Wealth Divide: Zeroing In On The 'One Percent' Of Chile

The Occupy Movement began on Wall Street by the so-called 99% shut out from economic growth. But Latin America's income gap mirrors the U.S. In Chile, it is particularly extreme.

"Somos el 99%"
"Somos el 99%"
Roberto Pizarro


SANTIAGO - In September 2011, the American Occupy Wall Street movement launched in New York with the slogan "We are the 99%."

The movement also created a tumbler blog where the 99% could rally against the greed and corruption of the 1% of highest-income earners in the U.S.

Inspired by these demonstrations, the 2001 recipient of the Nobel Prize in Economic Sciences, Joseph Stiglitz, published a book entitled "The Price of Inequality – How Today’s Divided Society Endangers Our Future." The new Spanish-language edition carries the subheading "1% of the population has what 99% needs."

Stiglitz says that the universal value of equity has been replaced in the neoliberal capitalist system by the greed of a few. The economic system fails the majority of citizens, while the economic interests of a minority control the political system. This is the reason why the world is losing trust in its politicians and democracy has deteriorated.

The U.S. has led this growing divide within developed economies, and Stiglitz reveals the origins of these inequalities rooted in markets that are not functioning like they should (they are neither efficient nor stable) and political systems that are incapable of correcting the deficiencies of those markets.

With the European and U.S. financial crises, market failures have become evident. Their inefficiencies are revealed through the huge, unmet needs of millions living in opulence. There are no investments to lift the poor out of poverty, to promote development in Africa, nor to resolve the issue of global warming. But at the same time, there are unused resources: unemployed workers and unused machinery. This is the paradox of an unjust and inhuman system.

Though dominant in the U.S., where market self-regulation and the power of corporations are much more visible, these levels of inequality and injustice are expanding all over the world. Stiglitz reveals that in Chile: 1% of the population possesses one-third of the nation's wealth. Over the last three decades, 90% of society has increased their salaries by only 15%, while that proverbial 1% has increased by 150%, and the very top 0.1% by 300%.

Yes Chile, also has its 99%. The Chilean economic and political model, a reproduction of the North American version, has brought inequalities to the extreme across society. In 2009, the difference between the average income of the 1% and the poorest 10% was 260 times, while in 1990 it was 158 times (Gonzalo Durán and Marco Kremerman, April 2 2012. El Mostrador).

Just rhetoric

This difference in incomes is the consequence of an elevated concentration of property and wealth in a few hands. The most powerful economic groups have multiplied their actions in the last 20 years in a rhythm that simply excludes the rest of Chile. They accumulated with the dictatorship and kept going when it ended and the coalition governments were formed.

There was a talk of greater equity in several of the governments, and former President Ricardo Lagos’ program used the motto “growth with equality.” Nevertheless, it turned out to be little more than rhetoric. We now know that the governments of the time when the dictatorship fell and the coalition governments were formed did not have the will or the means to deliberate public policy measures to favor a better income distribution nor to decrease inequalities of access to health, education and provisions. The complicity with the nation's elite was manifest.

Most economists and politicians in the coalition governments in Chile believed in the benefits of a self-regulating market economy. Others, having occupied positions of power under their governments, were hired as executives or board members of large domestic and foreign companies, while the most corrupt, turned into lobbyists in order to facilitate business for CEOs, while remaining advisors to the government.

The commitment to the neoliberal model revealed a lack of ethics, theoretical and political fragility of the leadership of the Coalition against the imposition of the right-wing civil-military model. But it is also a result of the overwhelming power that national and international economic groups have acquired, who tamed the opposition to neoliberalism in the past, turning them into staunch supporters.

Big businesses took over the means of production, at low cost, thanks to the privatization of public enterprise. But they were also installed in Parliament and in public services as well as in media, schools, universities, clinics and soccer teams. With this amount of material and communication power they were able to install their ideas in public opinion with few counterbalances.

Giving to the rich

In the last decade, the wealth of the five most powerful economic groups has expanded in an unprecedented way, from $5.6 million in 2002 to $48.3 million in 2010.

In addition, the Chilean tax regime has been extremely generous to large corporations and wealthy sectors of the population, while, on the other hand, the unprecedented expansion of the credit system through high rises and supermarkets has provided huge profits to these groups. Finally,the expansion of trade and financial openness of the Chilean economy, through the Free Trade Agreement (TLC), the central component of the country's foreign policy, has allowed a global scale reproduction of Chilean investors abroad.

Consequently, it is no exaggeration to say that the State has been captured by an economic minority who use it in their favor. Instead of using it as a tool to compensate for the inequalities of the market economy, it has become an instrument for economic expansion of a few. Under such conditions, the nation's sense of community has weakened by the presence of a fragile State, serving a minority considered an ideological nuisance.

The market economy has become a market society, where the ultimate goal is profit and personal enrichment. And when politics does not involve the market, society can be dangerously affected.

Advancement opportunities for small businesses narrow, and workers are placed in a position of fragility, environmental protection is weakened and the economic concentration in Santiago is amplified. Such conditions close opportunities for progress towards a developed society, with a more balanced distribution of economic (and political) power and even growth eventually darkens.

Faced with such powerful economic groups, we find a weakened State. A State without capacity or legislative instruments to promote economic initiatives or which could help fulfill the potential of small business owners.

It should be noted that the Constitution of 1980 prohibits the State from fostering entrepreneurship. This same State, co-opted by business groups, has not been interested in stimulating trade unionism or collective bargaining, an indispensable foundation for improving the distribution of equilibrium. Stiglitz is absolutely right. In Chile, 1% has seized what 99% of the population needs.

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The Food Truck, A Sign That The White And Wealthy Are Moving In

In San Diego, California, a researcher tracked how in the city's low-income neighborhoods that have traditionally lacked dining options, when interesting eateries arrive the gentrification of white, affluent and college-educated people has begun.

Balboa Park Spring Fling Food Truck festival

San Diego Food Trucks via Facebook
Pascale Joassart-Marcelli

SAN DIEGO — Everybody, it seems, welcomes the arrival of new restaurants, cafés, food trucks and farmers markets.

What could be the downside of fresh veggies, homemade empanadas and a pop-up restaurant specializing in banh mis?

But when they appear in unexpected places – think inner-city areas populated by immigrants – they're often the first salvo in a broader effort to rebrand and remake the community. As a result, these neighborhoods can quickly become unaffordable and unrecognizable to longtime residents.

An appetite for gentrification

I live in San Diego, where I teach courses on urban and food geographies and conduct research on the relationship between food and ethnicity in urban contexts.

In recent years, I started to notice a pattern playing out in the city's low-income neighborhoods that have traditionally lacked food options. More ethnic restaurants, street vendors, community gardens and farmers markets were cropping up. These, in turn, spurred growing numbers of white, affluent and college-educated people to venture into areas they had long avoided.

This observation inspired me to write a book, titled The $16 Taco, about how food – including what's seen as "ethnic," "authentic" or "alternative" – often serves as a spearhead for gentrification.

Take City Heights, a large multi-ethnic San Diego neighborhood where successive waves of refugees from places as far away as Vietnam and Somalia have resettled. In 2016, a dusty vacant lot on the busiest boulevard was converted into an outdoor international marketplace called Fair@44. There, food vendors gather in semi-permanent stalls to sell pupusas, lechon (roasted pig), single-sourced cold-brewed coffee, cupcakes and tamarind raspado (crushed ice) to neighborhood residents, along with tourists and visitors from other parts of the city.

Informal street vendors are casualties.

A public-private partnership called the City Heights Community Development Corporation, together with several nonprofits, launched the initiative to increase "access to healthy and culturally appropriate food" and serve as "a business incubator for local micro-entrepreneurs," including immigrants and refugees who live in the neighborhood.

On paper, this all sounds great.

But just a few blocks outside the gates, informal street vendors – who have long sold goods such as fruit, tamales and ice cream to residents who can't easily access supermarkets – now face heightened harassment. They've become causalities in a citywide crackdown on sidewalk vending spurred by complaints from business owners and residents in more affluent areas.

This isn't just happening in San Diego. The same tensions have been playing out in rapidly gentrifying areas like Los Angeles' Boyle Heights neighborhood, Chicago's Pilsen neighborhood, New York's Queens borough and East Austin, Texas.

In all of these places, because "ethnic," "authentic" and "exotic" foods are seen as cultural assets, they've become magnets for development.

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

A call for food justice

Cities and neighborhoods have long sought to attract educated and affluent residents – people whom sociologist Richard Florida dubbed "the creative class." The thinking goes that these newcomers will spend their dollars and presumably contribute to economic growth and job creation.

Food, it seems, has become the perfect lure.

It's uncontroversial and has broad appeal. It taps into the American Dream and appeals to the multicultural values of many educated, wealthy foodies. Small food businesses, with their relatively low cost of entry, have been a cornerstone of ethnic entrepreneurship in American cities. And initiatives like farmers markets and street fairs don't require much in the way of public investment; instead, they rely on entrepreneurs and community-based organizations to do the heavy lifting.

In City Heights, the Community Development Corporation hosted its first annual City Heights Street Food Festival in 2019 to "get people together around table and food stalls to celebrate another year of community building." Other recent events have included African Restaurant Week, Dia de Los Muertos, New Year Lunar Festival, Soul Food Fest and Brazilian Carnival, all of which rely on food and drink to attract visitors and support local businesses.

Meanwhile, initiatives such as the New Roots Community Farm and the City Heights Farmers' Market have been launched by nonprofits with philanthropic support in the name of "food justice," with the goal of reducing racial disparities in access to healthy food and empowering residents – projects that are particularly appealing to highly educated people who value diversity and democracy.

Upending an existing foodscape

In media coverage of changing foodscapes in low-income neighborhoods like City Heights, you'll rarely find any complaints.

San Diego Magazine's neighborhood guide for City Heights, for example, emphasizes its "claim to authentic international eats, along with live music venues, craft beer, coffee, and outdoor fun." It recommends several ethnic restaurants and warns readers not to be fooled by appearances.

Longtime residents find themselves forced to compete against the "urban food machine"

But that doesn't mean objections don't exist.

Many longtime residents and small-business owners – mostly people of color and immigrants – have, for decades, lived, worked and struggled to feed their families in these neighborhoods. To do so, they've run convenience stores, opened ethnic restaurants, sold food in parks and alleys and created spaces to grow their own food.

All represent strategies to meet community needs in a place mostly ignored by mainstream retailers.

So what happens when new competitors come to town?

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

Starting at a disadvantage

As I document in my book, these ethnic food businesses, because of a lack of financial and technical support, often struggle to compete with new enterprises that feature fresh façades, celebrity chefs, flashy marketing, bogus claims of authenticity and disproportionate media attention. Furthermore, following the arrival of more-affluent residents, existing ones find it increasingly difficult to stay.

My analysis of real estate ads for properties listed in City Heights and other gentrifying San Diego neighborhoods found that access to restaurants, cafés, farmers markets and outdoor dining is a common selling point. The listings I studied from 2019 often enticed potential buyers with lines like "shop at the local farmers' market," "join food truck festivals" and "participate in community food drives!"

San Diego Magazine's home buyer guide for the same year identified City Heights as an "up-and-coming neighborhood," attributing its appeal to its diverse population and eclectic "culinary landscape," including several restaurants and Fair@44.

When I see that City Heights' home prices rose 58% over the past three years, I'm not surprised.

Going up against the urban food machine

Longtime residents find themselves forced to compete against what I call the "urban food machine," a play on sociologist Harvey Molotch's "urban growth machine" – a term he coined more than 50 years ago to explain how cities were being shaped by a loose coalition of powerful elites who sought to profit off urban growth.

I argue that investors and developers use food as a tool for achieving the same ends.

When their work is done, what's left is a rather insipid and tasteless neighborhood, where foodscapes become more of a marketable mishmash of cultures than an ethnic enclave that's evolved organically to meet the needs of residents. The distinctions of time and place start to blur: An "ethnic food district" in San Diego looks no different than one in Chicago or Austin.

Meanwhile, the routines and rhythms of everyday life have changed so much that longtime residents no longer feel like they belong. Their stories and culture reduced to a selling point, they're forced to either recede to the shadows or leave altogether.

It's hard to see how that's a form of inclusion or empowerment.The Conversation


Pascale Joassart-Marcelli is a Professor of Geography and Director, Urban Studies and Food Studies Programs at San Diego State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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