Why are samba-dancing, soccer-loving Brazilians so angry?
Quick quiz: What do two of the market's biggest recent headlines related to China—Smithfield Foods' proposed acquisition by Shuanghui International, and the GlaxoSmithKline corruption case—have to do with the anger recently on display from samba-dancing, soccer-loving Brazilians?
The answer: Both are tied to the rise of a global middle class discovering it has a greater voice in business, political and social issues, and it's an opportunity that the populace can't afford to let pass.
"This large mass of people coming into the middle class have more political awareness and more desire for inclusion and voice than people might have had in the past," said Uri Dadush, senior associate and director of the Carnegie Endowment for Peace's International Economics Program.
"Glaxo is a middle-class issue because only the middle class can afford drugs," said Homi Kharas, senior fellow at the Brookings Institution. It's also a well-reported fact that as China's middle class expands it is becoming a much larger protein consumer. But it's more than just the purchasing power of the emerging world's rising middle class, whether it's drugs or pork, and especially when viewed in terms of protest movements like we've seen recently in Brazil.
It's about a once-in-a-generation opportunity to play a role in shaping societal institutions, whether that be the balance between government regulation and a market-based health-care system, or food safety and environmentally sound food production.
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"On the one had you want to free up the market for the private sector to let middle-class purchases take place, but as you do, and in the case of Glaxo, you can get abuses. It's the middle class that's driving different models of how you deliver health care," Kharas said.
And the crux of it applies to most major institutions where the middle class comprises the majority of use: "The system becomes harder to reform over time, and you better start to think, 'Is this the system I want at the end of the day?'" Kharas asked.
Rising income is synonymous with rising concern about a variety of issues.
"In some ways, what drives protests in any given country will vary, but if you look around at Brazil and Turkey, it is consistent with the narrative of what happens when you get a growing middle class," said Christian Meyer, research associate at the Center for Global Development. "Expectations rise and people are more concerned with issues beyond economic growth."
The Center for Global Development's research suggests that amid the protest movements in countries including Brazil, what we are witnessing is twofold: one is the growing voice of the actual middle class over an increasing number of issues, but less well known and studied is the group between the poor and the middle class: "the strugglers," as he calls them.
It's the strugglers that may define the broadest middle-class expansion in the future, and that makes this group the key one in viewing the recent protest movement as a trend more nuanced than just a cry from the middle class. These are people still exposed to significant economic risks, such as the bus fare increases in Brazil, shocks that true middle-class Brazilians could absorb.
"If they go on the streets because of bus fare increases these are strugglers. They are not truly poor anymore, and they could potentially be part of the middle class," Meyer said. "The ones focused on corruption are the middle class," he added.
In Latin America, over the next decade and to 2030, roughly 200 million to 250 million people will be in this "struggling group"—a third of the continent. The Center for Global Development estimates a global middle class of 2.7 billion and a global "struggler" class of 2 billion. If the members of the "safe" middle class are defined as those with at least $10 a day in spending power, in a nation like India, only 7 percent of the population is part of the middle class.
Meyer said there will be a great many people in the $4 a day to $10 a day group globally, not yet ready to rail against corruption and in favor of transparency, but having made the move up from poverty and anxious to not go back. The current protests are just a taste of the global populations that can be real catalysts for change, if they attain enough income security.
The strugglers represent the "getting it right the first time" critical challenge laid out by Kharas; without them, the hoped for continuation of the current global middle-class boom may never occur for the broadest group of these nations' citizens.
It's a fork in the road for Latin America, and there are two options. When you are frustrated, you either exit the system or voice your complaints. If you have enough money, you can exit the system and the threat is the middle class uses private health care and can pay for a private education. Currently, the middle-class interests are aligned with the poor and the strugglers, the ones who can't pay the bus fare increases, but "it can still go either way," Meyer said.
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I spent a year working in one of Brazil's largest favelas—unregulated "cities within cities"—in Rio, called Rocinha, a community where more than 100,000 people lived when I was there. On my walk to work at the local nonprofit where I taught English I would often pass one police officer seated in a chair at the border of where the municipal-funded roadway met the entrance to the favela—he was the only cop on duty unless the police were undertaking one of their periodic raids of the narcotraficantes' compounds.
The cop would be seated right by the stands selling bootleg copies of movies, video games and computer programs, flipping through the pages of a newspaper, and not doing much else. Within a few hundred yards of the officer as I made my way up into the hills walking along a canal in which raw sewage ran down toward the ocean I would pass roaming bands of young boys armed by the drug lords with AK-47s.
The lack of institutional interest in the community bordered on the comic (and often resulted in the tragic); the tension inherent in trusting multiple 13-year-olds with semi-automatic rifles as they nonchalantly passed bordered on panic (for me, and I imagine, any community parent). The obscured reality, though, was families just trying to get by and create an ordinary life amid the strife.
My eyes could move straight across three bullet holes in the wall of a dwelling that hadn't been there the day before to an interior view of a home through a glassless window—a typical set of mass-produced, stained-wood furniture, a partial view of an ordinary kitchen table crammed into a small space, a couch where a family matriarch sat watching her serial on the television set.
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In my English class, I had students who were teenage girls who just wandered in timidly on their own on the bet that learning English was a first step—to something. They were different, though still linked to the Brazilian teenagers from the middle classes that I would hear in the back rows of the movie theaters when I got nostalgic for the U.S. and would go and see whatever latest Hollywood fare was playing in Rio—the Brazilian kids would wait for the American slang and cuss words to be spoken by their favorite stars and then repeat the words with amusement, giggling at how "being American" and being bold sounded when it rolled off their tongues.
One of my best students was a 30-something Brazilian man who worked freelance gigs at hotels and parties around Rio as a bartender—he came to class to practice how to say "Jack Daniels" and other terms associated with tending bar without the Brazilian accent (Jack—hard "K", not Jack-ee, the Brazilian way with any hard consonant sound as a foreign word-ending). He was worried about getting enough gigs making drinks for foreign tourists and businesspeople and ultimately, earning enough to start his own business.
This is what was typical amid the well-reported, clichéd chaos of the favela. It's also part of the foundation for the current and future "angry" voice of soccer and samba-loving Brazilians: Ordinary struggles and striving that come with the idea that there is an opportunity to move up, and that opportunity only comes once, and that opportunity could be lost, or worse, stolen by the system.
When the former, highly popular president of Brazil, Luiz Inacio "Lula" da Silva made a well-publicized trip to Rocinha during his term and my residence in Rio, it was concurrent with the unveiling of a new government-funded sports complex for the community, a stretch of soccer fields that came before a water filtration plant.
That was half a decade ago, but it's no surprise that the recent protests flared over, among other things, the amount Brazil is spending on its upcoming World Cup and Olympics hosting. It's hard to imagine that in trying to understand what its striving citizens want, the government of Brazilian will any time again soon lead with a soccer field of any size or for any audience.
"If you just leave it to chance, you end up with a system you don't want," Kharas said.
For the soccer- and samba-loving among the strugglers and the middle class of Brazil, letting things happen by accident could be a recipe for national economic disaster, or in the least, lingering and widening income inequality.
There are those who see the recent protests in Brazil as a sign of a stalled economy and a nation that was on the rise now on the way back down. In fact, the recent protests could be the sign of Brazil's best hope for the continued rise of an economically secure middle class.
My former student-freelance bartender has by now probably mastered the proper American pronunciation of "Jack." I hope he's had the opportunity to voice other, more pressing demands.
—By Eric Rosenbaum, CNBC.com