A guest post by former CEPR intern Tara Ruttenberg.
Ecuador made international headlines this week, first for plaintiffs taking their fight to Argentina and Colombia to hold Chevron accountable for decades of toxic pollution, and secondly as a result of the government’s recent decision to tax bank profits as a way to increase state revenue for social spending on poverty alleviation. As Ecuador celebrated the fourth anniversary of its relatively new citizen’s constitution last month, news agencies and policy analysts have made note of the successes of the many changes taking place under President Correa, particularly related to social policies targeting poverty reduction through increased public social expenditure and cash transfers to the poor. These and other reforms embody Correa’s proclaimed commitment to 21st century socialism and an inverted juxtaposition of traditional power relations, placing people and the environment above the market economy and the formerly unbridled reign of the private sector. Ecuador’s social and economic policy platform and successful poverty reduction experience are a strong reflection of wider regional trends in countries governed by left-of-center leaders now nearly a decade into Latin America’s post-neoliberal era.
While analysts continue to draw due attention to Ecuador’s success in reducing poverty and improving socioeconomic indicators by balancing strong economic growth with policies geared toward greater income redistribution (see CEPR publication on Ecuador’s economy since 2007), many have neglected the wider paradigmatic framework within which Ecuador’s new constitution thrives; that is, the indigenous-born and politically articulated concept of ‘buen vivir’ (living well). Buen vivir as a social paradigm incorporated into Ecuador’s constitution seeks to “better the quality of life of the population, develop their capacities and potential; rely on an economic system that promotes equality through social and territorial redistribution of the benefits of development; ….establish a harmonious coexistence with nature… promote Latin American integration; and protect and promote cultural diversity” (Article 276 of the Constitution of the Republic of Ecuador). Refreshingly, we see Ecuadoran policies living up to these ambitious constitutional aims based on buen vivir, with Correa continuing to focus on income redistribution, as demonstrated by the most recent tax on banks.
Buen vivir is described theoretically as a synthesis of indigenous cultural wisdom and Western concepts of modernity, moving away from an obsession with progress and wealth accumulation, toward a more holistic, meaningful and practical existence of living in harmony with one another and with the natural environment through cooperation and community solidarity (Houtart, 2011; Gudynas & Acosta, 2011; Boff, 2009; Choquehuanca, 2010; Hidalgo Flor, 2011). Indigenous movements in both Ecuador and Bolivia have succeeded in articulating buen vivir politically, with both countries not only adopting the language of buen vivir in their new constitutions, but also as manifest in their national development plans with the explicit goal of implementing policies to support the realization of buen vivir. Similarly, as part of the post-neoliberal experience in Latin America, buen vivir as a development goal has become institutionalized in Ecuador with social policies geared toward helping individuals and communities realize their potential for living well. Social investments in healthcare, education, employment and social protection schemes are representative of the ways in which Ecuador has demonstrated its commitment to buen vivir as an alternative development strategy to improve living standards and quality of life throughout the country.
Moreover, the utility of translating the abstract concept of buen vivir into practical socioeconomic development solutions is being put to the test by Ecuador’s national Buen Vivir development plan, which now nearly six years old includes a twelve-point platform for meeting human development objectives. These objectives include reducing poverty and inequality, strengthening human capacities and potential, improving the population’s quality of life and education, and building and strengthening public spaces. With poverty dropping from 37.6 percent in 2006 to 25.4 percent in June of 2012 and child labor decreasing from 16.9 percent to 5.8 percent over the same period, in conjunction with education spending increasing from $90 million to $763 million, it should come as no surprise that 53 percent of Ecuadorans believe that the State works in favor of redistributive justice, the highest ranking in Latin America. Similarly, satisfaction with quality of life among the poorest quintile in Ecuador grew from 15 percent in 2006 to 40 percent in 2012, highlighting that improvements in poverty reduction have been both quantitative and qualitative in nature.
Contextualizing Ecuador’s new tax on banks within the larger framework of the national Buen Vivir development plan, the additional $200 to $300 million per year in revenues to be raised from this tax will have a direct and positive impact on the poor in terms of quality of life, increasing their monthly cash transfer allowance and contributing to the wider objectives of income redistribution in a still highly income-unequal socioeconomic environment.