Poverty in Latin America, always an issue!

Although Latin America has countries that are extremely resource rich, the level of poverty and inequality is staggering. Countries like Mexico, Venezuela, Argentina, Chile and Brazil who are rich but due to their policies and politicians, they have seen poverty. Smith and Sells argue that poverty is always an issue that politicians seek to fix. This may be easier said than done. While politicians on each side of the spectrum say they will fix the idea of poverty, there is no end in sight. Latin America, according to the Smith and Sells, has had a high of ~50% population in poverty.

So what has been done recently to try to ameliorate poverty? A social policy program that was introduced recently is the program of CCT’s (Conditional cash transfer). These CCT’s are for all intents and purposes a social contract between the government and the needy poor. How do they work? The government provides small amounts of cash to the needy when they meet specified conditions like sending their children to school and providing nutritious meals. In 1997 a program called “Progresa”, renamed “Oportunidades”, launched in Mexico. This major endeavor as of 2009 covers about 25 million poverty stricken people. Since then, “Bolsa Familia”, from Brazil is the largest CCT in the world.

Latin America suffered a big crisis in the 1980’s known as the debt crisis. This rose the inflation levels so the middle class did not have as much buying power as before. Due to this Latin America fell into a recession and experienced negative growth of about 9%. Due to this organizations like the IMF had to step in and lend money to the Latin american countries to pay off their debts.  After this crisis, Latin American poverty rates reached the highest levels. So it was up to countries to make reforms to improve the economy and reduce poverty. However, poverty and Latin America are very much related.

With the rise of poverty and the implementation of stricter policies by the IMF, the economy of Latin America grew. The concept of CCT’s is a great policy that helped ameliorate and provide funds to those in need. However, is it enough? No, there is always more than can be done to help. The reason why Latin America has a lot of poverty, is due to the inequality of wealth distribution. People at the top in Latin American countries and people at the bottom are separated by a lot of wealth. A case can be seen in Mexico with Carlos Slim. Carlos Slim rose to the top after the debt crisis of the 1980’s making some great investments. However, as he became wealthier, Mexico and the poverty rate within remained high.

Latin America has countries with tremendous wealth, at some point Argentina was supposed to rival the USA in terms of becoming super powers. The economy of Latin America is strong and the countries within them have a lot of wealth, how they deal with it and how the politicians act on it is why poverty will always be there. So, Latin America does not need new policies to deal with poverty. While CCT’s where a great innovation and they did provide aid for those in need, poverty starts with politicians and the corruption within.