58 According t o studies by U N D P and ECLA, the number of poor was 247 million in 1986. A large part of the 23 million added between 1986 and the present are estimated t o be the victims of adjustment and restructuring programmes conducted in the región t o stimulate the economy.
Brazil is now the country w i t h the greatest concentration of wealth; in o t h e r words, the rich are extremely rich.
There is a similar gulf in Chile, where 6 million out of a total population of 13 million live in great poverty, yet Santiago is a modern capital city complete w i t h skyscrapers, elegant shops, and offices equipped w i t h computers and modern te- lecommunications systems. One sees the other side of the pie- t u r e in the country áreas and in the shantytowns: the poor live in shacks, the schools are dilapidated and there is a des- perate need for dispensarles and hospitals.
In Argentina, 9 million out of 33 million live below the poverty line; the figure is likely t o rise t o 10 million under the austerity measures.
These are just a few examples of the way that, t h r o u g h o u t Latin America, the adoption of the free market and the dis- appearance of the welfare state have deprived large sections of the population of access t o health, education and decent housing, and have made their living conditions intolerable. This is particularly the case for millions of Indians in Guatemala and the Andean countrles.
As Octavio Paz said, "because socialism has failed does not mean that capitalism has succeeded".
least half the c u r r e n t income derives f r o m direct taxes (on 59 income, profits, capital gains), indirect taxes (sales o r value-
added tax) on goods and services, and social security c o n t r i - butions.
The p r o p o r t i o n of the total derived f r o m each of these sources has tended t o change considerably over the last 20 years (Ta- ble 8).
In some countries, like Chile o r Ecuador, the amount brought in by indirect taxes has risen, while in Chile the sums derived f r o m social security contributions have fallen substantially.
Elsewhere, the share provided by direct taxes has fallen, w h e r e as the yield f r o m taxes on consumption has increased (Perú, Colombia, Panamá).
In yet others, the share of both direct and indirect taxes has fallen, but social security contributions have increased (e.g.
Costa Rica).
In Uruguay, the amount derived f r o m income tax is very small, whereas consumption taxes and social security c o n t r i - butions are very high.
Taxes on consumption are harder on the poor than the rich, and widen f u r t h e r the disparities between social groups.
Whatever the exact position in each of these countries, many Table 8. Major sources of state income as a % total
receipts
s/s contri-
Income tax . ^ tax on cons.
butions
Í970 1990 1970 1990 1970 1990 Honduras 19.2 3,0 33,8 Bolivia 4,9 8,8 31,6 D o m . Rep. 17,9 20,9 3,9 4,1 19,0 19,8 Guatemala 12,7 18,1 0 0 36,1 23,2 Ecuador 19,6 56,9 0 0 19,1 21,5 Salvador 14,7 18,8 0 0 24,9 38,4 Paraguay 8,8 9,3 10,4 0 26,1 19,5 Perú 16, 10,0 0 0 34,0 44,2 C o l o m b i a 37,1 27,8 13,7 12,6 15,2 27,7 Panamá 23,3 14,7 22,4 27,3 13,3 17.9 C o s t a Rica 18,0 9.8 13.9 28.8 37.7 27.4 C h i l e 14.3 23.3 28,6 6,0 28,6 37,1
Argentina 4,3 43,4 22.4 Nicaragua 9.5 14.0 37,3
México 37,3 36,5 18,6 13,6 32.2 56.0 Venezuela 54.2 57,5 6,0 2,7 6,7 3,8 Uruguay 4,7 6,7 30,0 27,0 24,5 35,9
Brazil _ _ _ _ _ _
60 of t h e m suffer f r o m the creation of vast grey economies. This process is helped along by a general lack of trust in the state.
The state is seen as the opponent in the game of life and must be duped as often as possible. In Perú, for example, the black market is estimated t o equal between 30-77 % of the official GDP. Similar situations exist in all other Latin American coun- tries. This in no foundation on which democracy can flourish in the long t e r m .
If w e now t u r n t o public expenditures, w e see that many countries have cut back their spending on education and health, whereas in many instances defence spending in 1990 was higher than in 1972 (Table 9).
In some cases, defence expenditures w e r e only slightly higher (Ecuador and México), but in others the difference is consid- erable: t w o , three, four o r even six times higher in 1990 than 20 years previously. This is t r u e of Bolivia, w h e r e it should be recalled life expectancy is the lowest in the whole región.
It should also be pointed o u t that Costa Rica, which has the longest life expectancy, has no defence budget.
The authors of the W o r l d Human Development Report state that spending on armaments by developing countries is es- pecially depressing, and they show that military spending each year is equal t o the income generated by 160 million man/
years of w o r k . They conclude that "clearly, the poverty of the people of the developing w o r l d has not prevented the armies of these countries f r o m living in plenty".
Table 9. Expenditures under different headings as a
% of the total
Defence Education Health Social 1972 ¡ 990 1972 1990 ¡ 972 1990 1972 1990 Argentina ? 8,6 ? 9,3 ? 2,0 ? 40,9 Bolivia ? 14,1 ? 18 ? 2,3 ? 17,9 Brazi! 8,6 4,2 8,3 5,3 6,7 7,2 35,0 20.1 Chile 6,1 8,4 14,5 10,1 10,0 5,9 39,8 33.9 C o l o m b i a ? ? ? ? Costa Rica 2,6 0 28,5 19,0 4,0 26,3 26,5 14.9 D o m . Rep. 8,5 4,6 14,2 9.5 11.7 11,3 11,8 24.2 Ecuador 15,7 12.9 27,5 18,2 4.5 11,0 0,8 2,5 Guatemala 11,0 13.3 19.4 19,5 9,5 9,9 10,4 7,8 Honduras ? ? ? ? México 4,5 2.4 16,4 13,9 4.5 1.9 25,4 13,0 Nicaragua ? ? ? ? Panamá ? 7,9 20,7 18,5 15,1 17,9 10,8 24,1 Paraguay 13,8 13,3 12,1 12,7 3,5 4,3 18,3 14.8 Perú 14,5 11,2 23.6 16.2 5,5 5,1 1,8 0,1 Salvador 6,6 24,5 21,4 16,2 10,9 7,8 7,6 5.5 Uruguay 5,6 9,2 9,5 7,4 1,6 4,5 52,3 50.3 Venezuela 10,3 ? 18,6 ? 11.7 ? 9,2 ?
If m i l i t a r / budgets in developing countries w e r e simply capped, this would yield more than $10 billion per year for o t h e r needs.
If w e now compare spending on defence w i t h that on educa- t i o n , w e see that the f o r m e r is higher than the latter in cer- tain countries, such as El Salvador, where the defence budget is larger than expenditure on health and education combined.
Nevertheless, some countries have reduced their defence spending (Ecuador, Perú, Brazil, México).
If w e examine the way that the various budgets have evolved in the course of the last 20 years in the countries for which statistics are available, w e see that — i n addition t o the defence spending just discussed— the results are as follows.
As regards education, it appears that almost everywhere in the región the share of the state budget has fallen, t o a greater o r lesser extent.
Health spending has been more stable, although there has been a reduction in El Salvador, Chile and México, and a mas- sive increase in Costa Rica.
To assess the level of welfare, the expenditures on social pro- visions should also be considered: public housing, cleansing and sanitation, sickness and unemployment benefits, pensions, al- lowances for the handicapped and family income supplement, as well as environmental protection, etc.
Such expenditures rose only in the Dominican Republic and Panamá; everywhere else they fell, sometimes substantially, as in México and Brazil.
It should be noted, however, before examining the figures, that the various countries collect and present their statistics in different ways so that comparisons such as we have just made are not entirely reliable. Furthermore, in some in- stances, the prívate sector has a very important role, for ex- ample in health and education, and this is not included in the table.
Nonetheless, even w i t h o u t comparing one country w i t h an- other, the simple statement of the different percentages, coun- t r y by country, shows how priorities have changed over t i m e . In addition t o these data, it should be pointed out that there is another expenditure heading, labelled " o t h e r " , which ac-
62 counted for between 20 and 30 % of central government ex- pendltures In 1972 and which has since doubled (at least) in some countries such as Ecuador, Perú, Chile, México and Bra- zil. This covers among other things the interest charges.