The Multidimensionality of Inequalities. Interview with Enrique Provencio

Enrique Provencio
Picture: Diana Maldonado, 2024

INCOME INEQUALITY, POWER INEQUALITY
UNAM Internacional: Is economic inequality still considered the root of other forms of inequality? Do income disparities determine other forms of exclusion?
Enrique Provencio: We increasingly talk of inequalities in plural because it is clear that economic inequalities do not exist in isolation. Over time, the mainly economic view, which considered economic inequality as the origin of all other inequalities, has given way to a more balanced perspective that recognizes that economic inequality interacts with other inequalities, primarily those of power, and that economic inequality is often perpetuated by the concentration of power and by the types of policies that maintain it. Economic inequalities bring with them other inequalities, mainly educational inequalities, in access to public services, and in employment and income opportunities, and these and other inequalities are reproduced over time. It can be said that economic inequalities, by interacting with inequalities of power, generate dynamics that, over time, reduce opportunities for social mobility.

However, economic inequalities are not just income inequalities; they are, first and foremost, wealth inequalities, asset inequalities, which are more difficult to reduce because wealth is passed down from generation to generation; it tends to be reproduced through inheritance. The most relevant point is how to break these dynamics, so that income and wealth are redistributed, and opportunities for social mobility and access to better jobs and incomes are improved. This is where the importance of reducing educational and health inequalities lies, above all.

UI: What are we referring to when we talk about power inequalities?
EP: When we talk about economic inequalities, we tend to think they are inherent, that there is a certain distribution of wealth that gives some people more opportunities to study, better jobs, and higher earnings. Behind this distribution, however, lies a highly unequal distribution of access to power, that is, collective access to decision-making. It is the groups in power who perpetuate, or even change, the direction of economic decisions. I’ll give an example that might help illustrate this: in Mexico, from 1975 to 2000, the minimum wage was drastically reduced; it lost 75 percent of its purchasing power. Then, from 2000 to 2016, it remained stable, and from 2017 onward, it began to increase. What was happening? It wasn’t a historical accident, but rather, from the perspective of economic policy, there was a distortion of interests: the working class, the lowest-income sectors, were sacrificed to control inflation.

It was actually a problem of access to decision-making, such that the interests of lower-income sectors were underrepresented in economic policy. The minimum wage example is similar to others: job training, tax collection, and the allocation of public spending. What happens overall is that the representation of lower-income sectors or vulnerable groups, such as women, in decision-making is an inequality of power.

WHEN GROUPS WITH HIGH ECONOMIC POWER HAVE A DISPROPORTIONATE INFLUENCE ON DECISION-MAKING, UNEQUAL MECHANISMS TEND TO BE REPRODUCED IN ECONOMIC DECISIONS

UI: Could we say that in an authoritarian regime power inequalities are more likely to exist?
EP: In fact, this is precisely what has happened. In an authoritarian regime, the capacity to represent the interests of the majority is not reflected in decision-making. This also means that when groups with high economic power have a disproportionate influence on decision-making, unequal mechanisms tend to be reproduced in economic decisions. This has occurred at different times of history in Mexico, the United States, and many other countries. One of the key aspects in the pursuit of more egalitarian societies, in the reduction of inequalities, is the democratization of power and the establishment of mechanisms that allow for better representation of the interests of the most marginalized social groups. This means having checks and balances so that groups with high economic power do not have a disproportionate influence on decisions.

Picture: PUED

UI: For many years the minimum wage, although losing purchasing power, continued to be used to calculate fines and other things. Then this parallel was removed, and it became possible to increase it, which contributed to a decrease in inequality…
EP: One of the key factors in reducing income inequality in Mexico from 2016 to the present has been the possibility of improvements in the minimum wage. The increase in the purchasing power of the minimum wage began precisely with the measure known as “de-indexation,” which consisted of eliminating the minimum wage as a benchmark for more than 700 related items—rent, fines, and others. The argument was that the minimum wage could not be increased because everything else would increase as well, so this benchmark had to be removed. Through this reform, the idea that increasing the minimum wage would increase inflation or cause a loss of competitiveness was eradicated. Indeed, the increase in the minimum wage starting in 2017, but especially in 2019, is what prompted increases in other wages, and thanks to this increase, income distribution in Mexico has improved. This has resulted in an increase in the share of employee compensation in national disposable income. Thanks to this increase in wages, driven by the minimum wage and income redistribution, poverty has been reduced; that is how significant it is. However, we are talking about a change in income distribution, not in wealth distribution.

ONE PERCENT OF THE POPULATION MAY BE CONCENTRATING AROUND 30 TO 35 PERCENT OF THE NATIONAL WEALTH

UI: Has this improvement also occurred in access to education and health services?
EP: In terms of distribution, income increases improve people’s purchasing power: they buy more goods and services. But if this increase in income isn’t accompanied by improved access to education and healthcare, and thirdly, social security, then, in the long run, these people’s opportunities to increase their capacity to participate in society—something that is feasible when education improves—do not improve. Generally, improvements in education, health, and nutrition go hand in hand. Why is this fundamental? Because improvements in education and health enable generational change, as happened in Mexico starting in the 1940s and 1950s, when better access to education—first basic, then secondary and higher—changed the generational horizon and allowed the next generation to naturally access higher levels of education. But this change stalled in the 1980s and 1990s. School enrollment continued to grow, obviously, but so did the population.

Ilustration: Monserrat García Silva

The increase in income triggered by the minimum wage hike has indeed contributed decisively to a more equitable distribution of income and a reduction in income poverty. However, we still need to take the next step: improved spending and investment in health, education, and social security to ensure that this improved distribution is sustained across generations and that inequalities are reduced more structurally.


UI: What role does the high concentration of wealth in the hands of a few play in this scenario? Doesn’t it have a significant impact if we are growing, if we are overcoming poverty?
EP: The difference between wealth distribution and income distribution is clear. The Gini index [see box on p. XX] in Mexico ranges between 0.4 and 0.45, depending on the indicator used, but the wealth distribution index ranges between 0.7 and 0.75. This difference is particularly important because, at the household level, one percent of the population may be concentrating around 30 to 35 percent of the national wealth. That one percent in Mexico is equivalent to approximately 380 thousand families. Within that one percent, 0.01 percent may be concentrating more than 20 percent of the national wealth. Current forms of wealth production, highly concentrated in high-technology sectors, are causing a small group of these companies and shareholders to generate disproportionately high wealth and wield decisive power in how their sector’s activities are regulated. Groups or sectors with greater participation in production and heritage have a very high capacity for lobbying and influencing regulation.

The disputes currently unfolding between large companies in the digital economy and Europe, which is attempting to regulate them, are demonstrating this pattern. Previously, this occurred with oil companies and large, powerful automotive firms. This capacity to influence national or regional legislation, in the case of Europe, is what significantly alters the balance of power. The share of the top one or ten percent of income earners or wealth holders has been increasing considerably in the fastest-growing economies in recent times, particularly in China and India, where a phenomenon of extremely high-income concentration has emerged, but this is happening in all countries.
THE ROLE OF THE UNIVERSITY
UI: What role does universities, particularly UNAM, play in reducing inequalities?
EP: In general terms, there is agreement that access to education at all levels, and particularly to higher education, plays a fundamental role in reducing inequalities. During the period when inequalities decreased globally, between the end of World War II and the early 1980s, research consensus centered around this point. Schooling and access to education, first basic and then higher, played a crucial role in increasing household incomes and reducing inequalities.

This effect was mitigated because the crises of the 1980s and 1990s meant that, faced with job losses, the impact of higher education was not decisive. Within this context, it can be said that the role played by greater access to higher education, and, particularly, the role played by UNAM was crucial in facilitating access to secondary and, above all, higher education for lower-income sectors. This not only increased the capacity to generate higher-quality jobs and thus facilitated social mobility for the next generation but also led to increased national productivity and fostered economic and employment growth, thanks to the training of highly skilled professionals and employees provided by UNAM.

Over the past three decades, UNAM’s role has become even more important because most of its students come from lower-income sectors, as the supply of private higher education with high tuition fees has increased. UNAM’s contribution, both in the second half of the 20^th century, when its enrollment grew and it increasingly provided more professionals to society, and in the period after the 1980s, when the majority of students increasingly came from lower-income sectors, has been crucial because it has integrated a critical element into national social mobility and the improvement of income distribution. This could be even greater with a larger budget for higher education, but that is no longer a matter for the university itself, but rather for public finances.

UNAM’S CONTRIBUTION HAS BEEN CRUCIAL BECAUSE IT HAS INTEGRATED A CRITICAL ELEMENT INTO NATIONAL SOCIAL MOBILITY AND THE IMPROVEMENT OF INCOME DISTRIBUTION

REGIONAL INEQUALITIES
UI: Regarding regional inequalities, both within the national territory and in continental and global contexts, how can we counteract the development differences we find in the national north and south and in the global north and south?
EP: Let’s begin with the global perspective. From World War II onward, when the United Nations system was established, the promotion of development became an aspiration for global equity. The great aspiration of development was to reduce the gaps between rich and poor countries, and to some extent this was being achieved until the crises of the 1980s. Since then, only a few countries have managed to break through the barriers and catch up with wealthy nations. 
The emblematic cases were Japan—which began to achieve this in the 1960s—South Korea in the 1980s, and not many others.

Starting with the crises of the 1980s and then with the onset of globalization around 1990-1992, most developing countries began to experience slower growth and fall behind developed countries. There was one major exception: China, because its rapid growth (and later that of India and, at one time, Brazil as well) narrowed some of the gaps in global averages. However, when viewed regionally, things have not gone well. Latin America now has a wider gap with wealthy countries, as do Africa and some Asian nations. India and China, with their large populations and rapid growth rates, have been closing the gap with wealthier nations. The situation varies considerably by region, but the overall picture is this: the gaps between rich and poor countries have not narrowed, except for the effect of the rapid growth in China and India.

Something similar was happening in Mexico: until 1980, the poorest states were gradually catching up with the wealthiest, but the crisis of the lost decade—the 1980s—slowed and even reversed this trend. Then, during the North American Free Trade Agreement (NAFTA) era, the gaps between north and south widened. There are many nuances involved, but what I mean by this is that the period of high development in Mexico did foster regional convergence, a reduction in the gaps between states, although the states, especially those on the southern Pacific coast, particularly Chiapas, Oaxaca, and Guerrero, but also Puebla and parts of Michoacán, remained the poorest. With NAFTA, the economic dynamics led to greater growth in the states most closely linked to exports, widening the gap with the poorer states. The northern border states, plus Aguascalientes, San Luis Potosí, Querétaro, and Guanajuato, joined the export wave.

The dynamics of the last three decades have maintained or widened the gaps between exporting states and states with more traditional economies. There are two exceptions: Quintana Roo and Baja California Sur have been improving their position thanks to the dynamism of tourism. The period of high growth has not benefited states with more traditional economies: Chiapas, Oaxaca, Guerrero, parts of Michoacán, and also states like Tlaxcala, Morelos, and others. Regional policies are needed to reduce inequalities and facilitate greater development in the poorest states. The data available in 2025 on poverty in Mexico reveals a geography of poverty where the most disadvantaged states continue to be the traditional ones.

UI: Which are, as well, the states with the largest indigenous populations.
EP: This means that inequalities regarding ethnic groups remain very marked, which points to a geographical-ethnic inequality that requires policies much more focused on solving the deficiencies in the states and municipalities with a greater presence of indigenous groups.

UI: When we talk about countries like India, China, and Brazil—the BRICS—although their economies have grown and caught up with the world’s major economies, the internal situation is one of great inequality.
EP: Definitely. Inequality within China has grown enormously since the boom years. To give you an idea, the richest 10 percent of Chinese people have gone from holding just over 40 percent of the income to nearly 73 percent; inequality within China has increased significantly. The same thing is currently happening in India: internal inequalities are growing. Not so much in Brazil because during the 20th century they had highly active social policies, although it remains one of the countries with the worst income distribution. China and India, and to some extent Indonesia, are having an increasingly larger share of the global economy, but internally they have experienced a significant increase in economic inequality.
INEQUALITIES AND ENVIRONMENTAL CRISIS
UI: From the perspective of development studies, given the environmental crisis we are experiencing, is there still time to reverse the causes of global warming and climate change? Are new investment trends in large data centers and resource use for the digital economy jeopardizing the possibility of sustainable development?
EP: To link this to the issue of inequality, there is increasing information about the profound environmental inequality that exists in terms of the generation of greenhouse gas emissions worldwide. There is definitely both, an unequal distribution of emissions and a very unequal distribution of the impacts of climate change, and this has significant political implications. The principle of common but differentiated responsibilities, which governs the climate change convention, implies that the greatest effort should be made in countries that still have the highest per capita greenhouse gas emissions. This is a point that is indeed stipulated in international law, but in practice, it is not being implemented because financing for emissions mitigation in poor countries is not being provided. The Paris Agreement established a commitment that more developed countries would first finance mitigation efforts in poorer countries, but this has never materialized, even though the urgency of doing so has increased since then. More and more resources are needed, but funding is lacking, and this is a crucial factor in inequality.

Most of the impacts of climate change are occurring in poor countries that lack the capacity to respond. Countries with higher per capita emissions are not providing the necessary funding, while countries with lower emissions are more vulnerable and are bearing the brunt of the impacts and damages caused by climate change. This results in a profound global climate injustice.

Regarding the Sustainable Development Goals (SDGs), according to the latest United Nations assessments, there is a significant lag compared to the expectations of 2015. On average, only 20 percent of the 2030 targets are on track to be achieved globally. Of the remaining 80 percent, half are on a very uncertain and unstable trajectory, but progress could still accelerate and be achieved in the remaining period. The other half of the targets show a setback in most African countries, parts of Latin America and the Caribbean, and some Asian countries. The overall trajectory in achieving the SDGs is highly unsatisfactory.

However, when viewed by goals and by region, progress varies considerably. The main advances are being made in three goals: 5 (gender equality), 7 (clean and renewable energy), and 9 (infrastructure). There is stagnation, particularly in education (SDG ₄), water (SDG ₆), sustainable production patterns (SDG ₁₂, with the whole issue of waste), but also in climate action (SDG ₁₃) and biodiversity (SDGs ₁₄ and ₁₅).

What is the outlook for 2030? It’s the final stretch, the last five years of the agenda; no major changes are expected, mainly due to the weakening of the multilateral system of international negotiations and the weakening of United Nations organizations, from which the United States is withdrawing, and which are losing funding capacity. But also, because the economic outlook for 2030 is very uncertain. The way in which the United States has jeopardized the multilateral trading system is hindering the economic prospects of many countries, and therefore, although the UN will almost certainly reaffirm the 2030 Agenda, in this highly uncertain context, negotiations for a new round of goals and a new development agenda will begin very soon—probably by 2027 or 2028.

Two conclusions: we must not lower our attention and urgency to 2030, with the new round of negotiations, because it will also be—and this is the second conclusion—in a more uncertain international environment such as the one that the United States, but also Russia and other countries are causing.

WHAT WE ARE CURRENTLY WITNESSING IN THE WORLD IS A GROWING DETERIORATION OF DEMOCRATIC CONDITIONS

THE STEPS TO FOLLOW
UI: What should the government be doing to reduce inequality?
EP: The information available for the last eight years, which is comparable information, tells us that in Mexico we are experiencing a reduction in income inequality, and that is a transcendental change, not only because it has allowed us to reduce poverty, but because it has been based on an improvement in the income of the population triggered by the minimum wage, as we mentioned before.

Going forward, in my opinion, there are two key issues: the first is that we need to place greater emphasis on improving and reducing the social deprivations experienced by most of the population. This means seeking more effective access to public social services related to the fulfillment of rights to education, health, social security, housing with all its services (water, sanitation, and others), and a healthy environment, which is not adequately measured in poverty assessments. We also need to foster greater social cohesion, which we are not measuring well either. That is the first aspect: emphasizing improvements in effective access to quality services and the fulfillment of these and other rights.

The second point is that we need to place more emphasis on increasing income and fulfilling rights, and therefore on effective access to quality public services in the poorest municipalities and states in the country, and particularly in indigenous and Afro-descendant groups, which can be identified much better with current information.

We won’t have complete data on municipal poverty until 2026, but what we already know from 2020 (from the previous measurement) allows us to say that we can identify where we need to improve our efforts. By focusing on the second point—the most disadvantaged states and municipalities, and particularly on ethnic groups—we would also be addressing regional inequalities in Mexico, which should be a priority: reducing the gaps between the most dynamic states with the best conditions and development and the most disadvantaged states.

The emphasis on these two points—more work in the service sector and therefore the fulfillment of rights, and attention to the most disadvantaged states and municipalities—must also be viewed within the framework of the near future, seeking to maintain income improvements, particularly through the creation of formal and decent jobs. There is no doubt that the improvement in income has already yielded results, but it must be sustained; it is not yet enough. The critical aspect will be improving employment for those working informally, as they are the poorest.

THERE CAN BE NO DEVELOPMENT WITHOUT REDUCING INEQUALITIES AND IMPROVING DEMOCRATIC CONDITIONS

The biggest shortcoming in measuring poverty is the lack of access to social security; that’s where the problem lies. What will happen in the coming years, given the less-than-ideal economic outlook? We need to take better care of formal employment because what’s happening right now, in 2025, is that informal employment is growing due to insufficient job creation. But informal employment, by definition, offers low wages and no social security. In the coming years, to prevent a reversal of the progress made in poverty reduction, we need to improve the economy, not through growth per se, but through a quality economy focused on decent jobs with social security. Advances in health, education, and social security will allow us to maintain the progress we’ve been seeing.

It should be added that the root of the improvement in income distribution in Mexico in recent years represents a five-percentage point increase in wage earners’ compensation as a share of national income. That has been the reason. Does it produce an improvement in wealth distribution? No, perhaps not. I say “perhaps” because it is possible that there has been some improvement, but we don’t know for sure.

Throughout the 21^st century, one of the most debated issues worldwide has been the extremely high concentration of income, particularly the control of the wealthiest one percent. Generally speaking, the argument has been that, especially since the 2008-2009 crisis, dissatisfaction with income distribution has been behind many of the social emergencies and urgent social needs of the last 15 years. A particularly important development is that the causal relationship—which in the past was expected to lead to better distribution through improved development—has been reversed. Today, the prevailing idea is that we need to simultaneously improve distribution and development because improved distribution not only allows for greater economic activity but also creates better conditions for democracy.

What we are currently witnessing in the world is a growing deterioration of democratic conditions. All indicators show an increasing number of autocratic countries, countries with hybrid political systems, or countries that have ceased to meet the classic elements of a democracy: separation of powers, transparency, checks and balances, freedom of the press, and respect for human rights. In the classical era of development, it was said that democratic progress was a sine qua non condition for development, that development could not be understood without democratic improvement. Today, we can say that there can be no development without reducing inequalities and improving democratic conditions. Distributive improvements facilitate the creation of conditions for development and democracy, and therefore, we should not expect distributive improvement to be a byproduct; it must be part of the objectives. All of this is happening under complex conditions because, at the same time, we must address the climate crisis and improve human security and public safety in our countries.

Fortunately, in Mexico we are seeing an improvement in income distribution. This needs to be complemented by improvements in education, health, and social security, above all. For that, we need to strengthen the Mexican State’s fiscal capacity. States and their governments are more effective at redistribution when they achieve redistribution after taxes. In Mexico, we are not achieving that; that is, the distribution before taxes is almost the same as the distribution after taxes because tax collection in Mexico is very low. We will have a structural change when we achieve redistribution after taxes through greater investment in public services.


UI: This doesn’t mean raising taxes, does it?
EP: It means at least three things. First, spending better: that the resources available to the federal, state, and municipal governments be invested where they yield the best results in terms of social improvement and mobility. Second: for that, it’s necessary to reduce tax evasion: improve tax collection efficiency and end tax evasion impunity, in which Mexico has made significant progress since 2019. But—third—it also means greater tax progressivity; that is, we need to look at it from the perspective of spending, revenue, and progressivity. In Mexico, we don’t yet have good tax progressivity. For example, if someone earns 250 thousand pesos and starts paying an income tax rate of 35 percent, they are paying the same rate as someone earning 10 million pesos a month; that’s where a change is needed. So far, the Mexican government has been successful in improving its revenue collection through efficiency measures and reducing evasion, but that will reach its limit sooner or later with the current tax rates. That’s why we haven’t managed to increase our tax revenue beyond half of what OECD countries have. Looking ahead, it will be crucial for us to become a society that actually pays taxes in order to fund public services.

UI: Is it possible to think about a universal basic income?
EP: Without explicitly calling it that, we have been making progress toward a basic income. The universal pension for senior citizens aged 65 and over, the new support provided to women aged 60 to 65, and the expansion of “bienestar” (welfare) scholarships have all established a minimum income level. And the increase in the minimum wage has boosted the income of those without formal contracts, those working in the informal sector: the minimum wage is also benefiting informal workers. So, in practice, a step in that direction has already been taken. Most importantly, what was expected to be achieved through a basic income is being achieved through other means: poverty reduction.

Nevertheless, we still have very high levels of poverty, especially in terms of poverty due to social deprivation. Let’s not forget that. We still have, for example, 44 million people without access to healthcare.

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