Los sistemas de impresión

In a presentation about Equality, the Chilean economist Oscar Landerretche introduced the topic by presenting a matrix with two axes (see Figure 2.1): one showing different definitions of equality, identified as equality of opportunities, of levels and of both of them;

and the other showing the reasons why someone could be interested in the question of equality: because of an instrumental-political reason, an economic-developmental reason, or simply a political-ethical reason (Landerretche and Tironi, 2009).

As well as clarifying different approaches to equality, the diagram is interesting as it opens a conversation about why we should care about inequality and the different approaches to that concern. According to Landerretche, the political-ethical reason would be enough to set a normative position regarding the relevance of reduction of inequalities as an object for social policies, namely the desire to inhabit a world that is less unequal. Part of this

-41-

ethical position is what has been discussed so far in this thesis. This section, then,

presents a series of reasons beyond the normative realm that put reduction of inequalities as a central feature of socio-spatial policies such as housing. One relates to historical trends and the relevance of social arrangement to determine redistribution. The other relates to the complicated relationship between inequality reduction and poverty alleviation. And finally it presents a discussion on wealth and income inequalities, and the particular space in which housing policies can become relevant for this debate.

Figure 2.1 | Matrix of definitions of Inequality and reasons to worry about it, by Oscar Landerretche

Source: Landerretche and Tironi, 2009:40

a. Why inequalities: Historical trends and the role of social arrangements

In historical terms there has been an increase of inequalities within and among countries over the last decades that make inequality a significant issue both globally and locally.

Globalisation and the series of structural reforms conducted during the debt crisis in most developing economies, including countries like Chile as an early adaptor in the 1970s (Harvey, 2005), comprised a range of political and economic transformations, including processes of controlling the state's budget, privatisation of service provision and export sector rehabilitation (Mohan, 1996; Mkandawire, 2005). According to McGrew

"whilst the relationship between globalization and world poverty is enormously

OPPORTUNITIES

BOTH

LEVELS

POLITICAL- ECONOMIC- INSTRUMENTAL-

DEVELOPMENTAL POLITICAL ETHICAL

-42-

complicated, there is a general acknowledgment that globalization is strongly associated with an intensification of global inequality" (2000:353). Moreover, “from 1973 to 1993, inequality, however measured, increased between countries, within most countries and in the world as a whole” (UNHSP, 2003:36), and this is manifested by the fact that “rapid increases in national income are enjoyed less by low-income earners, and rapid decreases are felt more” (UNHSP, 2003:41).

It is not a coincidence that many major economists have focused their interest in recent years on inequality measurement and reduction, and that more than ever they have become relevant voices in public debate. Work over recent decades by authors such as the Nobel Prize-winning Joseph Stiglitz, Anthony Atkinson, Thomas Piketty and the

Chilean economist José Gabriel Palma, has been particularly relevant in this process. The last century has shown that there is no clear relationship between stages of development and levels of inequality. In other words, there is an acknowledgement that developing economies are not synonymous with decreasing inequalities. This has been clearly exposed by Piketty’s most recent and substantial work, which shows, through an exhaustive historical analysis, how economic growth can benefit some groups while harming others, without reducing inequality as a spontaneous consequence. In Piketty’s words, “[t]he history of inequality is shaped by the way economic, social and political actors view what is just and what is not, as well as by the relative power of those actors and the collective choices that result” (Piketty, 2014:20). In other words, he highlights the importance of the “interaction between beliefs systems, institutions, and the dynamics of inequality… (as) the history of the distribution of wealth has always been deeply political, and it cannot be reduced to purely economic mechanisms” (Piketty, 2015:68-69). Inequality is also central in relation to issues of economic growth, as explained by Joseph Stiglitz (2013a), who argues that in the context of a crisis it is necessary to address the underlying problem of inequality in order to restore growth.

As described by many researchers, inequality and economic concentration are among the problems that are impossible to tackle without strong state intervention, and social policies are definitely part of the instrument that states can use to intervene in society.

Following Piketty’s exhaustive historical analysis of capital and inequality, probably one

-43-

of his main conceptual conclusions relates to the fact that institutions and beliefs systems are key to the distribution of income and wealth. In his words: “[i]nstitutional changes and political shocks –which can be viewed as largely endogenous to the inequality and development process itself– played a major role in the past, and will probably continue to do so in the future” (Piketty, 2015:67). He goes even further, proposing that it is such institutional arrangements that unquestionably determine the path of inequality trends, rather than it being a deterministic process:

There are powerful forces pushing alternatively in the direction of rising or shrinking inequality. Which one dominates depends on the institutions and policies that societies choose to adopt (Piketty and Saez, 2014:842-843).

This assumption implies enormous challenges for the state in addressing actions towards improving redistribution. On the one hand, states have the capacity to use transfers and taxes for the reduction of inequality from market income to disposable income (Joumard et al., 2012). On the other, it implies the need for a responsibility in the use of social, economic and sectoral policies in general to trigger processes of socioeconomic and political transformation able to challenge unequal patterns of distribution in different fields. Despite the general acknowledgement of this issue, individual attempts to achieve a better distribution of wealth in developing countries have failed in scaling-up their effects: the redistributive whole has been less than the sum of individual measures (Griffin and James, 1981).

b. Why inequalities: The complicated relationship between inequality and poverty

In addition to the historic evidence that positions inequality as an important global and local issue, another reason to discuss reduction in inequality as the main object of social policies relates to the complicated interrelation between poverty alleviation and

inequality. For decades, housing policies, as with many public policies, have been

conceived as socioeconomic instruments with massive implications in terms of economic activity – in the case of housing, this is particularly relevant given the volume of the construction industry – and as a key tool for poverty alleviation (Ramírez, 2002). Over recent decades, however, the concept of poverty has been contested and redefined, as

-44-

challenges related to poverty have become more complex and multiple.

Then there has been a series of shifts towards more complex and multidimensional approaches in defining poverty, not just incorporating various social indicators, but also embracing aspects of vulnerability and entitlement as part of a cross-sectoral approach (Moser, 1995; Wratten, 1995). This transformation in the conception of poverty has also affected the ways in which it is measured. In the case of Chile, multiple variables beyond income have been incorporated in official statistics (Berner Herrera, 2014),

acknowledging the heterogeneous nature of urban poor families (Salcedo and Rasse, 2012), and the change in the nature and manifestations of poverty that have taken place as a consequence of, for example, access to credit (Han, 2012).

The shift has also focused on the differences between absolute and relative definitions of poverty. While absolute poverty is defined in fixed terms, people are considered poor in relative terms if they cannot obtain “the conditions of life – that is the diets, amenities, standards and services – which allow them to play the roles, participate in the

relationships and follow the customary behaviour which is expected of them by virtue of their membership of society” (Townsend, in Wratten, 1995:14). Relative definitions of poverty are inevitably related to questions of inequality.

As the evolution of ideas about poverty and their translation into policies have moved away from more quantitative and mono-sectoral approaches, the reduction of poverty starts to involve aspects of redistribution and recognition that are at the core of the reduction of inequality. As the next section will discuss, there has also been a radical evolution in ideas about inequality and social justice, at least from Rawls (1971) concept of primary social goods onwards, incorporating more complex and multiple dimensions to its understanding. This movement towards multidimensional approaches has contributed to the convergence of the inequality and poverty debates. In other words, we want to argue here that nowadays policies focusing on the reduction of poverty, without addressing issues of quantitative and qualitative redistribution, cannot reduce poverty.

And in addressing these issues, the object of the policies that have been historically seen as tools for poverty alleviation, moves towards aspects of inequality reduction and social

-45-

justice, requiring therefore a different set of approaches and criteria. Failing to deal with redistribution issues will inevitably end in failing to reduce poverty in its current and more complex sense.

c. Why inequalities: Wealth and income inequalities and the role of housing The discussion about inequality has historically been led mainly by economists, as some of them have done considerable work on the measurement of economic inequalities, and this has given the issue an important place in public debate. There is a final issue singled out by this economist-led discussion that is worth considering in the normative

definition of the reduction of inequalities as the object of housing policies: the differentiation between inequalities in wealth and income.

Thomas Piketty has possibly been the person who has put together the most consistent body of data analysis about the history of income and wealth distribution. One of the many key issues highlighted by his work is the differences and causes of wealth inequality on one hand, and income inequality on the other. According to Piketty, one of the tasks of his latest book was to “distinguish between the inequality of labor income and the inequality of capital ownership. Of course these two dimensions of inequality do interact in important ways (…) But the forces that drive income inequality and wealth inequality are largely different” (Piketty, 2015:72). This distinction becomes particularly relevant in traditional patrimonial societies, in which the top shares of income and wealth tend to be less correlated, and social hierarchies contribute to raising wealth rather than to income inequality. In countries like Chile, this is particularly clear as capital property tends to be much more concentrated than in other countries, and traditional estimates of inequality significantly underestimate the share of the richest 1% (López et al., 2013).

This distinction between income and wealth inequality is relevant for this research as houses are often the primary economic assets held during the lives of most of the population of developing countries like Chile, and probably the main capital good to which families have access. As Aalbers and Christophers point out:

In many capitalist societies residential property is the largest individual wealth/asset. (…) As such, it is in housing that the vast wealth inequalities of

-46-

capitalist societies, which we hear so much about today, are often most visible and most material (2014:380).

Housing is the most relevant asset in terms of wealth disposal for most families,

particularly for the poorest, in contexts like Chile where the volume of home ownership is especially high, as will be discussed later. As wealth seems to be even more relevant and dramatic than income in terms of economic inequalities, housing becomes a key

instrument for the redistribution of capital and the challenges related to the reduction of inequalities. This is not to dismiss the importance of labour and other social systems in reducing inequalities, but to give emphasis to less obvious sources of inequality linked to the distribution of wealth, for example access to adequate housing.

In their attempt to understand how housing is implicated in the political economy, Aalbers and Christophers (2014) argue that the link occurs because of the ways in which housing production interacts with capital in its three primary forms: as circulation, as social relation and as ideology: “as private property ownership, market allocation

mechanisms and accumulation strategies are decisively privileged (by capitalist ideology)”

(2014:384). In the same way, Madden and Marcuse point out that “homeownership patterns are both expressions and instruments of inequality. Increasing homeownership without ending inequality is not a route to ending alienation. It will just lead to more debt and more insecurity” (2016:81).

“No other commodity is as important for organizing citizenship, work, identities,

solidarities and politics”, say Madden and Marcuse (2016:12) when referring to housing.

As inequality has become one of the main drawbacks of capital ideology (Piketty, 2014, 2015) the bonds described above reinforce the necessity of studying the ways in which housing policies can contribute to tackling one of the main political and socioeconomic downsides of current social order: inequalities in their multiple natures.

This section has presented a series of issues that explain the relevance of researching housing policies in relation to the reduction of inequalities. The different points singled out here seek to support the definition of the reduction of inequalities as the object of

-47-

housing policies: the historical relevance of inequality; the relationship between poverty and inequality; and the relationship between wealth and income inequality and the relevance of housing to this. As has been said, this is also a normative definition that responds to particular political subjectivities, but that does not mean there are no strong reasons behind such a definition, for example those discussed above.