Written by César Morales Oyarvide   

The problem of inequality in Latin America has been called by sociologist Michael Mann the “perennial structural crisis of the region". The British professor is right, and his sentence is applied more accurately to Mexico, a country with a contemporary history of increase in poverty and inequality, even for Latin-American standards.

Data made public last November by ECLAC (Economic Commission of United Nations for Latin America and the Caribbean) shows the persistence of the problem: Mexico is one of the few exceptions (alongside with Ecuador and Costa Rica) in which poverty, far from being reduced, grows: from 31.7% of the population in 2006 to 34.8% in 2008. The same goes for inequality: the conservative calculations of the World Bank indicate that at the moment one tenth part of the Mexicans concentrates a wealth of 439,597,2 million dollars (41.3% of the total wealth of the country). Before 2006, this select group accumulated the 35.4% of the entrance of the country. 6% plus in 4 years.

Wherever we measure, as is indicated by Colegio de México economist Gerardo Esquivel, today practically one of each five Mexicans does not have enough resources to cover minimum levels of nutrition, health and education. Although it is certain that the situation in terms of poverty would be worse without the welfare social programs implemented by pos-transitional governments and, especially, without the remittances (shamefully, the second source of foreign currency, a clear symbol of the incapability of the Mexican state to generate jobs and welfare), it is also true that neither the social programs nor the remittances have helped significantly to lessen the painful Mexican inequality.

We are still a country of poor men and millionaires: both the population of towns with a level of development similar to Malawi's and 9 of the 100 tycoons who appear in Forbes’ list of the world’s richest men (including the first place, communications tycoon Carlos Slim, and druglord Joaquin Guzmán) are Mexican.

Surprisingly enough, Mexican population that considers itself part of the middle-class goes up to 80%. There is much voluntarism and blindness when defining our social perception; and much indifference towards the situation of the others. The following paragraphs try to show that the Mexican state (by action or omission) not only does not fight against inequality, but foments it.

The fiscal issue: different kinds of entrepreneurs and workers

The Mexican State is (and has always been) quite weak fiscally. It has remained almost always near bankruptcy, due to his minimum tax collecting capacity. It collects little, not only compared with developed countries but with the rest of Latin America: approximately 11% of the GNP. The interesting thing is that tax collecting capacity is not so weak when dealing with captive contributors (like wage earner employees) and it has the level of a fiscal paradise when dealing with great fortunes. I support this statement with data taken from a recent work of Dr. Sergio Aguayo: between 2000 and 2005, the 50 biggest companies of Mexico paid, in average, by concept of taxes a total of 141 pesos per year (around 11 American dollars). A worker who gains 10 thousand pesos a month (a middle-low class wage) contributes monthly in concept of taxes about 1037 pesos each month. That is to say, several times more than the average of the 50 biggest companies of Mexico do...per year! Offensive, says Aguayo, but legal.

Thanks to special fiscal regimes, to the legal mechanisms that exist for the devolution of taxes (approved by most politicians) and to legions of accountants and lawyers, big business contributes to the state annually much less than a single worker.

The consumers: noncompetition and inequality

Another issue in which the government contributes to preserve this unequal distribution of income is the day to day consumption: handcuffed consumers are virtually squeezed by monopolies and oligopolies of private companies that are favored by Mexican government. In 2010, for the Federal Commission of Competition 30% of family expenses is dedicated to markets with little competition (in financial services, telecommunications, transport, energy and consumer goods). Worse: the poorest Mexican families transfer more percentage of their income to them: up to 42%. Many of these companies are competitive in the outside but, when in Mexico, they are “virtuous in enslaving the consumer” and occupy the first places in terms of consumer complaints. The Procuraduría Federal del Consumidor (like many other public organisms dedicated to the defense of citizen rights) is colonized by partisan and group interests. The result: meekness.

The last three paragraphs clearly exemplify what Joseph Stiglitz has called “crony capitalism”, denounced already by more than one critical and eminent voice from Mexican academic world: an economic model in which some privileged people receive from the government a special treatment that allows them to increase their fortunes without having to face uncomfortable competition.

Wastefulness: political class and bureaucratic elite

Despite the picture previously exhibited, the high level bureaucrats of the government, the members of autonomous public organisms and political parties nomenklatura live (and defend their privilege to live) in opulence, with null sensitivity to the poverty of most Mexican people. Ours, as it’s been repeated several times recently, is one of the most expensive democracies in the world. The public financing to the parties, justified to avoid the illegal private funding in campaigns is enormous although it’s incapable of reaching its goal.

The salaries of some public servants tie or exceed those of their equivalents in the rich and developed countries, even though their lack in productivity. If we take for example the case of our Supreme Court, according to a recent investigation by the CIDE (Center for the Research and Teaching of Economics), the picture would be the following: with 3000 employees, its funding doubles that of the American Supreme Court; the salaries of its Judges are the highest ones in the entire world; and during 2009, it resolved almost 4 thousand cases less than its Peruvian equivalent.

Such wastefulness goes hand by hand with inequality. Like corruption and impunity, it seems to be something characteristic of the Mexican political system.

Inequality and transition to democracy.

The relative deprivation and the high inequality incentives illegal conduct. Although it is not a sufficient condition to the eruption of violence it is a necessary one. We’d have to be fools to doubt that violence and criminality have something to do with inequality and the lack of opportunities (especially for young people). Also, we have to be very cynical to think that by suggesting this we are justifying criminals in some way.

Mexican transition had the goal of establishing an electoral democracy (this profit already has been put in doubt in 2006 and 2010), but it didn’t center its energies in forming a more egalitarian society. Everything aims, nevertheless, to the fact that the search of social justice and a less shameful inequality is an urgent objective. These are our times in Mexico, in which the lack of economic security (besides the growing lack of physical security) makes true democracy impossible. Like all the rights, this will have to arise from multiple fights, complexes processes of negotiation, and incomplete victories of the subaltern groups.