In recent years, as public anxiety over growing inequality has intensified, policymakers and academics have started scrambling for some increasingly extreme solutions. India, for example, has launched massive programs to provide the poor with food and jobs, and the French economist Thomas Piketty has famously proposed a redistributive global wealth tax.
But there are big problems with such efforts. Huge, heavily bureaucratic programs such as India’s have proved inefficient and expensive. And the planet’s richest citizens are certain to use all their influence to block any proposals along Piketty’s lines from being implemented.
The good news is that these and other radical solutions are also unnecessary. Over the last dozen years or so, one country—Brazil—has shown that there’s a far better, less provocative, and more market-friendly way to fight inequality.
Not long ago, the idea that Brazil might have something to teach the world about reducing inequality would have sounded like a joke. Latin America’s largest nation had long been among the most unequal places on earth, a state synonymous with savage social injustice. The country may have been blessed with a large, youthful population and abundant natural resources, but for a long time, Brazil did as bad a job spreading its wealth as could be imagined. Even tiny, benighted Haiti was more equal.
At the turn of the millennium, about a third of Brazil’s population languished beneath the international poverty line.
In the 1980s and 1990s, Brazil moved from dictatorship to democracy and embraced structural reforms that finally brought hyperinflation under control. But the mass of the population remained trapped in rural penury or urban favelas, while the fortunate few soared over the country’s ungovernable megacities in private helicopters. At the turn of the millennium, about a third of Brazil’s population languished beneath the international poverty line (surviving on $2 a day), and about 15 percent was indigent (living on less than $1.25 a day).
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