Race & Law; Bolsa Familia

The Economist notes controversy over the race and law in Brazil. As well, The Economist covered Bolsa Familia in a long article, distinguishing between impact in rural and urban areas. These two articles give some context for understanding the emerging middle class, an important Global Macro theme to watch.

On race and law:

BRAZIL’S Supreme Court is wrestling with one of the toughest dilemmas in politics: which is preferable, absolute equality before the law or discrimination in favour of disadvantaged races? This is a surprise, for until recently Brazil liked to see itself as a true melting pot.

Like America, it has significant minorities of blacks, indigenous peoples and European immigrants; it even has the world’s biggest populations of Japanese outside Japan and Lebanese anywhere. Unlike Americans, Brazilians rarely classify themselves by race. One survey listed 136 sample skin colours. At the last census, 38% simply said they were mixed.

On Bolsa Familia:

Much of this acclamation is justified. Brazil has made huge strides in poverty reduction and the programme has played a big part. According to the Fundaçao Getulio Vargas (FGV), a university, the number of Brazilians with incomes below 800 reais ($440) a month has fallen more than 8% every year since 2003. The Gini index, a measure of income inequality, fell from 0.58 to 0.54, a large fall by this measure. The main reason for the improvement is the rise in bottom-level wages. But according to FGV, about one-sixth of the poverty reduction can be attributed to Bolsa Família, the same share as attributed to the increase in state pensions—but at far lower cost. Bolsa Família payments are tiny, around 22 reais ($12) per month per child, with a maximum payment of 200 reais. The programme costs just 0.5% of gdp.

Published by Janar Wasito

Janar Wasito is the manager of Magis Capital in San Diego, CA. He is a graduate of Harvard and Stanford Law School, and a former Marine Officer.

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