Elite Power and State Strength: A Timely Focus of Academic Studies

By Eric Hershberg

lapidim / Flickr / Creative Commons

lapidim / Flickr / Creative Commons

Insufficient state revenues are one fundamental reason that many Latin American governments fail to provide their citizens with adequate education, health care, public transportation, environmental protection and the physical and technological infrastructure needed to move their countries toward high-income country status.  As a whole, the region’s governments were able to spend only 14.8 and 15.25 percent of GDP in 2013 and 2014, according to the UN Economic Commission for Latin America and the Caribbean (ECLAC).  Rationalization of expenditures is a goal that can only be pursued in practice if there are adequate funds to begin with, and few Latin American states have that luxury.  (To be sure, even where states are well financed, as in Brazil and Argentina, governments typically fail to spend resources efficiently.)  Historically primitive and regressive tax systems have not evolved in a manner consistent with the development needs of the region.  During the second decade of the 21st century this remains a major obstacle for those who strive to build more effective and democratic states across Latin America.

Several ambitious new books in comparative political economy offer insightful and complementary analyses of the political conditions that perpetuate state weakness as well as the dynamics that offer hope of overcoming it.

  • Aaron Schneider’s 2012 Cambridge University Press volume on State-Building and Tax Regimes in Central America was an initial contribution to this emerging literature, linking that sub-region’s changing relationship to the world economy to aggressive efforts by different factions of the elite to fashion tax systems that reflect their narrow interests rather than a broader agenda of societal development.
  • A book that will be launched later this month in Guatemala City builds on this work by underscoring the importance of political contestation regarding the fiscal arena more broadly – encompassing state expenditure as well as revenue. That study, prepared under the auspices of CLALS and the Instituto Centroamericano de Estudios Fiscales (ICEFI), illustrates the ways in which Central American elites have exercised disproportionate influence to render states ineffective and regressive: they contribute little to state coffers and extract much from them, with consequences that diminish the life chances of a majority of that region’s population.
  • Tasha Fairfield’s conceptually ambitious and empirically rich comparative study of South American cases, to be published later this year by Cambridge University Press, is a landmark contribution to literature on elites and Latin American political economy. It consists of a thorough comparative analysis of Argentina, Bolivia and Chile, revealing that strong business associations tied closely to the state augment elite capacity to block progressive tax reforms.  Conversely, she finds that social movement influence over the state can undermine elite capacity to resist the sorts of taxation needed to redistribute wealth.
  • Evelyne Huber and John Stephens demonstrated previously, in their 2012 University of Chicago Press book on democracy and the left, that there is a clear link between the capabilities of the political left in democratic regimes and the prospects for more equitable social policies in Latin America. Such policies, as this recent wave of publications make clear, will only come about if societies develop systems of taxation compatible with the emergence of effective states.

Scholarship on Latin American economic development has until recently devoted little attention to political power imbalances as drivers of state weakness and the consequent failure of societies across the region to forge pathways toward developed-country levels of income and opportunity.  These studies highlight the centrality of elite collective organization and behavior, as well as the political strength of countervailing forces in society, for determining levels of taxation across the region.  Taken as a whole, this welcome wave of social science research restores Latin American political economy to its rightful place as a domain of scholarship that speaks to the concrete challenges facing the region today and in the future.  Policymakers throughout the hemisphere who speak of democracy and economic growth need the clear analysis to progress that scholarly works such as these provide.

February 5, 2015

Brazil Protests: Amorphous Causes, Unpredictable Consequences

By Matthew M. Taylor

Protestors in Brazil / Photo credit: Izaias Buson / Foter.com / CC BY-NC

Protestors in Brazil / Photo credit: Izaias Buson / Foter.com / CC BY-NC

Hundreds of thousands of Brazilians hit the streets of a dozen state capitals this past week.  The initial trigger was a proposed hike in São Paulo bus fares, already among the world’s most expensive, but news media soon reported that the protests reflected anger with the rising cost of living, crime, corruption, impunity, and the high costs of hosting the World Cup. Lackluster public services haven’t helped, and widely televised police violence last week provided another rallying cry.  Polling by Datafolha shows that the protest is a middle class phenomenon, with 77 percent of the marchers in São Paulo claiming a university degree.  This growing demographic group is turning against President Dilma Roussef’s Worker’s Party (PT) but it is also weary of the opposition PSDB, especially in São Paulo state.

So far, the protests have been difficult for political parties to harness for their own ends.  Partisans who showed up at the marches on Monday waving party flags were reportedly forced to pull them down by indignant protestors.  Dilma’s popularity has been falling – she was recently booed at the opening match of the Confederations Cup – but the marchers don’t seem collectively exercised about her policies or those of any single party or politician.  Aecio Neves, Marina Silva and Eduardo Paes, her potential opponents in elections scheduled for late 2014, have yet to capitalize on her vulnerabilities, as the protestors seem to be casting “a pox on all their houses.”  An outside candidacy is a rising possibility, but Brazilians have been wary of supposed political saviors after the rapid rise and fall of Fernando Collor in 1990‑92.  Anger is directed at the political class as a whole because it is incapable of responding to public disgust with Brazil’s unsatisfactory public services.

It is quite possible that the protests may peter out on their own, especially if the renewed violence seen in São Paulo on Tuesday night alienates supporters.  If the protests continue and remain peaceful, they may result in increased social solidarity and a shared sense of patriotism in the face of an unsatisfactory political system.  Something similar happened during other mass protests in the past, especially the Diretas Já marches of 1985.  A renewed consensus in favor of a more robust and effective democracy would be salutary, but the concrete results arising from the protestors’ demands are difficult to predict.  One thing to be sure of: withdrawing the proposed bus fare increase proposal is too little, too late.