Conservative reaction in Brazil may be response to improvement in income distribution

Deployed to consolidate democracy, public policies to combat inequality have ended the relatively privileged socio-economic status of the lower middle class, says political scientist heading one of FAPESP’s RIDCs.

By José Tadeu Arantes  |  Agência FAPESP – Inequality in Brazil was the subject of one of the best-attended presentations at the São Paulo Advanced School of Social Sciences, held in São Paulo, Brazil. Entitled “Democracy and inequalities: theory and empirical findings of the project ‘Trajectories of Inequality’”, it was delivered by Marta Arretche, Full Professor in the Political Science Department of the University of São Paulo (USP) and director of the Center for Metropolitan Studies (CEM), one of the 17 Research, Innovation and Dissemination Centers (RIDCs) supported by FAPESP.

Two views of democracy and inequality are current among social scientists, Arretche said.

“The first argues that inequality has remained constant in Brazil during the democratic period, with the richest appropriating one-quarter of the nation’s wealth. This version is true, and the research that supports it is highly convincing,” Arretche told Agência FAPESP. She coordinated a study by 23 researchers in several social science fields that resulted in the book Trajetórias das desigualdades: como o Brasil mudou nos últimos 50 anos (“Trajectories of Inequality: How Brazil Has Changed in the Past 50 Years”).

“The other version says inequality has fallen a great deal during the democratic period in Brazil, and has fallen even faster than in other countries that succeeded in becoming egalitarian in the same period. This version is also true,” Arretche went on.

“Strange though it may seem, both versions are true, because they deal with different things. The first is about the concentration of wealth at the top of the pyramid, about how much of the nation’s wealth the richest 1% appropriate. The second is about the other 99%. What has happened to this large contingent of the 99% is a reasonable degree of inclusion. During the democratic period in Brazil from 1984 to 2015, the poorest people gained relatively more than the richest. Inclusion improved in terms of access to the public health system and the public education system. The minimum wage rose considerably. These are achievements of Brazilian democracy.”

Most of the progress in terms of social inclusion occurred under left-wing governments, Arretche said, “but there were also gains under other governments, because during the transition to democracy, there was a widely shared understanding that democracy wouldn’t survive in Brazil unless poverty and inequality were reduced. Policies were put in place with this objective. Brazilian society is sharply divided with regard to inclusion. Besides conflicts between rich and poor, there’s also conflict between the very poor and the less poor. The former’s gains can represent costs for the latter”.

As an example, Arretche pointed to Constitutional Amendment 478, passed by Congress in 2013 to extend to domestic employees the rights enjoyed by other urban and rural workers. This extension of rights, which benefited the poorest stratum of Brazilian society, had a significant impact on the budgets of less poor households that depended on the services provided by domestics.

“This is probably a typical conflict in highly unequal societies that are starting to change – societies in which the citizens can’t rely on public services,” she said. “One of the cornerstones of stability in Brazil was the ability of the less poor to ensure their relative wellbeing by paying very low wages to the poorest. To these middle-class families, the improvement in the earnings of these unskilled workers by force of law felt like a loss. This is a perverse feature of highly unequal societies, and it’s a major challenge for democracy.”

Resistance to change by the social stratum in the middle of the income distribution curve may be associated with this kind of conflict, Arretche went on. 

“The minimum wage rose considerably in the period in question. This affected not just the fiscal budget or the budgets of large corporations but also those of small firms and households – indeed, all organizations and groups that buy the services of workers who earn the minimum wage. The data show that the earnings of 25% of Brazilian voters are directly tied to the minimum wage,” she said.

“This tends to cause a sharp split inside families, since on the one hand, the rise in the minimum wage may mean more income for some family members, but on the other, it can entail an increase in costs for others. This is very likely to be one of the factors underlying what has been called a conservative reaction. It’s a typical effect in highly unequal societies that are starting to become less unequal thanks to protection for their most disadvantaged members.”

The main database used by the authors of Trajetórias das desigualdades: como o Brasil mudou nos últimos 50 anos was the 2010 census, the last one performed by IBGE, Brazil’s national bureau of statistics, but in her presentation, Arretche updated the numbers to 2015. Her analysis did not take into account the changes that have taken place since the impeachment of President Dilma Rousseff.