25/11/19: Rents, inequality and corruption in Peru

RENTS, INEQUALITY AND CORRUPTION: The country of the little brothers and little friends.

Efraín Gonzales de Olarte

One of the main causes of socio-economic inequality in Peru is the rentier origin of more than half of the national income. The owners of land, mines and oil and gas fields receive a rent, for the difference in their costs (which includes the profits) in relation to the prices they receive. For example, the cost of production of an ounce of gold is around $ 300 and the international price is $ 1,400, the difference is not due to productivity but to what is called differential rent. The series of monopolies and oligopolies in various public services offered by private companies also earn income, even if they are regulated. The owners of buildings, apartments, offices also receive an urban real estate income (rents), whatever their size. Territorially, there are an infinity of small and medium businesses whose income has a component of space rent. In sum, the income received is due to land ownership, real estate, the privileged position in the market or a special geographic location. Additionally, the neoliberal model has also become an ideological monopoly of how the economy and the state should be organized.

The problem is that in general, income is not connected with productivity but with property, therefore income depends on how much one has and not how productive it is. This generates that an inequality in the distribution of income, because the owners and monopolists receive high shares, which cannot be accessed by purely productive sectors such as industry in all its forms, nor by workers. One would be tempted to say that inequality is “structural” in Peru because we have an economy focused on rent and rentiers. This is the economic part of the Peruvian distributive problem.

The political part comes when to maintain property rights, the monopolistic position and the economic model, the “economic agents” try to secure their concessions, their monopolies and the neoliberal model, for which lobbies are created, political parties are financed and Candidates and, finally, Public officials and state authorities are corrupted, that is, everything is valid in order to maintain a certain ownership structure, a certain productive structure, the current economic model, in short to maintain the economic power. This is what has happened in Peru, apparently throughout its history since XVI century, but particularly today, and perhaps for the first time in a visible and documented manner. But the most remarkable thing is that “thanks” to the operations of Brazilian corrupting companies, it has been revealed that large Peruvian companies and their businessmen have tried to obtain income illegally and immorally through corruption and, at the same time, have infected the neoliberal model, which in addition to having equity failures and poor inclusion – light outlets in Chile and other countries – in Peru is contaminated by corruption. Therefore, the fight against corruption must be assumed as a national crusade and make the recovery of public and private morals the basis for maintaining democracy and correcting the economic model, which could change the course of the history of corruption. Hopefully, the Judiciary Power is investigating and they are close to issue sentences against all those who enriched themselves illegally and immorally at the expense of all

Peruvians. Lima, 22 – 11 – 2019


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