The Risks of Importing Piketty: Rich Latin-American families, Rigid Guidelines to Redistribute Wealth and Potential Collateral Effects”

HEREDIA MARIANA

Amsterdam

Congreso; Society for the Advance of Socioeconomics (SASE); 2022

Society for the Advance of Socioeconomics (SASE)

The works of Thomas Piketty constitute a turning point not only in the measurement of inequalities but in the planning of a social policy agenda towards the rich. After documenting the concentration of wealth in the top 1%, he developed a series of proposals for tax reform and international agreements to achieve them. These suggestions have been discussed and even adopted in different countries, some of them in Latin America as Argentina and Ecuador. Originally inspired by the study of Western Europe and the United States, these ideas may need adjustments when imported to late industrialized countries with specific social and institutional structures. The aim of this paper is to consider to what extent Piketty’s definition analyses are satisfactory to describe the highest classes in Latin-America and his recommendations are appropriate for the region’s tax systems and their ability to raise the contribution of the rich to public coffers Throughout a brief characterization of the highest classes in Argentina, Brazil, Chile and Mexico, this paper reveals the risks of importing Piketty with no criticism. First, using Forbes rankings, Word Inequality Database as well as Household Surveys, we show that social inequality is clearer in Latin-America when considering the top 10% than looking at the top 1%. Secondly, we demonstrate that the reproduction of Latin-American elites is determined more by geographical and institutional segregation than by the persistence of family fortunes. Finally, we consider how the importance of the informal economy, and the weakness of legal institutions may undermine taxing capacities, encourage evasion and exacerbate inequality.