How longstanding is Latin American inequality?

by on March 4, 2009 at 11:33 am in History | Permalink

Not so much, says economic historian Jeffrey Williamson:

Most analysts of the modern Latin American economy hold to a
pessimistic belief in historical persistence — they believe that Latin
America has always had very high levels of inequality, suggesting it
will be hard for modern social policy to create a more egalitarian
society. This paper argues that this conclusion is not supported by
what little evidence we have. The persistence view is based on an
historical literature which has made little or no effort to be
comparative. Modern analysts see a more unequal Latin America compared
with Asia and the rich post-industrial nations and then assume that
this must always have been true. Indeed, some have argued that high
inequality appeared very early in the post-conquest Americas, and that
this fact supported rent-seeking and anti-growth institutions which
help explain the disappointing growth performance we observe there even
today. This paper argues to the contrary. Compared with the rest of the
world, inequality was not high in pre-conquest 1491, nor was it high in
the postconquest decades following 1492. Indeed, it was not even high
in the mid-19th century just prior Latin America’s belle époque. It
only became high thereafter. Historical persistence in Latin American
inequality is a myth.

An ungated version can be found here.

1 Gabe March 4, 2009 at 11:53 am

Argentine was the 5th richest country in the world witha large middle class before Obama Peron took over. Who was the favorite economist of Peron? Mises, Basstiat?….no, it was Keynes.

If you study history it is clear. If you destroy private property through money printing, massive government debt/spending and higher taxes then you destroy prosperity and increase human suffering.

2 Jorge Gajardo Rojas March 4, 2009 at 1:06 pm

The point is other,if inequality exist or not.Other if under developpment is in connection with politics and economics actions of ruling segment of latinomamerican societies.Is less a economical issue than a socio cultural fact.Discriminacion,human right history, lack of oportunities to human develpment is correlated positive to “liberal” policies of many countries that are a bad imitation of USA free market theory that are in the center of caos of financial debacle today.

3 Fernando March 4, 2009 at 1:41 pm

It would be good to know how Jeffrey Williamson arrives to say inequality in Latin America is a rather recent phenomenon. Apparently, he did not read Humboldt:

Si actualmente la casta de los blancos es en la que se observa casi exclusivamente el desarrollo intelectual, es también ella casi sólo la que posee grandes riquezas, las cuales, por desgracia, están repartidas aun con mayor desigualdad en México que en la capitanía general de Caracas, La Habana y el Perú. En Caracas, los jefes de familia más ricos tienen unos 10,000 pesos de renta; en Cuba hay quien tiene más de 30 a 35,000; en el Perú nadie llega a una renta fija y segura de 6,500. Por el contrario, en Nueva España hay sujetos que, sin poseer minas, juntan una renta anual de 200,000 pesos fuertes. La desigualdad de fortuna es aún más notable en el clero, parte del cual gime en la última miseria, al paso que algunos individuos de él tienen rentas superiores a las de muchos soberanos de Alemania. El clero mexicano se compone de 10,000 personas, de las cuales casi la mitad son frailes. Contando legos, donados y criados de los conventos, el número asciende a 13 o 14,000 individuos, cantidad insignificante si se compara con los más de 177,000 individuos que comprende el clero en España. La renta anual de ocho obispos mexicanos asciende a la suma total de 539,000 pesos, de los cuales 130,000 corresponden al arzobispo de la capital. Lo que verdaderamente desconsuela es que en su misma diócesis haya curas de pueblos indios que apenas tienen de 100 a 120 pesos al año. Los bienes raíces del clero mexicano no llegan a dos y medio o tres millones de pesos; pero este mismo clero posee cuarenta y cuatro millones y medio de pesos fuertes en capitales en hipoteca sobre propiedades de particulares.

4 Blackadder March 4, 2009 at 3:44 pm

The upshot of the paper seems to be that while inequality in Latin America has always been high, in the past all countries had high levels of inequality, and back then Latin American inequality wasn’t unusual. How this is supposed to justify the claim that persistent Latin American inequality is a myth is beyond me.

To see how ridiculous this is, imagine the following paper: People have long thought that Milton Friedman was short. But actually, when Friedman was 5 years old, he wasn’t much shorter than other 5 year olds. Thus, the claim that Milton Friedman was short is a myth.

5 D. Watson March 5, 2009 at 11:32 am

The 1800s aren’t historic? I can see an argument that inequality only appeared in the last 100 years as being recent, but when inequality has persisted for multiple generations, it sounds like “an” historical phenomenon to me. I agree with Blackadder.

I also fault the strawman Williamson sets up in that lead-off sentence. The argument (more rigorously stated) is that inequality set up institutions and policies that depress mobility. Those hindrances to mobility are set up by government and can be taken back down by government. Path dependence does not mean fatalism, as his strawman argues, but that it is when we ignore the historical processes in proposing new policies that we fail.

6 Cris March 10, 2009 at 1:16 am

Ricardo, how does the case of 97%-white Argentina apply to what Kurto is arguing? He didn’t claim that more white/European = lower Gini.

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