Paraguay - Poverty and wealth

Paraguay has an extreme gap between the small upper class and the large lower class, and there has historically been virtually no social mobility. Paraguay has the most unequal distribution of land in the region. Less than 10 percent of the population owned and controlled over 75 percent of the nation's land in the late 1990s, leaving much of the large rural population landless and living in extreme poverty. In the mid-1990s, nearly half of the farmers in Paraguay did not own land, according to Ramón López and Alberto Valdés, writing for the World Bank. The upper 10 percent of the population accounts for 46.6 percent of income and consumption, and

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Paraguay 1,297 1,871 1,754 1,816 1,781
United States 19,364 21,529 23,200 25,363 29,683
Brazil 3,464 4,253 4,039 4,078 4,509
Uruguay 4,092 4,962 3,964 4,611 6,029
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

the upper 20 percent make up 62.4 percent of all income. The poorest 60 percent of the population earns less than 20 percent of the nation's income.

The extreme gap between the small upper class and the large lower class was widened by the clientelism of the Colorado Party during the last 50 years. During the 1960s, by selling most unused land to Colorado Party affiliates, the small elite class came to include a small, newly established agro-industrial elite class. These elites underpaid workers to maximize their own profits. Cotton and soybean producers (the elite landowners) continued to underpay peasant workers well into the 1980s, and the government kept labor unions weak and ineffective. Although the 1990s were a time of newly-developed strength for labor unions, the gap between the rich and the poor did not change significantly.

There are not enough schools or educational resources throughout the nation, but shortages are worst in poor, rural areas. Rural areas also have less effective health care available to them. Virtually all urban areas have access to safe water and good medical care, but only 15 percent of the rural population has access to safe drinking water and only 42 percent of the rural population has access to medical care. Despite these problems, it is important to note that Paraguay's government does subsidize education and health care. The government finances schools and makes teacher training courses available.

Distribution of Income or Consumption by Percentage
Share: Paraguay
Lowest 10% 0.7
Lowest 20% 2.3
Second 20% 5.9
Third 20% 10.7
Fourth 20% 18.7
Highest 20% 62.4
Highest 10% 46.6
Survey year: 1995
Note: This information refers to income shares by percentiles of the population and is ranked by per capita income.
SOURCE: 2000 World Development Indicators [CD-ROM].

Paraguay's Social Insurance Institute (SII) oversees the social security system. Some 9.5 percent of employees' own earnings, 16.5 percent of employers' earnings, and 1.5 percent of government funds go toward social security. The Institute offers pensions for old age, invalidity, maternity, sick leave, and on-the-job injury. The SII also runs its own hospitals and health clinics.

Though as a rule there is little socioeconomic mobility in Paraguay (especially in agriculture), the commercial city of Ciudad del Este is the exception. In Ciudad del Este, a man pushing handcarts can work for US$15 a day, save up enough capital to buy a small spot on the street sidewalk and a table to sell goods. Then he can save enough money to buy a van and gradually work his way up the economic ladder.

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Sep 1, 2011 @ 7:19 pm
A Land Tax system would ensure the landed upper class wealth was re-distributed without need for land siezure. If the percentage tax rate is gradually increased it can be done with minimal social disruption to the upper classes.

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