James Surowiecki – The New Yorker, 07/08/2013
When mass protests block the streets in Madrid or Athens these days, it comes as no surprise. People there have been in economic purgatory for years. But the huge demonstrations that have hit Brazil represent something unexpected: revolt in the midst of relative prosperity. Brazil has been one of the economic success stories of the past decade. The economy grew quickly and the benefits were widely shared—arguably for the first time in the country’s history. Since 2003, some forty million Brazilians have joined the middle class, and the percentage in extreme poverty has shrunk markedly. Though the economy has slowed lately, most people are better off than they were ten years ago. Yet the protests have been widespread, popular, and, most striking of all, dominated by the middle class—the very people who have benefitted from the boom.
So what’s everyone so unhappy about? The core problem is that living conditions haven’t really caught up with the improvements in people’s income. Brazil is an increasingly middle-class country that still has many of the characteristics of a poorer one. Public infrastructure is notoriously bad. The public health-care system is overcrowded, and public education, while improving, is far from good: one recent study of education quality in forty major countries ranked Brazil next-to-last. Brazilian police forces are ineffective and sometimes corrupt, so citizens don’t feel safe. And cities like São Paulo are so congested that two- or three-hour commutes are routine. The original impetus for the demonstrations was a twenty-centavo increase in bus fares; that’s just nine cents, but no one wants to pay more for a patently inadequate system.
The wealthy are able to insulate themselves from this dysfunction—Brazil has long had one of the world’s highest levels of income inequality. They have private health care and education, hired bodyguards, and so on. But such options are out of reach for most of the middle class. To make matters worse, Brazil’s economy isn’t really designed to deliver goods and services at low prices, which makes being middle class there significantly more expensive than it is in many other countries. Even by developed-country standards, Brazil is a pricey place: a recent study ranked São Paulo and Rio de Janeiro among the fourteen most expensive cities in the world—far above New York, which was thirty-third. A Big Mac costs more in São Paulo, adjusted for income, than in nearly every other country in the world. And high tariffs and less competition mean that cars, televisions, sneakers, and iPads are often two or three times more expensive than they are here. As a result, many Brazilians buy on installment plans, and high interest rates mean that Brazilians now devote a fifth of their income to servicing debt (almost twice as much as Americans do).