Banking and taxes
The banking system in Colombia disproportionately discriminates against the middle and lower classes. Colombia's inflation rate in 2015 was around 4.5%. However, it is incredibly difficult for regular families to obtain bank loans and those who do get given extortionate interest rates often over 20%. It is clear to see who the winners and losers are in this equation. Many families are stuck between a rock and a hard place, not applying for credit and living with rising prices and inflation but with stagnating salaries, or get credit and be faced with almost impossible repayment rates.
Colombians are taxed 0.4% on every single type of bank transaction, including withdrawing money from cash point, promissory notes, wire transfers, internet banking, bank drafts and bank checks, money on term deposit, overdrafts and installment loans. In addition, Colombians are charged around $9,000 a month to just have a debit card and withdraw only 4 times per month from a cash point and this increases if you want to withdraw more. This is why most people simply don't have debit cards so have to spend hours every week queuing in the banks to see their statements and withdraw or move money. I have seen on countless occasions hoards of manual labourers sat outside banks for hours on end just to access their weekly salaries. In addition, paying household bills and phone bills requires you to physically go to a supermarket and queue up for ages to pay them. Even if you can pay online, most do not due to the charges for having a debit card. So, not only is the class war directly monetary, it also indirectly affects development and wellbeing as it takes up valuable time that could be spent working or looking after family.
Similarly, getting your tax code sorted or changed, or applying to start up a business requires several physical visits to a DIAN office, the national tax authority. Not only does this take up a lot of time, as you may have to wait hours or an entire day to be seen (I have had the pleasure of such visits), these offices are only located in the major cities meaning that for the poorest or most remote rural communities, this is an incredible expense of time and money. Thus, the class war is not just between strata, but also shows the strong urban bias. These taxes, whether official or unofficial, exacerbate the wealth gap and do not affect the rich who can afford to pay the fees to save themselves time, and money in the long run. The poor, however, do not have the luxury of long-term planning, so are faced with these small, but significant, every day costs. Mortgage rates are also extortionate and I know people who, in the 80s and 90s has interest rates of up to 25%. Nowadays, rates are up to 12% which is over 10 times higher than in most of Europe. It doesn't help that, in Colombia, 3 banks own 80% of the mortgage market. A monopoly that is common in the country, ranging all the way from banking to nappies and toilet paper.
One of the factors exacerbating Colombia's inequality and class divisions is the lack of proper regulation. The whole economic system needs reform from the bottom up, decentralising the tax offices and fairer, more pro-poor banking regulations would be a start to enable easier access for the non-rich to not only credit, but their own hard earned cash. In addition, interest rates must be tied to inflation. There needs to be a long-term vision that acknowledges the benefits of having more financial empowerment for the middle and lower classes. Having a stronger middle class, less inequality and poverty would mean a stronger consumer base who purchase more products and invest in their children's futures, in addition to more taxes being paid that could be reinvested in infrastructure and education.
Apart from the banking system, there are numerous ways in which financial mechanisms are designed unfairly to benefit the rich. One that I feel is the most shocking and exemplifies this and the corruption in Colombia is the pension system.
Only 1/10 Colombians of working age have a pension fund, due to high levels of informality, and unemployment, and of those, many are never able to receive their money and, therefore, can never retire. In order to access your public pension, you have to have logged 1,300 weeks of work (or 25 years), meaning that many people, mostly women, who end up working less due to childcare responsibilities, or people who suffer from medical problems in middle age, could work for 24 years, for example, and pay thousands of pounds into a pension and never see a penny of it.
The private pension funds people can pay into are no better. In fact, they have been known to steal and suffer from a lack of regulation, which would arguably only bring them up to the abysmal level of the public pension system anyway. In private funds, you need to have 180,000,000 pesos in your pension before you can access it. So, if you earn the minimum wage, as over 55% of the population do, not only would you be putting money into your pension that you desperately need to live on as the wage is too low, you would have to work for over 150 years in order to even receive it. Pensions in Colombia, therefore, disproportionately affect the poor. They are part of such a complicated system that not even educated people would easily be able to understand it. I know an accountant who has spent hours figuring it out and barely understands it. It is there to trick people into giving away their money and not receiving anything in return.
The injustice of the pension system is clear when you read about the corruption that has come to define it. Even if you are able to make a claim to your public or private pension, your pension may be denied to you on the basis that you do not have enough savings or years logged, or fraudulent action will take place and your documents will be altered illegally to make you look ineligible. On top of this, many high level congressmen and magistrates fixed the pension system to give themselves extremely high pensions illegally or outright stealing hundreds of thousands of pounds from the pension fund. There are also currently thousands of court cases where people are suing the government due to their pension funds being mysteriously emptied, which often result in an unfavourable outcome as it is the judges and magistrates who are profiting from this theft. The government has complete impunity.
Even if Colombians manage to receive their pensions, they will get it heavily reduced due to complicated algorithms that could see them only getting around 65% of what they expected, and on top of that, the average life expectancy in Colombia is only an average of 73 years, meaning that people will only get their pension for 12 years. However, the majority of people of retirement age and over have not choice but to keep paying into their pension fund and work until their dying day.
This is not the usual lack of safety nets that are all too common here. This is the elites and the government consciously stealing from its own people. It is such a clear misuse of power and should be punishable by huge jail sentences, but it will remain unchanged due to the unequal balance of power and the fact that many Colombians are unable to fight such a unjust system. It is devastating that millions of hardworking individuals have to face such stress and disappointment in old age to access something that they are legally entitled to and see that their money is actually being used to fill the pockets of the elites.
Crucially, solving these problems and class divisions requires the allocation of rights to all, not just the rich and for those in power to lead by example of transparency and fairness. Crime and violence in the lower classes are rooted in the current inequality and elitism, where the lower classes have little choice but to resort to quick methods of earning money since the official mechanisms are stacked against them. Similarly, crime and violence in the upper classes, as a means of exerting control and obtaining more power, are also a key factor in this inequality. The powerful and the government have a duty to promote a culture of trust and responsibility, rather than the one of suspicion, individualism and corruption that currently exists. The key is to to grow a real middle class, redistribute wealth and pull people out of poverty, while condoning corrupt and unfair practices in the financial and banking sector. This might be asking for too much, but you have to start somewhere. Getting rid of charges to access your own bank account and allowing people to actually retire would be a great start.
This inequality and class war is certainly not limited to economics, see my posts about inequality and poverty for more on this topic.