Academic journal article Brazilian Political Science Review

The Elusive New Middle Class in Brazil *

Academic journal article Brazilian Political Science Review

The Elusive New Middle Class in Brazil *

Article excerpt

A characteristic that strongly marked the world economy in the last 20 years - at least before the full unfolding of the consequences of the "Great Recession" that started in 2008 - was the intense growth experienced by practically all countries, the developing ones in particular, in the wake of the process of market globalization and the rise of China. In social terms, the main consequence of this phase of growth of developing countries was the dramatic reduction of poverty in the world population, and today one may even envisage its virtual disappearance, at least in its more extreme form1.

This process has been accompanied by the growth of intermediate layers between the poor and the rich, which, by having access to new levels of mass consumption, some analysts prefer to consider as members of a presumed "new middle class", people who have access to additional resources (nearly a third of the total) after the satisfaction of basic needs like food and housing. It is estimated that, in the emerging markets as a whole, the so-called middle class increased from nearly a third of the population in 1990 to more than half today2.

A point to be considered is that these analyses admit that it is not enough to have escaped poverty in order to enter the threshold of the "Middle Class". For this, it would be required to have enough additional monetary resources to allow the discretionary spending in material and cultural consumption. The hypothesis seems to be that there is an intermediate stratum between the poor and the middle class, a stratum whose position is still precarious and unstable, without full access to the consumption market and constantly besieged by the ghost of social decadence.

A recent study by the World Bank on the emergence of the middle class in Latin-America3 explicitly considers these criteria. The study defines the middle class in terms of economic security, i.e., of a low probability of falling down (for many, falling back) into income poverty. As may be guessed, their results show that the "vulnerable", who do not make enough to enjoy economic security, is the largest group of Latin American population, including that of Brazil. Following the lead of this study, Birdsall et al. (2014) look into the prospects of this group, which they call "the strugglers", and predict that they may well end up marginalized in the not-too-distant future.

Still, the Latin American case awakens interest inasmuch as the reduction of poverty was accompanied by a sustained contraction of inequality; in any case, a rarity in the history of the region (CORNIA, 2014)4. Lustig et al. (2013) estimate, using a US$ 4 dollar PPP per day poverty line, that the decline in inequality contributed about 40% to the total reduction of poverty (the rest is explained by growth). In Brazil, between 2003 and 2011, nearly nine million households (more than 30 million people) crossed upwards a poverty line roughly equivalent to a fourth of the minimum wage (Figure 01).

The decline in inequality as the income of the poorer increased in a proportion larger than that of the richer seems to be an established fact (see Table 01 below) - and its contribution to the reduction in poverty is only somewhat lesser than the regional average (LUSTIG et al., 2013).

Some works empirically relate such changes with stable democracies and center-left coalition governments in the region (e.g. CORNIA, 2010, 2014; HUBER et al., 2008). In fact, in Brazil, if currency stabilization with the Real Plan was crucial to cutting poverty levels from their 1980's 30% peak level down to 20% in 1995, while poverty levels had been pretty much pro-cyclical before that, after 2002 and up to 2011 poverty halved (see Figure 02 below) also on account of policy-induced inequality reduction.

It is generally acknowledged that public policies were important in this period (HUBER et al., 2008; HUBER and BOGLIACCINI, 2010; LÓPEZ CALVA and LUSTIG, 2010; LUSTIG et al. …

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