Thursday, March 6, 2014


Rio de Janeiro, Brazil

Over twenty years ago, while in graduate school, I read "The Latin Americanization of the United States" by Howard J. Wiarda. Among the issues we discussed were the increased use of gated communities and the growing gaps between the rich and poor in the United States. The piece didn't make any waves then, but the message and discussions that we drew from Wiarda's work are pertinent today. This is especially the case when we see how income and wealth are diverging in the United States.

Barry Ritholtz has a nice review of economists (via the Associated Press) who make it clear that runaway inequality is hurting the U.S. economy. Here's a sampling:

The growing gap between the richest Americans and everyone else isn’t bad just for individuals. It’s hurting the U.S. economy.
“What you want is a broader spending base,” says Scott Brown, chief economist at Raymond James, a financial advisory firm. “You want more people spending money.”
“The broader the improvement, the more likely it will be sustained,” said Michael Niemira, chief economist at the International Council of Shopping Centers.
Economists appear to be increasingly concerned about the effects of inequality on growth. Brown, the Raymond James economist, says that marks a shift from a few years ago, when many analysts were divided over whether pay inequality was worsening. Now, he says, “there’s not much denial of that … and you’re starting to see some research saying, yes, it does slow the economy.”

You also might want to take a look at what Ritholtz has to say here.

- Mark

UPDATE: In the FYI category ... Wiarda's "Latin Americanization" piece was written within a larger narrative that saw the United States as an increasingly centralized and bureaucratic government. While I'm over simplifying the issue, this was a condition that lent itself to a "corporatist" structure throughout Latin America at the time. Wiarda saw a corporatist structure emerging in the United States, which he believed worked against the made in America liberal-democratic model.

I'm compelled to explain this because - I'm sure - several readers might have been drawn to this post believing that the discussion would be about the growing number of Latinos who are now living in the U.S. The "Latin Americanization of the United States" is not about race and demographics. It's about structure and governance. The discussion we had in graduate school was within the larger structure-governance story-line presented by Wiarda. For more on Wiarda and this point click here.

One last point. Wiarda's piece was written at a time when "corporatism" was a hot discussion topic for those studying Latin America. According to Wiarda, the corporatist condition he saw emerging in the United States was likely a permanent and necessary part of modern developed states. This reality, he wrote, might actually work against the larger capitalist economic model pursued in the United States.

I'll leave you to think about what he was suggesting, and what's happening in America today.

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