Latin America's Historic Opportunity to Achieve a Shared Society

IN THE PAST TWO DECADES, Latin America has gone through a major transformation. You could even call it a renaissance. This renaissance could continue for many decades, transforming most Latin American countries into highly developed, socially more equal and deeply democratic societies. In these societies, today's poor and lower middle classes would be full participants in vibrant, socially progressive, diverse national cultures, both part of and very influential in shaping the global knowledge economy. Yet, there is no assurance that the renaissance will continue. Latin America is at a crucial moment. The enormous economic and political progress being made could be halted by social strife. Economic growth rates could slow, and democracy could deteriorate into well-known forms of populist caudillismo.

I have been an active participant in Latin America's renaissance, and in my Andean homeland, Peru, I played a part in helping to make it happen. I am proud of that and am optimistic that it can be the beginning of a long cycle of Latin American development.

I am writing this book because I believe Latin America is at a crossroads. Hard work, planning, and serendipity have led us to a time and place where we have a historic opportunity to make a giant leap forward. I believe that by 2050, we could be a region that leads the world in human development, economic development, and equity of opportunity. We could be a region without poverty, with low levels of inequality, with a diverse economy based on the minds of our people rather than commodities—a region enjoying sustainable development based on social and economic responsibility and technological innovation.

MY VISION FOR A SHARED SOCIETY

My vision is of a Latin America that is an inclusive, shared society—economically, socially, and politically. Recent research by the World Bankand others suggests that shared societies enjoy considerably higher economic growth. If we understand economic well-being to be a combination of sustained economic growth with equitable distribution of its gains for all, then shared societies are more likely to achieve it. Shared societies also create a virtuous and self-reinforcing cycle that generates more economic dividends by ensuring that everyone shares (and reinvests) the gains from economic growth. Shared societies' economies also have reduced costs related to intersocietal tensions, like law enforcement, security, and the repair of damage caused by violence or protests.

I am a member of the Club de Madrid, a nonprofit organization of over 90 former leaders of democratic countries. The Club de Madrid has led the way in pushing for the creation of global and local shared societies through the shared societies project. I believe that if we actively work to construct a shared society, our vision for Latin America's future will be achieved. By our Club de Madrid definition:

A "shared society" is a socially cohesive society. It is stable, safe. It is where all those living there feel at home. It respects everyone's dignity and human rights, while providing every individual with equal opportunity. It is tolerant. It respects diversity. A shared society is constructed and nurtured through strong political leadership.

A number of basic principles are essential for building shared societies and critical parts of the vision we put forward in this book. They include:

• Respect for the dignity of every individual.

• Equality and fairness. True equality and fairness do not really exist where there is still discrimination, marginalization, or a lack of opportunity for all.

• Respect for human rights and the rule of law. This means that political leaders, business owners, workers, field laborers, and all members of society alike must adhere to the rule of law.

• Democracy. I believe that strong, functioning democracies enable people to overcome their own self-interest and work toward the benefit of all. In true democracies, individuals can express their aspirations and needs, while simultaneously building social cohesion.

It should be evident by now that I am not concerned only with economic growth. Economic growth is a means to an end. Economic growth alone is not sufficient to improve people's well-being, to give equal opportunity for all, or to ensure the possibility of future growth and stability. In my vision of a shared society, Latin Americans would enjoy the benefits of economic growth that are created from focusing on sustainable development and investing in the minds and health of our people and societies to ensure equal opportunities for all.

We would have evolved from being dependent on the export of raw materials to being exporters of knowledge-based products and services. With healthy citizens who are well versed in science, technology, and innovation through a quality education, our economy will be strong, resilient, and less vulnerable to exogenous shocks.

This would be a Latin America in which a child's future does not depend on her gender, her family's income, where she lives, what language she speaks at home, or the color of her skin or the shape of her nose.

We would be aware of the incredible resources we are blessed with in the cultural diversity of our people and encourage this diversity because we know it will inspire new and unique perspectives on our challenges and spark creativity in the development of solutions. Latin America is a cradle to ancestral, millenary peoples and can brag of a rare explosion of cultural diversity that manifests itself in the over 400 different indigenous peoples who survive and thrive there despite the dramatic pulse of extermination brought about by the Spanish conquistadores (and their diseases) in the sixteenth century. This compendium of diverse cultures represents approximately 7 percent of the total population of the subcontinent and 1.6 percent of the global population. Such an amalgamation of peoples constitutes a disproportionately high grouping of cultures in comparison with other parts of the world and is reflected in the existence of some 600 different languages, hailing from about 34 uniquely distinct linguistic families. This in turn allows for an equally impressive and vast constellation of cultural, ideological, and social perspectives that without a doubt are of singular global relevance, both qualitatively and quantitatively.

We must ensure that all citizens have the opportunity to develop the capabilities they need to succeed in the life of their choosing. To do this, we must invest in the health and minds of our people. We must ensure equitable and universal access to basic services like water, sanitation, and electricity; health care services; and quality education. Without basic utilities or health services, children cannot develop to their full potential physically or mentally.

Providing equitable and universal access to quality education is nonnegotiable. Education can set you free. (It set me free.) Thanks to education, I never had to live in poverty. While we have made great strides in providing equal access to education, our educational quality is low across the board, and, in addition, it is inequitably distributed. Education frees us from "the noises of the stomachs and the noises of the streets" because education helps individuals become active, productive, engaged members of our society and our economy. Quality education is an essential part of a shared society, and in my vision, by midcentury we will have developed a high-quality school system that serves all of our children. Commodity prices might drop tomorrow, but what we have invested in our children's minds can never be taken away.

This would be a Latin America that is conscious of how our decisions about growth and development affect our environmental and social sustainability. We would be a region fully aware of climate change, and we would make active decisions to reduce or offset our contribution to it. We have been blessed—or cursed, depending on how you look at it—with bountiful natural resources. I say possibly cursed because as a result of our easy access to revenues through our natural resources, we have tended to ignore the need to invest in our people. We now know that in the long term the knowledge and capabilities of our citizens will be more important to the health of our society than natural resources, especially if we continue to deplete the natural wealth from our lands. But natural resources can also provide the funding we need to invest in our people. By midcentury we will be striking a balance between protecting our lands and resources and investing in our people.

We would be a region in which the money we spend on weapons is inversely related to the investment in health care and education. As we become more integrated, our enemies would no longer be at our borders or frontiers but in the midst of our society; these enemies would be poverty, inequality, discrimination, and exclusion. In 2009, we spent $48 billion on weapons. Just imagine what we could do with $48 billion invested in the minds and health of our people! I believed this should be a goal when I was president of Peru, and I practiced what I preached: on my first day in Congress, I reduced military expenditures by 25 percent and reallocated the funds to health care. I believe this change is even more important today.

Real human security—economic and physical—will not come from buying more guns. It will come from building shared societies in which social cohesion is strong, in which everyone feels that they are a part of the community, and in which each individual feels responsible to his or her fellow community members.

We would be a Latin America that accomplishes all of this through deeply democratic institutions. We would spend time and energy building institutions that have the capacity to deliver real results. Our high-quality educational system would feed a vibrant, informed, deliberative democracy—a democracy that produces a concrete, measurable, tangible, and powerful sense of well-being and identity for all members of our diverse societies.

But to do this, we need to commit ourselves. Many would say that we do not need to change, that our current course is good enough. It is true that today's economic development is reaping some benefits: I am proud that we have reduced poverty and that we are the only continent to have reduced income inequality since 2000. We have done a better job of getting our economic house in order (the latest economic crisis was not driven by us, and we were less affected by it than other regions). However, we still live in the most unequal region in the world. And, although we have made progress, we still face huge challenges in our efforts to provide basic services, health services, and a quality education to all of our children. Tens of millions of our children are denied the opportunity most important to all humans: the chance to develop the capabilities they need to be proactive, productive members of their society.

So, alternatively, we can make the effort to take a sharp turn and a giant leap. We can begin to focus on actively creating shared societies and establishing positive, self-reinforcing cycles of economic growth, equity, and democracy that will nourish healthy and productive individuals, societies, and nations. I believe if we take this leap, by 2050, we will have eliminated poverty, reduced inequality, and provided equitable access to basic services, health, and education to all of its citizens. In this vision, which I believe is achievable if we act now, Latin America will have developed a diverse economy that is based on the well-educated and creative minds of its people and that plays a crucial role on the world stage. In this vision, Latin America will also share the benefits and profits of its advanced economy more equitably, incorporating the high fraction of Latin Americans now living in poverty into a vibrant and expanding middle class.

Latin America today has an enormous and unique opportunity. No other region has our abundance of natural resources and macroeconomic flexibility, combined with high levels of national language homogeneity and cultural and historical commonalities. All this gives us the ability to integrate ourselves in terms of infrastructure and trade and to develop comparative and competitive advantages that enable us to compete in the global economy. We are also fortunate to be well positioned geographically to collaborate with the fastest-growing region in the world: the Asia-Pacific rim. If we make this leap, Latin America will be a region that stands on its own feet. We will have learned from our own mistakes and cultivated independence, health, and knowledge at the individual and community levels, which will lead to economic independence, growth, and a horizontal relationship power-wise with the rest of the world at the national and regional levels.

With the right set of policies and politics, I am sure that Latin America will be an economic powerhouse by the middle of this century. The great mass of Latin Americans can attain the economic and personal security now enjoyed only in the highly developed countries. I want to underline the beginning of that last sentence: with the right set of policies and politics. Accomplishing the bright future that I believe is possible for the people of the region requires real discipline and willingness by governments and private businesses to think long term. As I explain throughout this book, despite the impression given by political bickering, we already know what will work. We also know what has to be done. Getting it done is the hard part, and that is where politics comes in.

THE STAGE IS SET

Beginning in the late 1980s and early 1990s, Latin American countries implemented national development strategies based on economic reform and democratic governance. In the 2000s, these reforms helped the region attain sustained economic growth of almost 4.5 percent per year since 2003. With hardly a ripple, Latin American economies just kept expanding through the economic crisis of 2008–2009. Two of the big economies, Argentina and Peru, have had much higher annual growth rates of about 7 to 7.5 percent.

Achieving these levels of economic expansion has opened up tremendous opportunities for changing Latin Americans' lives and for further strengthening democracy in the region. Declining population growth has also helped. Population growth in Latin America has dropped from 2 percent annually in the 1980s to just over 1 percent in the past five years. This means that if economic growth were distributed equally over all income groups, the average Latin American would have seen his or her purchasing power increased by 25 percent in eight short years. In my country, Peru, the economic growth I helped get underway in the early 2000s has increased average per capita purchasing power since 2001 by about 70 percent.

The sustained nature of this growth has had a major impact on poverty reduction, at least in terms of how many people earn less than $2 per day, which is the way international agencies measure poverty, or $1 per day, which is the way these agencies measure extreme poverty. According to the Economic Commission for Latin America and the Caribbean (ECLAC), based on these measures, the percentage of people living under the poverty line decreased from 42 to 29 percent in 2000–2011, and those in extreme poverty decreased from 18 to 12 percent. The good news is that Brazil has reduced its poverty rate to 20 percent, Chile to only 11 percent, and Argentina and Uruguay to about 5 percent. Thanks to the high economic growth rate in Peru over the past decade, the poverty rate dropped from more than 50 percent to 25 percent, and extreme poverty from 24 to just 6 percent. The rates in Peru are still high, but the decline is a tribute to what sustained, rapid economic growth can accomplish, at least in terms of this measure of poverty.