(15 January 2015) The Economic Commission for Latin America and the Caribbean (ECLAC) reaffirmed today the links between the studies of this United Nations regional commission -with the main focus on equality- and the work of Thomas Piketty, during the visit of the renowned French economist to its headquarters.
Piketty, who is Director of Studies of the School for Advanced Studies in Social Sciences (EHESS) and Professor of Economics at the Paris School of Economics, took part in a lunch meeting attended by ECLAC officials and special guests from academia and politics in Chile. On this ocassion, he found out about the proposals on equality developed by the Commission in recent years.
In her welcoming address, Alicia Bárcena, Executive Secretary of the Commission, stated, “We believe that your presence in ECLAC opens up a vital space for collaboration and for you to discover first hand our thoughts on inequality in Latin America, which are based on the interdisciplinary study of economic and social development with a structuralist vision”.
Ms. Bárcena emphasized that ECLAC’s work - past and present - has much in common with the works of Piketty, including their basic perspective. She said that, for almost a decade, the Commission had worked on a trilogy of equality, which contains publications summarizing the main relevant ideas that ECLAC has presented to the region’s countries between 2010 and 2014.
In the first of such documents, Time for equality: closing gaps, opening trails (2010), ECLAC described the need to make equality a guiding ethical principle and the ultimate aim of development, while highlighting the need to have equality for growth, and the need to have growth for equality.
In the second document, Structural Change for Equality: An Integrated Approach to Development (2012), the Commission suggested that the region should transform its production structure by prioritizing less polluting knowledge-intensive sectors with fast-growing internal and external demand in order to create more and better jobs, thus facilitating growth with increased equality and environmental sustainability.
According to the third part of the trilogy, Compacts for Equality: Towards a Sustainable Future (2014), protecting the social achievements of recent years and avoiding another period of restriction and hardship requires using a renewed series of institutional and policy reforms to promote a new path of sustainable development with increasing levels of equality.
Ms. Bárcena stated that ECLAC would be presenting a fourth document on territory, equality and citizenship in Mexico in 2016.
In his address, Mr. Piketty thanked ECLAC for its invitation and commented that it was necessary more coordination between his research team and this UN organism in order to improve their combined ability to measure and monitor the evolution of inequality in Latin America.
“You are the perfect place to promote this type of study”, Piketty stated. “I think it is really important to change the discourse, especially concerning the data collection, and I think that an organization like yours can play a big role in this direction”, he added.
The Executive Secretary of ECLAC remarked that, although Latin America and the Caribbean is not the world’s poorest region, it remains the most unequal. She added that the experience of neoliberal models implemented in the 1980s and 1990s achieved high and steady growth rates, but that they also deepened inequalities and accelerated a worsening in income distribution.
One distinctive characteristic of this inequality is that 32% of the region’s total income is concentrated in the richest 10% of households. At the other extreme, the poorest 40% of households only have an average of 16% of total income. Alicia Bárcena declared “This is why one of the main challenges is to implement public policies for income redistribution and to strengthen the State in a way legitimized by citizens”.
Ms. Bárcena went on to describe the connections between ECLAC studies and the work of Mr. Piketty, particularly in terms of methodologies and fiscal policy matters. She explained that developing countries had made significant efforts to quantify inequality in terms of wealth based on tax records or special surveys, but that information was scant and the issue was still pending.
In terms of tax, Ms. Bárcena affirmed that ECLAC measurements point to a structural problem in Latin America’s tax system, owing to the limited use of income tax as an effective instrument of progressive taxation. Despite the reforms implemented by several countries to improve tax collection, she reported that the impact on inequality indicators remains limited.