Extreme Inequality: Income And Wealth Gap As A Main Problem In Mexico

Extreme inequality: income and wealth gap as a main problem in Mexico

Oxfam revealed in 2014 that 85 people in the world had the same wealth as half of the human population, but in January 2015 the number had reduced to 80. Since then global movement began within the framework of the “equal” campaign to alumn us with the true magnitude of the inequality that our country is lived.

In Mexico, inequality has grown, so much that we are within 25% of countries with higher levels of inequality in the world and at the same time the economy has stagnated, being the fourteenth economy of the world 53.3 million people living poverty. Economic growth is lean, averages do not grow, poverty persists but the fortune of a few continues to expand, while GDP per capita grows to less than 1% per year, the fortune of the richest 16 Mexicans multiplies by 5. As consequences, inequality brings limits to the development of physical, social and human capital necessary to improve the living conditions and well -being of people, therefore combating inequality to reduce poverty is a task that all implies us.

However, this inequality that characterizes Mexico not only has social implications since political implications play a preponderant role, and one of the most serious aspects is reflected in the distribution of income, and over time if income has growncapita but poverty rates have stagnated in the country and this is because growth is concentrated in the highest distribution spheres.

One of the big problems lies in the fact that our fiscal policy favors whoever has the most, and this is not progressive and the redistributive effect is almost null, other consequences of inequality in Mexico and that are pending on the public agenda are: the indigenous populationwhose poverty rate is four times greater than the general, public education versus private and violence caused by marginalization. In my opinion, Mexico should change from fiscal policy, since there must be an equality with all income without having favoritism, since all this only generates problems in economic rates and are even more affected in different situations.Very low resources. Therefore if the country continues like this we will never be able to reach high levels of development because it condemns a high percentage of the population to live in the same conditions in which they were born.

THE AGENDA FOR THE FUTURE

We must stop inequality and stop poverty so as not to have a threat to the sustainable growth of Mexico, the solutions to make Mexico a fairer country are:

1. Guarantee access to basic services under a rights approach.
2. The creation of a progressive fiscal policy and a fairer distribution.
3. The expense focused on education, health and accesses of basic services, in infrastructure, in schools that have the necessary services, etc.
4. Improve salary and labor policy.
5. Transparency and accountability to combat corruption.

    

The author marks these quite relevant aspects for a change, so I think it is time to talk about the subject and no longer dodge it, Mexico has to change so much for ethical, political and economic reasons. This cannot continue like this, the country should not benefit only a few, it is time to change the panorama and the magnitude of inequality that characterizes us. We must achieve a fiscal policy that helps us to have a better economic level, since it is the one that compensates around a third of the inequality of income before taxes and transfers (which is usually called inequality of market income).

The magnitude of inequality in Mexico

Mexico has a 0 coefficient of 0.441 When the average is only 0.373, this means that Mexico has much more inequality than the average of all countries, in fact when ordering them from the highest level of inequality, Mexico occupies the 87th place of 113 countries. In some graphs that have provided us with two known results, 1: that in the mid -199In Mexico it is greater than what it was in the early eighties. The recent reduction in Mexico of inequality has been attributed to three main factors: to the remittances received.

With database of 2014 today 16 Mexicans appear in the category of Mexican billionaires, which has changed in them very significantly is the importance and magnitude of the wealth of its millions, currently equivalent to 142, 900 million dollars, eachMember of this select group of Mexicans went from 1,700 to 8.900 million dollars. The period of 1996 and 2014 The GDP capita has only grown around 26%, growth very below what the fortunes of Mexican billionaires have increased in fact.

At present, the real performance of 4 multimillionaire Mexicans is around a third of the income accumulated by almost 20 million Mexicans. And again the same story: the entrance of a small group of the population is not related to the largest part of the Mexican population. This results in comparing the evolution of the performance of the richness of these billionaires with the entrance to the lower part of the income distribution in Mexico. And in the opinion here there is no favorable growth in the country, we continue in the same line of inequality, where the poor is still done and the rich is presented more benefits and their wealth only grow day by day. This economic inequality that is presented facilitates institutional capture, and to the extent that this happens we face worse governments, more separated from public reality and more at the service of private interests over public. And precisely what the first 4 millionaires have in common on the scale, is that all their wealth derive a significant part of their fortune in privatized sectors, concessioned and/or regulated by the public sector.

On the other hand, the lack of economic competition and a weak regulatory framework constitute the ideal scenario for abuse by companies with a certain monopoly or oligopolic power. The clear example is based on Carlos Slim, who made Mexicans pay for years telephone rates well above what they would have paid in a competitive or adequate context regulated, and this is thanks to the monopolistic power of Mr. Slim’s companies. Talking about the mining field we can observe the inequality in the natural resources of the entire nation that only a few have benefited. Our fiscal policy does not correspond to an unequal economy where the tax instruments are designed to significantly reduce the gaps in the entrance between rich and poor, in a nutshell we do not have an especially progressive fiscal policy. In an economy as unequal as the Mexican, poor households can end up paying (in the form of tax) more than rich households, so we find ourselves is a scenario where who perceives the most is the one who receives the greatest benefits from the tax system, same that tends to record more consumption than income.

From 1981 and 2012 the participation of capital increased from 62% to 73% and that of work decreased from 38% to 27%, in these last 30 years we can observe a gradual growth of capital participation in national income but to thesame time a consequent decrease in the participation of the work factor, all of the above favors in 11% to national income in favor of capital and at the expense of labor. The explanations of the phenomenon can be defined as a considerable increase in the size of capital in Mexico or in an increase in the negotiation capacity of capital owners to appropriate a larger portion of added value. As we can see the exacerbated concentration of both economic power and the politic.

In my opinion, the authorities have a range of options to achieve efficient and equitable results, everything is in wanting to make the change. I consider that there must mainly be an effective universal social security system, as well as a new industrial policy so that the Mexican working class can be inserted in the international market with decent and quality jobs, also to raise the minimum wage to the well -being line followed byGradual increases according to the country’s inflation, the creation of innovative mechanisms for the requirement of transparency and accountability, starting with the correct implementation of the National Anti -Corruption System that allow the good use of public resources, the restoration of a tax to a taxThe inheritance, a better collection of the property tax on the property, greater taxes on yields of fixed and variable income instruments in capital markets and finally evaluate and design a pilot for the implementation of universal basic income.

Economic and social consequences of inequality and political capture

In this section it talks about the economic and social consequences of inequality and political capture. The author tells us about the consequences of both inequality and political capture and mainly as he has had a negative effect on economic growth talking about Mexico. It also speaks to us as Mexico has left behind reducing poverty and has also added to the deterioration and stagnation of the minimum wage.

Inequality and growth

One of the problems of Mexico’s economy is that there is a lotThis is transformed into an economy that offers an imperfect financial market and that one alone how they enjoy the privilege of savings.

Investments in human physical capital will occur not necessarily for those who have greater business talent or better learning disposition. The investment will be allocated to those who have the resources to do so.

In a recently conducted study (Cingano 2014) performs an economic exercise to study the effect of inequality on the growth of OECD countries obtained 3 results:

1. The inequality that affects economic growth is the one that occurs in the lower part of the distribution that means the one between the entrance gap between the poor and the individuals that are above them
2. He finds that the most important channel is he of low human capital pressure by the lowest part of the distribution
3. It shows that for the specific case of Mexico and between 1985 and 2005, inequality reduced with GDP growth in an accumulated amount of 10%

    

Then this economic exercise helped us to know the main problems facing the economy. One of them is the high inequality that is in our country that limits a lot to the possibilities of the growth of the economy.

minimum salary

The minimum wage policy explains the consequences of the inequality that was seen in Mexico between 1984 and 1996.

A Bosch Manacorda study analyzed the impact of the policy of minimum wages on salary inequality and in particular in the compression of labor income in the lower part of the distribution will occur precisely in these years and one of the hardest aspects is thatThe current level of the minimum wage in Mexico is below the welfare or poverty line not only that but also below the double of the minimum well -being line or extreme poverty

The author shows us how it is affecting the inequality and one of the points it touches is the minimum wage that tells us that in Mexico is inequality so much, that the salary that the government has stipulated does not even reach to acquire a basic basket and thisIt is a problem from all of Latin America that must be solved as soon as possible.

Inequality, marginalization and exclusion of the indigenous population

In Mexico we have another problem that is the inequality and exclusion of our indigenous people in the graph that the author shows in his work 38% of the indigenous speaking population lives in extreme poverty the corresponding percentage for the total population is the lower than 10%. This implies that the extreme poverty rate for the indigenous people. In this case, indigenous people are not giving the same opportunities as other people and therefore these people live even in extreme poverty, so that the country is not generating income with people who are not given the opportunity toA job and a dignified life.

Gender inequality

The author also shows us how in Mexico there is gender inequality and show us the percentages with which I was amazed:

• On labor participation, woman occupies 48% while man 83%
• In the case of Mexico, the income obtained by women was just 46% of the men who receive men
• The average monthly labor income of women in Mexico in relation to the income of men fluctuates in a 67.2% for people over 55 to 84.4% for people between 15 and 24 years old
• The salary for industrial activities or as transport operators is 30% and 24% lower than that of men
• In activities as professional merchants officials or office workers the gap fluctuates between 17% and 10%

   

With these data and its percentages we realize that there is a very pronounced gender inequality and if we take into account that in 2019 there are more women than men, we can deduce that there is a problem that is directly affecting our economy.

Private education vs. Public Education: An unequal treatment

According to a census, 48% of public schools lack drainage access 31% lack of drinking water access 12.8% do not have bathrooms or sanitary and 11.2 does not have access to electricity. On the other hand on 61.2% of them students do not have access to a computing team that serves and 80% of students do not have the Internet. With which this is evidenced by a disadvantage situation in the face of private school students.

It is clear that there is a total inequality in education since he who has a good capital can obtain a level education and those who win the minimum wage definitely will not be of quality, and this affects the new generations since thefuture of the country having illiterate people or with knowledge deficit will not be able to upload the economy on the contrary it will worsen.

A program to combat inequality and agenda for the future

The author tells us that there are already strategies to end inequality in the economy, we already know what are the instruments that have served us and also with those we fail and therefore shows the measures with which this would end.

Creation of an authentic social state: We must focus on a social policy based on rights: food, education, health, etc.

The State must ensure that its citizens, for the simple fact of being, access a minimum of social rights, which must be guaranteed from the beginning to the end of life.

More progressive fiscal policy: Fiscal policy in Mexico is insufficiently progressive. In this case we must ensure that taxes are more progressive.

Best focused expense: The expense must be focused on health education, and access to basic services required by the population.

Salary and labor policy: We must change the minimum wage policy. Continue with a salary policy oriented to inflation containment This change would be positive to improve and strengthen the purchasing capacity and standard of workers who receive that level of income.

Transparency and accountability mechanisms: Make public the patrimonial statements of all members of the three branches of government: executive, legislative and judicial. Such simple measure would reveal the potential or real conflicts of interest in which public servants would incur and help fight corruption and strengthen the rule of law.

Bibliography

1. Esquivel g. (2015). Extreme inequality in Mexico. Mexico: Oxfam.