The culture of privilege has three basic characteristics: normalised inequality as a hegemonic form of domination, established social position based on personal background, and the need for perpetuation.
This is how it is explained by the Economic Commission for Latin America and the Caribbean (ECLAC), which also discusses the factors that help to perpetuate and deepen inequalities – instruments of domination that reach all sectors of society and its economic and financial relations.
These include taxation, the appropriation of income from natural resources, the blocking of political regulations by de facto powers, segregation of land and infrastructure provision, and segmentation in the quality of urban life. Not to mention the costs paid by the populations faced with environmental damage and climate change, rigidities in intergenerational social mobility, or access to well-being.
Financialisation is another process used to maintain equality gaps, defined as the increasing importance of financial markets on productive markets, a change promoted by neoliberal ideology.
According to a recent study by the Latin American Strategic Centre for Geopolitics (CELAG), the Latin American banking sector is ranked second in the world for percentage asset returns, at 2.1, a figure higher than the indicators for Asia (1.4), Europe (0.9), and Canada and the United States (0.7).
The researchers attribute this increased profitability of banking to financial deregulation and the proliferation of tax havens in Latin America – increasing the gap between rich and poor, slowing investment in the true productive sector, and increasing the debt of the most disadvantaged. In terms of tax, 27 per cent of Latin America’s private wealth is held in tax havens. Tax privileges take the form of payment exemptions, tax evasion and low rates of income tax. In other words, the indirect tax burden falls on consumption, while income tax rates are lower than in OECD countries.
The CELAG study also shows the deep inequality between monetary income and wealth concentration.
In short, the interests of the economic and political elite are interwoven into the culture of privilege; it is difficult to implement reforms that promote equality when those who have the most contribute the least and lack commitment to the common good.
Education is another factor that reproduces inequality, affecting future work patterns and access to social protection.
Educational segregation acts as a mechanism for social isolation and differentiation in networks of relationships.
Pandemic and inequality
Latin America is the global focus of the Covid-19 pandemic, a health situation which has revealed deep regional inequalities. The region faces unexpected challenges and lacks positive prospects in the medium term.
The disease has provided evidence of the structural problems in the region’s development model: fragile social protection systems, widespread disparity affecting women and indigenous people, commodification and fragmentation of health systems, and high labour informality.
Against this backdrop, ECLAC predicted a 9.1 per cent contraction in GDP, increased unemployment and thus an adverse effect on household income, as well as the possibility that resources may be insufficient to meet basic needs.
It also warned of the disease’s negative external effects on trade channels, terms of trade, tourism and remittances.
Faced with this scenario, the regional body predicted that the number of people living in poverty will increase by 45.5 million to reach 230.9 million, up from 185.5 million in 2019. The number of people living in poverty will increase by a figure equivalent to 15.5 per cent of the total population. In terms of trade, the value of exported goods from Latin America and the Caribbean could drop by 23 per cent, the worst performance in 80 years, while imports could be reduced by 25 per cent, the biggest decrease in almost 40 years. (PL)