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3RD WORLD AMERICA ( Thanks for doing your part to make it happen, Ariana Huffington)

Posted on Sunday, 11th December 2011 @ 11:43 AM by Text Size A | A | A

What Latin America Can Teach Us

By JORGE G. CASTAÑEDA

IN a Bertelsmann Foundation study on social justice released this fall,
the United States came in dead last among the rich countries, with only
Greece, Chile, Mexico and Turkey faring worse. Whether in poverty
prevention, child poverty, income inequality or health ratings, the
United States ranked below countries like Spain and South Korea, not to
mention Japan, Germany or France.

It was another sign of how badly Americans are hurting their middle
class. Wars, famine and violence have devastated middle classes before,
in Germany and Japan, Russia and Eastern Europe. But when the smoke
cleared and the dust settled, a social structure roughly similar to what
existed before would always resurface.

No nation has ever lost an existing middle class, and the United States
is not in danger of that yet. But the percentage of national income held
by the top 1 percent of Americans went from about 10 percent in 1980 to
24 percent in 2007, and that is a worrisome signal.

So before the United States continues on its current road of dismantling
its version of the welfare state, of shredding its social safety net,
of expanding the gap between rich and poor, Americans might do well to
glance south. The lesson is that even after a large middle class
emerges, yawning inequities between rich and poor severely strain any
society’s cohesion and harmony.

If ever a geographical stereotype had some truth to it, it would be that
in Latin America, where a handful of immensely wealthy magnates wielded
power over a sea of the poor. If there has ever been a social cliché
with roots in reality, it would be that a vast middle class was always
the backbone of the United States’ strength.

The United States has never had the type of robust welfare state that
Europeans built after World War II. It didn’t need that. Through private
initiative and efforts to equalize opportunity, Americans long ago
ensured that a huge middle class would provide the social glue to hold
their society together.

If that middle class withers, what might America look like? Well, what
Latin America used to be, and in some ways still struggles to stop
being.

So here are two questions: Does the United States really want to look
like what Latin America was? And is there a lesson to be learned from
its neighbors to the south — that once inequality becomes entrenched,
reversing it becomes incredibly difficult?

Consider, first, some history. From the pre-Columbian era through most
of the 20th century, conventional wisdom painted Latin America as the
planet’s most unequal region, where the extreme poverty of its destitute
was matched only by the extreme wealth of its rich.

In fact, this perception began departing from reality some 50 years ago
in most of the region, and today it is true for only a few nations:
Haiti, Honduras, Bolivia and maybe Nicaragua. By 1970, the larger
nations like Brazil, Mexico, Colombia, Venezuela, Chile and Peru had all
witnessed the emergence of sizable middle classes. Others, like
Argentina and Uruguay, had been, for all practical purposes,
middle-class societies since at least midcentury (although the
Argentines in later decades worked hard at regressing.)

But there was always a gulf between those societies and the United
States. Until quite recently, the Latin middle classes made up barely
one-third of the population, and some of their most prominent members —
Che Guevara in Argentina, Fidel Castro in Cuba, Salvador Allende in
Chile — made political careers out of the cause of eradicating
inequality. That cause was shared by thousands of students, union
leaders, academics and middle-of-the-road politicians, who found their
own way of life morally intolerable and politically untenable.

After years of frustration and failure, at the end of the 20th century
something began to change. And over the last 15 years the trend has
become unmistakable. According to one definition of the middle class
used in recent research by the Organization for Economic Cooperation and
Development, the middle class is in the majority in Chile, Brazil,
Mexico, Uruguay, Costa Rica and to a lesser extent Colombia. In the
1960s and ’70s, even after decades of robust growth, those middle
classes were barely at 30 percent; today in Mexico, Brazil and Chile the
figures range from 55 to 60 percent.

Yes, it is still a slim and precarious majority, and it is not your
mother’s middle class — as secure and well-off as in Europe, North
America, Japan or South Korea. The Latin middle class still struggles,
with living standards far behind those of the local affluent. But a
middle class it is nonetheless: with cellphones and used cars; with tiny
but well-built homes with every appliance; and with modest but deeply
enjoyable holidays at the beach.

Consumer markets have expanded. The World Bank and the O.E.C.D., writers
like this one and universities like the Getulio Vargas Foundation in
Rio de Janeiro have produced reams of data and analysis about the size,
depth and lasting power of this middle class. Politicians know they can
be elected only if they connect with that class and are doomed when they
appeal exclusively to the poor, who, though now a minority, are still
too large a share of the population.

So it can be said that much of Latin America has arrived: it is
democratic, with a slight but growing majority of its people prosperous,
competitive and possessing international ambitions (real, though not
always realistic).

But reducing poverty and building broad middle classes do not
automatically reduce inequality. The statistical measures of inequality
known as Gini coefficients have begun to fall slightly in Latin America,
but remain the highest in the world, with the wealthiest 1 percent, 5
percent or 10 percent of the population controlling incredibly high
shares of total wealth or income. In Brazil, Chile and Mexico, which
together account for nearly 70 percent of the region’s G.D.P. and
population, the wealthiest 10 percent held an average of 42 percent of
national income in 2008-9; the equivalent figure for the United States
was 29 percent.

This is why hundreds of thousands of Chilean students have brought their
country’s government to a virtual standstill this year, even though
Chile is the most successful Latin nation by any economic or social
standard. It is why Colombia, Brazil and Mexico have murder or
kidnapping rates far higher than those of the richer nations, which are,
despite their wealth, less unequal.

Indeed, the historic inequalities that linger have produced singular
traits of national character, handed down between generations, that must
change if these societies are to continue equalizing their wealth and
realizing their promise. Brazilian fatalism, Chilean insularity and
Mexican individualism are being slowly shed. And that is good; these
traits should be jettisoned completely if these societies ever hope to
achieve the level of equality for which the United States has been their
model.

And yet, as all of this is occurring, the United States — that epitome
of the middle-class society, of the egalitarian dream that pulled
millions of immigrants away from Latin America — has begun to go Latin
American. It is in a process of structural middle-class shrinkage and
inequality expansion that has perhaps never occurred anywhere else
(again, possibly excepting Argentina).

Americans can object — and in this they have a point — that their
society differs from Latin America because there is mobility at the top
and the bottom. South of the Rio Grande, the affluent are always the
same; in the United States, they vary from generation to generation,
often strikingly. This is what gives so many Americans the impression —
false as it must be for most — that one day they might reach the top and
that those already there will make room for them. But this ability to
aspire does not really address the issue of how large the distance is
growing between those at the top, middle and bottom; nor does it comfort
those in the middle who see their chance of moving up growing ever more
slight.

WHICH leads to a question for the United States: why would you allow
that to happen, when we in Latin America can show you how difficult it
is to achieve the kind of exemplary middle class that you invented in
the first place, and that gave you such economic power and social
cohesion — at least since the 1920s? Especially when we all know its
existence is crucial to preserving some of the best traits of your own
national character.

Alexis de Tocqueville made the point nearly two centuries ago. Something
in the American character had produced a far more egalitarian society
than any in Europe, and something in that society was producing a
different, more modern and exciting national character, with room for
experimentation, cooperation and acceptance of differences. Americans
cannot retain the tolerant, forward-looking and innovative national
character they cherish if they give up the egalitarian middle-class
configuration that comes with it.

Mexico and other Latin American lands are reshaping our national
characters and democratic politics in our quest for a larger and more
vibrant middle class, and at last we are having some success. The United
States’ middle class is coming under increasing pressure as the income
gap between it and the very rich widens.

Do Americans really have nothing to learn from us, after we have learned so much from them?

Jorge G. Castañeda is a professor
of politics and Latin American and Caribbean studies at New York
University, who served as foreign minister of Mexico from 2000 to 2003.

 

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