The latest WBR (November 9th , 20129) brings out interesting outcomes concerning social mobility in Latin America. Over the last 15 years , 43% of Latin americans changed social class and Middle class increased its size by 30 million people , making up in 2009 a total of 152 million, well above the 103 million people within this segment in 2003.
Between 2003 -2009, almost 2 million people in Chile , became part of middle class segment leaving behind their poverty condition. Chilean society has 42,3% of its population within this segment, just below Argentina (46,5%) and Uruguay (56,3%).Other countries like Brazil which has 32% of its population within this segment, has also made significant gains in the last ten years.
WB report set middle class income ranging from U$$ 10 up to U$$ 50 daily .Besides it identifies a fourth segment with incomes ranging from U$$4 up to U$$ daily, which represent 40% of the population. This segment ,is still considered to be fragile with important chances of becoming poor again. So public policies must keep close attention to it.-
What are the implications of these changes:
a.- Middle Class was the driven force of history in the XX century, and it will be so again this century. In Latin America ,very much of social and economic changes since the seventies (with cost and benefits), had the middle class as its main engine.
b.- Increasing Middle class share means key features for economic progress such as : more stability and social cohesion ,higher demand for services and complementary products, large size of markets for goods with high value added, higher average of education level which improve innovation flows and induces higher productivity .
c.- Middle class shift the focus of politics from needs and demand (captured voters), to expectations and supply (autonomous voters), changing the nature of government involvement in economics .-
d.- Important Middle class segment mean a government focused on efficiency and quality of services ,capable of fulfill higher expectations than just provide basic and limited assistance .
Thus, the surge of Middle Class is not only the outcome of good economic policies , economic growth, and better institutions, which policy makers can count on as a measure of success and effectiveness. It is also the opportunity to move along with stronger policies to eliminate poverty,(30% of Latin America population),as long as it also ignites the virtuous circle of prosperity .
Mexico and the USA: Two presidential elections. Two similar outcomes. The center left take it both over. That is what democracy is about. But in the USA case , there was more than just a democratic exercise. Facing the avenues of time for this century, this election was stated as a matter of choice between two models self excluded from one another. The basic of it ,goes like this : More or less government, More or less regulation, More or less taxes and so on. It seem increasingly plausible that these were the slogans for the XX century,already gone.
Chile usually considered as leading example of free markets policies, have a center right government .But it has applied a tax reforms , with lower taxes for middle income people although higher taxes for business (from 17 to 20%), which it has been estimated will create losses to firms of more than U$$ 100 million. It added up more government influence in economic activities, with new public organisms for education, environment, and inland security, and manage public expenditure running at a pace of 7% for the first months of this year .Is there something wrong with it?.Does it means that the center right has quitted their ideal and principles?.Not necessarily so . From the Government point of view, is a matter of governance, social inclusiveness ,stability and the chance to be competitive for the next election. It follows that these last three values have become the constraints , that none platform to run a government and win elections , can get rid of. It seems that the same apply to our neighbors in the north.
Citizens of the world are more involved throughout social networks, which can get together huge crowds no matter their individual preferences, for the sake of what to expect from Government .But What do people expect from Governments ?.Let try some answers:
a.- Pragmatism to cope with people expectations and needs. Ideology is for books, novels and intellectuals , but not for politicians .-
b.- The issue is not whether to have more or less Government, but to have a both better and more efficient government.-
c.- The dilemma rich against poor, is a false one. These days, what count is middles class needs ,which goes on the line of quality of services (health, education, safety, life style) resetting public policies priorities.
d.- Demographic factors: People get older than before and live longer, therefore demand protection. Immigrants flows have something to say. Beside they also have values to believe in, and hopes to carry on to get some outcome. Young people and women looks for different dreams. They look for better place to live, with less congestion and environment contamination such that they feel they are in charge of their life and destiny.
e.- Finally, there are different values away from traditional ones , but not necessarily worse than those ones but different , and leaders must be able to navigate through with them. Otherwise is to stay out of the winds of history.