mises.org/wire/colonialism-isnt-source-latin-americas-high-inequality

Income inequality in Latin America is appallingly high, with the richest 10 percent of the population controlling 54 percent of national income. According to the 2021 Regional Human Development Report's “Trapped High Inequality and Low Growth in Latin America and the Caribbean,” published by the United Nations Development Program, Latin American countries record higher inequality and worse social indicators than countries in other regions with similar levels of development. However, the story of inequality in Latin America has not been a desolate narrative of doom since the mean Gini coefficient decreased from 0.534 in 2002 to 0.499 in 2010.

But some worry that these gains might be eroded due to external shocks and economic downturns springing from covid-19. Indeed, researchers point out that covid-19 has heightened the growth of inequality by worsening economic opportunities. The inequality-inducing effects of covid-19 have brought the persistence of inequality in Latin America to the forefront of academic discourse. Many attribute the blatant inequality of Latin America to the colonial era. Writing in this vein, Sergio Costa and Francesc Badia I Dalmalse posit that leftist administrations were elected “based on a premise of reverting inequalities accumulated since the colonial period.”

Although the vices of Latin America are usually ascribed to colonialism, the issue is more complicated. Popular knowledge is that the Spanish operated an extractive enterprise in the Americas aimed at deriving resources for the metropole. Spain’s enterprise in the Americas entailed a high level of regulation, so we cannot designate it as promarket. Yet the escapades of the Spanish Empire are largely an embellishment of history, according to Henry Kamen in his lucid text Spain’s Road to Empire. Administering multiple territories proved to be expensive and the cost of empire was compounded by interest payments. Spain relied on the assistance of creditors to fund...

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