Inequality, in its myriad of social and economic forms, is a persisting issue in Latin American society. As of 2014, Latin America was found to be the most economically unequal region in the world: just 10% of the richest Latin Americans controlled 71% of the regions wealth (Ibarra, 2014). When wealth is concentrated in the hands of the few, often so is power. It is argued that, for many Latin American nations, this is partially due to political systems being heavily skewed in favour of the business elites. Moderately high levels of corruption in the region stem from the capacity of undemocratic and populist politicians to exploit weak democratic institutions (Transparency International). When the interests of the elites are protected, it is at the expense of the well-being of the poor majority. In comparison to developed countries, Latin American governments spend 11.4 percentage points of GDP less on social services such as education, health, pensions, and infrastructure (Melguizo, 2017). Lack
of social investment restricts inter-class mobility, reinforcing disparity both systemically and culturally. It is important to clarify is that wealth and income inequality is a representative of institutional capacity, not macroeconomic stability. Over the past few decades, Chile and Peru have both experienced extensive export-led economic growth and managed to more than double their respective GDPs in just under 30 years (Madison Project Data Base). Despite reduced levels of extreme poverty (World Development Indicators), Chile and Peru continue to be included in the 50 most economically unequal countries in the world (World Bank Estimate, 2015). Without effective redistribution methods, the previous economic growth was at the expense of equity. I will argue that income inequality in Chile and Peru is partially due to the legacy of authoritarian- and dictatorship-era neoliberal reforms, which continue to undermine the integrity of political institutions via systems of taxation and privatization.