Mexico: Income Inequality, Corruption, and Poverty

Introduction Survey

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The Continuous Cycle of Poverty in Mexico

There are countless reasons as to why poverty in Mexico is so bad. While many believe it has to do with just one certain thing, it is actually quite the opposite. Poverty in Mexico is most greatly influenced by several things: wealth inequality, corruption and most prominently, a profound lack of empathy on behalf of the richest 1%. Mexico’s wealthiest 1% own nearly half of all of Mexico’s monetary assets, and “the assets of just four multi millionaires make up 9 percent of the country’s GDP.” The rich continue to get richer, and the poor have no way of climbing up this ladder of economic inequality.

Why it Matters to Me

I find it very painful to live in San Pedro Garza Garcia, Monterrey, Nuevo Leon mostly because homes similar to the ones above are within walking distance to mansions such as the one pictured below. I completely despise the idea of such impoverished areas existing within the limits of one of the supposed “richest and most developed cities in all of Latin America.”

Local Issues

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Mayor of San Pedro Mauricio Fernandez (pictured above), claims that because it is one of the richest cities in all of Mexico, people feel that they are all important and therefore are free to do as they please, making it a nightmare to govern. Due to the widespread presence of large corporations such as Pepsico, Cemex, Pemex, and FEMSA, lobbying is a very common occurrence. Many of these large companies seek to influence the government not for power, but simply for a say in what the lowest, legal minimum wage is (which is currently $80.08 pesos for a days work). By making “large donations” to the parties of political leaders, businessmen have made their subtle, yet strong presence in politics, both at the state and city level. Upon doing this, these business moguls are equipped with politicians at their disposal.

Due to low wages, those belonging to the middle and lower classes cannot prosper economically, and the profits of business owners continue to grow exponentially.

The Root of the Problem

How is it that this problem exists? State/City wide corruption. The state in which I currently live in, as well as my city, have both unfortunately fell victim to this Mexican institutional paradigm.

Former Governor of Nuevo Leon Rodrigo Medina (pictured above), as well as his father, brother, and other political collaborators have had cases filed against them for the “Diversion of resources and the [illegal] acquisition of expensive properties in Mexico and abroad”, all done with a whopping 500 million pesos (26,315,789 USD) in state monetary resources. As with any other corrupt Mexican Politician, his only response —hence the singularity of ‘response’—to these public allegations was that “he will clarify everything in the coming future”.

However, this is not to say that the wrong doings of one man have accounted for the majority of the problems the state of Nuevo Leon faces; it moreover serves as a sort of profile that many Mexican Politicians fit.

The “Middle Class” and Poverty Rates

On a global scale, Mexico stands in 91st place, with a GDP per capita of $18,900 USD. What this means is that 53% of Mexico’s population is making just shy of $20,000 dollars per year, or about $1,600 dollars per month. The average size of a household is about 3.8 people, with income coming from only one person per family.

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Above: Typical Middle Class Neighborhood

The current President of Mexico, Enrique Pena Nieto, has made several desperate attempts to bring jobs to even the poorest of states within Mexico, yet with the 46.5% of Mexico’s people that have been living below the line of poverty for the past two years, change seems to be just out of reach. Nieto hopes that by opening the doors to more foreign investment, the amount of businesses will increase, thus creating more jobs for those in dire need of a way to make ends meet. Yet this has not been the case, as many foreign investors do not see potential in business based out of the poorest areas in Mexico, leading those investors right back to places similar to Monterrey, Nuevo Leon.

How Other Countries Handle Income Inequality and Poverty

The United States is ranked #34 in terms of overall economic inequality. Poverty rates are at a low 14.5%, and the average household makes about $50,000 USD a year.  The minimum wage is currently at $7.25 per hour, which translates to about $58 dollars per day of work. On the other hand, daily wages in Mexico are the equivalent to about $4.21. To put into perspective, working as a grass cutter is a minimum wage job in both the United States and in Mexico. However, the only difference is that a grass cutter in the US is making $53 USD more per day than one in Mexico.

To combat income inequality in the US, both federal and state governments have increased the minimum wage steadily in recent years, and have seen that “A higher minimum wage reduces the inequality of wages earned by workers.” Further, if the United States were to increase minimum wage to a mere $10 USD nationally, ” 4.6 million people out of poverty and add approximately $2 billion to the nation’s overall income…” therefore proving the existence of the positive correlation between higher minimum wages and low rates of poverty

The Answer

While many believe the answer to poverty lies within the realm of investment and trade, or a money “band-aid”, it all begins and ends with the people themselves and their perspective on equality. If we can encourage the population of both the super rich and of the super poor to bond, through means of creating awareness of this problem by having both communities advocate for social and economic equality by showing the detrimental effects of corruption on society, it will create a monumental impact that will completely reverse societies perspective of the poor. This in itself should generate a mutual feeling of respect between both groups of people, uniting them, and thus an unbreakable bond in between these two extremely different groups of people should begin to emerge. The poor lack a voice, and are stuck in the never ending cycle of poverty because they are looked down upon by those who are fortunate enough to be born into families with a lot of monetary resources at their disposal. By spreading awareness, we have the ability to show them that they are apart of society too, that they are important, and relevant, just as everyone else is.

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I ___________ , pledge to do what ever I can for the sake of preserving equality in settings both domestic and professional. I promise to never cheat, to never be corrupt, or to commit acts that could potentially damage to success of another person, regardless of the context of the situation.



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