-Caveat Lector-
Argentina's anxious middle class
Howard LaFranchi Staff writer of The Christian Science Monitor
BUENOS AIRES - To Juan Serres, a good time used to mean a long
meal with his family in a Buenos Aires restaurant, if not a long
weekend at the beach. Now, the former bank and dotcom official
must make do with a trip to the park.
"This is all I can afford," he jokes, lifting the youngest of three sons to
the top of a battered slide. These days, he struggles to make ends
meet publishing newspaper inserts. His attitude echoes a
disillusionment that is spreading throughout Latin America: "I used to
be a typically optimistic member of the middle class, but now that
middle class is disappearing. And like everybody else, I don't see a
solution."
In Argentina, Brazil, and Chile, it was the middle class that ventured
out of a long tradition of political and economic nationalism to
embrace the promise of international trade, the free market, and democracy.
But now, as a hurricane-force economic slide sweeps across Latin
America, the middle class is losing its optimism for the promises of
economic liberalization and democracy. In fact, nervous Argentines
flocked to banks last week as concerns mounted that the
government would freeze bank funds in order to service $132 billion in
public debt. To quell a run on banks, the government banned
Argentines from withdrawing more than $250 a week in cash and
restricted the transfer of funds abroad.
"When it seems change has only left you worse off and living a
poorer life, you just want to hunker down - or leave," says Mr. Serres,
who counsels his older sons to think about moving to Europe or the
United States.
The impact is likely to extend well beyond Latin America's borders.
US keeps its eye on Argentina
Over the next few months, President Bush will pull one eye away
from the war against terrorism long enough to push for so-called
"fast-track authority" to allow his administration to negotiate
expanded trade pacts with countries and regions around the world.
But his dream of a free-trade area of the Americas - extending
NAFTA throughout the hemisphere by 2005 to counterbalance the
growing weight of the European trade bloc - faces roadblocks from a
public soured on the promises of free trade.
As economic pain spreads skepticism throughout Latin America,
international financial institutions are nervously watching Argentina as
it teeters on the brink of the biggest default in history. If a deeply
troubled Argentina were to default on international loans and in effect
declare bankruptcy, the economic impact on its neighbors and other
developing countries would be so deep that the free-trade area would
likely be dead, at least for this decade.
"This country has gone through 20 years of restructuring, and ... it
hasn't delivered," says Oscar Raul Cardoso, a Buenos Aires political
analyst. "The feeling that people have been cheated out of 20 years
is very strong, and especially focused in the middle class.
Understandably, there's no enthusiasm for anything that suggests
more of it."
Adds Marta Lagos, a Chilean pollster, "We're at a crucial moment
where people are saying, 'We're back where we were before all the
reforms that promised so much.' People don't see the end of the
tunnel," she says, "and that's worrisome for democracy and the
market economy."
The squeeze is also on in Venezuela, where the oil boom of the
1960s and 1970s that created a new middle class went bust. Even
Chile, until recently considered the economic "jaguar" of the
continent, is feeling pressed as a slower economy eliminates second
jobs, hitting the new two-income families that had raised their living
standards.
"From the mid-1980s to 1998 there was remarkable upward mobility
in Chile. Jobs were available to young people with a good secondary
education, [pulling] them out of poverty and into some level of the
middle class - with decent housing, disposable income, and
aspirations for still more," says Arturo Leon, a social economist at
the UN's Economic Commission for Latin America in Santiago. "Now,
much of that social ascendency is gone - and so is the hope."
During the 1990s, Chile reduced the number of families living in
abject poverty by about half, and expanded the middle class to about
half the population, Mr. Leon says. But now, the middle-class pie is
shrinking again with every job that disappears.
Even though Chile's economy grew again last year and could
continue to expand, it is now typically growth without jobs. "Before in
Chile, the estimate was about 40,000 jobs created for every percent
of growth," Leon says. "Now it's not even 10,000."
The middle-class decline is not uniform across the region. More than
six years after its economic crash, Mexico started growing again with
its beleaguered middle class once again expanding - at least before a
recent downturn fed in part by the skidding US economy.
But that expansion began after nearly two decades of middle-class
retreat, and also for reasons related to social change. A conservative
Mexico, for example, was slower than Argentina to accept a growing
female workforce. But now, two-income families and working women
are key factors behind Mexico's budding middle class.
The squeeze of the middle class
A central factor in the stagnant job market is a region-wide
retrenchment of the public sector, a traditional bastion of the middle
class, as governments privatize services, and in some cases hand
pay cuts to public employees.
"It's sad to say, but I get by on my salary because I don't have a
family to support, and I live with my mother, who gets a small
retirement," says Ana Cladera, a principal of an elementary school in
Entrerios, Argentina. "Being in education used to allow for
middle-class living. But now I have teachers who have to sell their car
to make it, and parents who take their kids out of school so they can
work for the family's short-term survival."
A growing number of Latin Americans are blaming democracy for the
last decade's unkept promises, says Ms. Lagos, whose polling firm
MORI conducted a periodic survey recently.
The survey results showed that, over the past year, faith in
democracy as a problem-solving system of government dropped in
every Latin American country except Mexico, where it rose 1
percentage point to 46 percent. In Argentina, support for democracy
fell from 71 percent last year to 58 percent now; in Chile, from 57 to
45 percent; in Brazil - the hemisphere's largest democracy after the
US - from 39 to 30 percent.
The disillusionment so keenly felt in Argentina is leading people to
take very different steps from what they might have done in past
decades of social activism and even armed rebellion. But the new
responses hardly bode well for the region's democracy, experts say.
A loss of faith in collective action, plus a deep public pessimism
"mean hardly anyone thinks about activism. The response is more a
moving away from public life," says Martin Krause, a political
scientist at Buenos Aires' ESEADE graduate business school.
"Instead of involvement, people turn to evasion."
To stay or go? Argentines debate
That desire to "avoid" or "get away" takes two forms, Dr. Krause
says: the symbolic (evading taxes and other legal means of money
exchange) or the literal (leaving the country). During the 1990s, the
decade when one-fifth of middle-class Argentines fell to the lower
class, surveys show a steady climb in the percentage of adults who
say they would leave the country if they could - now at 40 percent.
"I see a visa as an insurance policy for the day I've had enough of all
this instability," says Lionel Andres Favale, the grandson of an Italian
immigrant, who made a trip recently to the Italian consulate in
Buenos Aires to apply for an Italian passport.
A computer programmer with a wife and baby, Favale says it is not
Argentina's 16 percent unemployment that has him thinking about
leaving, but short-term employment. "The jobs in my field are there
and I can get them, but they hire you for six, eight months, then it's
over. That's no good for the future."
Though an Italian passport would open the door to working anywhere
in the European Union, Favale hasn't decided to leave just yet. "It's
an insurance policy," he says. "I think it would be painful for my
grandfather to hear, because he came to this country with the idea
that things would be better for his family in this new country. In a
way," he adds, "my going back there would be like saying he wasn't
right."
(c) Copyright 2001. The Christian Science Monitor
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