Combining data with political analysis

I just came across Duncan Green´s entry on inequality from a couple of years ago.  I like his argument that we need more on the politics of inequality reduction and his research project proposal (has he or his group advanced on it?  Does anybody knows?)  Yet one thing he does not acknowledge is the need to have more interaction between data and politics to make sure we are discussing real life.  His example of Brazil is paradigmatic in this case: Brazil in the 2000s would probably be a cae study in his inequality project (it has been a case study of inequality reduction in many other studies and books, including Why Nations Fail)... but maybe this would be a mistake.  I am afraid that unless we know more about the rich, we will know relatively little about inequality... but it is just too hard to get this information. What is the best way forward?

Is Costa Rica more unequal than El Salvador?

I am currently in the midst of a research project evaluating the long term determinants of inequality in the eighteen Latin American countries.  Because I am interested in COMPARATIVE historical processes and there are only eighteen countries, econometrics analysis is not particularly useful.  Instead, I will probably use qualitative comparative analysis (CQA) as an organizing devise.  This requires creating sets of countries closer to the very unequal and not very unequal categories (since we are studying Latin America all countries are very unequal).

Here it is where the problems begin.  The data is not totally consistent with what I think we know about income distribution in Latin America.  Following Gabriel Palma's work, I organize countries in two criteria: the level of the Palma ratio (relation between the top 10% and the bottom 40%) and the middle groups (deciles five to nine).  I establish cut-off points that are related to global patterns of distribution.

There are two main problems with this data: one about cut-off points that we can ignore for the moment and a more relevant one (where any feedback is most welcomed) having to do with the various of specific countries.  The place of El Salvador and Peru (and to some extend the Dominican Republic) is particularly surprising. 

In particular, compare Costa Rica with El Salvador: despite recent changes in both countries, can we really assume that Costa Rica is more unequal than El Salvador?  Where are El Salvador's fourteen families?

Of course, this is not a problem of my research alone--which is the most worrying bit.  How much should we value quantitative research on inequality that is based on such questionable data?  Are we really measuring INEQUALITY when considering income distribution based on household surveys? 

Inequality can only be reduced through violence... and implications for Latin America

Walter Scheidel wrote last year a really interesting book, The Great Leveler, which I am in the process of reading.  He argues that revolutions, wars and other forms of violence have historically been the way to significantly reduced inequality.  The argument has been used by the right to argue that there is not much we can do to reduce inequality.  In this interview, The Economist tries very hard to make Scheidel recognize exactly that.   Yet this is a silly argument for several reasons: (a) there are some exceptions to Scheidel´s rule; in particular, the Social-democratic social experiment in the Scandinavian countries begun before the Second World War and was only partly facilitated by it; (b) the fact that conflict helps inequality reduction does not mean that we cannot find more creative policy tools in the future; in fact (3) this is an alternative interpretation of the book: unless we don´t find ways to stop the current concentration of income at the top in the global economy, we may have to deal with significant conflict.

The book may also be quite significant for Latin Americanists and partly explain why inequality never went down as much in this region than others.  Latin America has historically been a relatively peaceful continent, particularly in the 20th century.  The World War and the Communist challenge affected it but less than to Europe.  And yet, it is also interesting than, as far as we know, the process of Independence replaced one elite by another without significantly reducing inequality.  Do we have good studies of why that was the case?