Extreme poverty and the super-rich grow in LA

Inequality in Mexico and Latin America has increased since 2020, when the Covid-19 pandemic began in the region, since since then the number of super-rich people, that is, those with a net wealth of 1,000 million dollars to more went from 61 to 91, while, at the same time, 12 million people in the region joined the ranks of extreme poverty, according to a study by Oxfam International.

The document details that in general the wealth of the super-rich in Latin America grew by 21 percent between 2020 and 2022. However, in the same period the Gross Domestic Product (GDP) of the Latin American countries, as a whole, increased by barely 3.9 percent.

“In other words, the wealth of the super-rich in Latin America grew five times faster than that of the countries of Latin America and the Caribbean,” the report states.

uneven taxation

The organization refers that the extreme concentration of wealth is due to the fact that the Latin American tax design widens inequalities, since it collects less from those who have more. He explains that the collection of taxes on work and consumption rose 11%, while taxes on corporate income and wealth fell by 5%, between 2007 and 2019.

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Governments are largely responsible for this explosion of inequality. Most have not implemented progressive policies to avoid or reduce inequality, to facilitate the redistribution of wealth and power, and to break the vicious circle by which the richest capture policies and influence government decisions. , refers to the report

At the end of last year, Latin America and the Caribbean had 91 super-rich who together accumulated a wealth of 398.2 billion dollars. Brazil (57) is the country with the largest number of this type of people, followed by Mexico (15), however, the ultra-rich in Mexico are the richest in the region.

Followed by Chileans and Colombians at some distance, because there is also inequality among the ultra-rich.

“Latin America went from having 61 to 91 millionaires. In other words, our response to the pandemic created 400,000 people in extreme poverty for every new super rich”, the analysis refers to.

The institution considers that the “Carlos Slim effect”, the richest man in Mexico and one of the 10 richest in the world, undoubtedly counts. Oxfam International recognizes that in Latin America no one is richer than him.

According to the document, his wealth has grown 42% (25.5 billion dollars) since the beginning of the pandemic. In other words, his fortune has been increasing by 787 million per month in a country with 8.5 million people in extreme poverty, living with less than 3 dollars a day, no more than 60 pesos, with different economic and social needs.

The areas where the super-rich do most of their business are energy, mining, finance, entertainment, healthcare and the hospital sector.

the other end

Oxfam International reports that the situation for the other vast majority is contrasting, since from March 2020 to the end of 2022, inequality, poverty and social gaps have widened considerably.

Real wages have lost 10% in value in the same period of time and 201 million people (32.1% of the total population live in poverty, of which 82 million (13.1%) are in extreme poverty.

Similarly, food insecurity reached four out of 10 people in the region at the end of last year.

Taxes

The report warns that taxes on the very rich used to be much higher in previous years. However, governments worldwide have reduced tax rates for these people while increasing taxes on goods and services that fall disproportionately on the poorest people.

In such a way that Oxfam suggests, through an analysis, an annual wealth tax of up to 5% on the world’s billionaires, which could raise 1.7 trillion dollars a year, enough to take 2,000 million people out of poverty. Poverty, in other words, this figure represents a quarter of the world’s population.

His wealth has doubled in 10 years

They register more than 2,600 with a fortune of more than 1,000 million dollars

According to Oxfam, the extreme concentration of wealth in the world erodes democracy, undermines economic growth, corrupts politics and the media, and accentuates political polarization.

According to the report The Law of the Richest, the world is experiencing for the first time in 25 years a simultaneous increase in extreme wealth and poverty.

Figures from the organization show that 2,655 people with a net worth of more than $1 billion have seen extraordinary increases in their wealth. From the start of the Covid-19 lockdowns through 2022, they earned $2.7 billion a day.

As an example, the organization mentions, four days of these earnings would be enough to end extreme poverty in Mexico for a year with 42 days.

“While ordinary people make daily sacrifices to pay for essentials like food, billionaires have exceeded their wildest dreams. Despite the pandemic and just two years old, this decade is shaping up to be the decade of the rise of the super-rich,” said Gabriela Bucher, Executive Director of Oxfam International.

In said report it is found that the wealth of the super millionaires has doubled in the last 10 years, monopolizing almost six times more wealth than that which ends up in the hands of the poorest 50% of the population.

In other words, of every 100 dollars of wealth generated in the last 10 years, 54.4 dollars have gone to the hands of the richest 1% of the population, while 50% of the poorest have only received 0.70 dollars. .

The cases of inequality in Latin America occur in various countries, such as Colombia, where in the last decade, for every 100 dollars of new wealth created, 45 have gone to the hands of the richest 1% and only 12.4 to 50 % more poor.

In the case of El Salvador, the richest 1% of the country has taken four times more of the new wealth than the poorest half. For Honduras and Guatemala, between 2020 and 2021, the richest 1% of the country took seven times more than the poorest 50% of both countries.

ivan.rodriguez@eleconomista.mx