El Salvador Offers a More Equal Society Than America
WHY YOU SHOULD CARE
This Central American country has ridden a Latin tide of decreasing inequality in the world’s most unequal region.
By Justin Higginbottom
In January, President Donald Trump announced an end to the temporary protected status of some 200,000 El Salvadorans who had been living and working legally in the U.S. since two powerful earthquakes killed hundreds in El Salvador in 2001. The decision reminded Americans of the small, troubled Central American country and what awaits those being forced to return to it.
In the Americas, only Haiti, Bolivia, Honduras and Guatemala are poorer than El Salvador, where more than a third of the population lives in poverty. And, in 2016, the nation of 6.4 million had more than 81 murders per 100,000 people — a total of nearly 5,200 deaths — making it the most violent country in the world that isn’t a war zone.
But there is one Salvadoran metric that has improved since those earthquakes hit 17 years ago — one that puts the country ahead of its giant northern neighbor. According to World Bank data from 2015 (the most recent available):
From 2000 to 2015, El Salvador reduced its income inequality by 20 percent — and now it has less disparity than the U.S.
Here’s how the numbers break down. In 2000, El Salvador had a Gini coefficient of .510, which is a measure of income inequality (0 means everyone has the same amount of wealth, while 1 means one person owns everything, and everybody else owns zip). By 2015, though, that number had dropped to .408 — meaning inequality had decreased 20 percent in 15 years. In Latin America, only Argentina and Bolivia had greater reductions in income inequality. And for the U.S.? By 2015, its Gini coefficient had risen to .415, from a .404 in 2000, making it more unequal than El Salvador.
“There have been small moves in the right direction, but the feeling is that those can be moved backward,” says José Artiga, who fled to the U.S. in 1980 during the civil war and now works at the California-based SHARE, an NGO trying to increase the economic sustainability in his native land. Most people in El Salvador still live on the edge. Americans might be conscious of inequality if they see their boss’ new Audi. In El Salvador, “what people put on the table would be a simple way of measuring,” says Artiga. As in, when was the last time a family had fresh fruit? Or someone might become aware of disparity when he or she needs medical care and can’t afford private treatment, he says.
El Salvador isn’t unique in the region for cutting inequality, according to Eduardo Ortiz-Juarez, a researcher at the Commitment to Equity Institute at Tulane University in New Orleans. Although Latin America remains the region with the greatest income disparity in the world, 16 of 18 countries have seen an increase in equality since 2000. On average, the region’s disparity declined by 1.07 percent annually from 2002 to 2015. El Salvador’s 1.6 percent decline during that time outpaced the average. This progress occurred even as inequality has increased in many countries around the world besides the U.S., including China and India.
When you are poor, your think your life is worth less. And you might want to get quick money. And then you end up with another problem: That’s violence.
José Artiga, SHARE
The reasons behind this trend in Latin America are complicated. But a couple of factors seem to play a big role — and likely contribute to El Salvador’s improvements. According to Ortiz-Juarez, they boil down mostly to higher wages from a more educated workforce and more progressive government transfers of wealth to the poor. He’s crunched the numbers: On average, more than half of El Salvador’s reduction in its Gini coefficient is the result of changes in income, and around 21 percent is from government transfers. Remittances also surely play a role, as they represented a record 17.1 percent of El Salvador’s economy in 2016.
The Farabundo Martí National Liberation Front abandoned its leftist guerrilla roots and, in 1994, became a legitimate political party in El Salvador — one that has jockeyed with the rightist National Republican Alliance for control of the legislature since 2000. As with other countries in the leftist “pink tide” that swept the region, El Salvador has seen an increased focus on social programs, if not their efficient delivery. President Salvador Sánchez Cerén, a former guerrilla and teacher, prioritized education and subsidies to the poor when he entered office in 2014. To varying degrees, programs such as providing school meals and supplies have likely helped equality in the country, say experts.
Artiga notes other policies that produced “small changes in a good direction,” including increased salaries, improved medical care and redistributed land titles that people can use as collateral for mortgages.
It’s in everyone’s interest for El Salvador to continue on a path toward equality and prosperity, he explains. “When you are poor, you think your life is worth less. And you might want to get quick money. And then you end up with another problem: That’s violence.”
- Justin Higginbottom, OZY Author Contact Justin Higginbottom