cartagena April 14-15 they will advance the conversation and renew their commitment to promote a shared prosperity. This includes empowering women, increasing job opportunities for young people, investing in early-childhood education, strengthening entrepreneurship and expanding access to technology. In the long term, it means closing a credibility gap and investing in the future of democracy.
José Miguel Insulza is secretary general of the Organization of American States.