I’m in the “model” Latin American country, Chile. Yesterday, I had to run some errands in Vitacura, which is part of the prosperous “favoured quarter“* of Santiago. It was a classic edge city day. Much of it could as easily have happened in San Ramon, California, as Santiago, Chile. I dropped off my MacBook Pro at a certified Apple dealer next door to a vendor of fine leathers. Walked on a tree-lined sidewalk past an Audi dealer. In the distance, the Marriott, a towering executive desk ornament, windows shut against the smog.
To keep all this prosperity running, you need a critical mass of people with money, right? Which is why an article in the Sunday print edition of generally elite-oriented newspaper La Tercera was so surprising. Here’s what Yale/UChile economics professor Eduardo Engel writes:
Slightly more than 6 million Chileans received a salary in 2010. How many received a monthly wage of more than 6 million pesos (US$144,000 a year)? Please, wait a second. Don’t keep reading, just answer. It’ll be worth the trouble. You have an answer? Second question: how many earned at least 2 million pesos a month (US$48,000 a year)? And third, how many earned at least 1.2 million a month (US$29,000)?
The answers are: For the first question, 6,000. Second question, 40,000. Third question, 125,000. Of a total of 6 million workers.
So: if you are, say, a university professor in the US, you would be in the top 1% in Chile. If you’re a first-year lawyer, you’d be in the top 0.1%. I bet that most of this blog’s readers are 1-percenters.
Henry Ford figured out a long time ago that if you want to sell high-priced products, you need to pay people well. Even though retail is the biggest industry in Chilean cities, retailers here have taken a different tack.
Opposite the article I quoted, there’s a full-page ad for the Banco Security MasterCard. Why pay well? Isn’t it better for the system to offer ever-growing levels of household debt? Consumer debt rose 11% year-over-year in the third quarter last year, the most recent quarter for which I see figures, on page 32 of the linked document. That’s not an unusual rate of increase in this neck of the woods.
You might think this has little to do with the energy situation, which is always my focus on this site. And then you might be surprised when stable, growing countries full of prosperous-looking people in new clothes line up behind a communist, or favour nationalisation of a company producing electricity or oil or copper.
Don’t complain to me that these are illogical responses. The 1% can sit around and complain about the irrational masses until their (our) heads are rolling in wicker baskets, but it won’t convince a cake-eating soul.
* This is a generally good, clear critique of why edge cities suck, though the history lesson is misleading. Favoured quarters were first identified in the 19th century.