Inequality increases social spending on security – 12/21/2023 – André Roncaglia

Latin America is a violent region. Responsible for almost half of the world’s homicide victims, it accounts for just over 8% of the global population. It is also one of the most unequal regions on the planet.

A recent study by the International Monetary Fund (IMF) shows that, in addition to painful family losses, crime inhibits capital accumulation. By scaring away investors fearful of theft and violence and increasing the costs of living and operating companies, insecurity reduces productivity by diverting resources to less productive investments, such as residential security.

Fighting crime improves the allocation of resources, but it is important to attack its deeper causes. A study by Daniel Hicks and Joan Hicks (2014) provided evidence of a correlation between crime and inequality: regions of the USA where there was greater conspicuous consumption (cars, jewelry, expensive restaurants, etc.) also suffered from greater crime.

Brazil is one of the countries with the greatest economic inequality in the world. Here, R$20 of every R$100 generated goes to the 0.5% richer of the population. Economic deprivation, the concentration of wealth and the feeling of insecurity drive the need for asset protection.

Research by the Datafolha Institute showed that insecurity grows with income level. Data from the Brazilian Public Security Forum justifies the fear: crimes against property, such as robberies and thefts, have increased in recent years in Brazil.

The spatial concentration of wealth also correlates with higher rates of property crime. High-value properties become attractive targets for criminals, which leads owners to invest in more sophisticated security systems. This includes hiring private security guards, installing surveillance cameras and alarm systems, with private security, car armoring, layers of cybersecurity against scams and financial crimes and, as of 2019, with weapons, lots of weapons.

A recent tragic event exemplifies this pattern. Encouraged by Bolsonaro’s policy of public violence, the paranoid businessman with his home security fired his two pistols at a civil police officer and encouraged his private security guard to do the same. All three ended up dead.

The DataViva platform shows that, between 2003 and 2021, monthly income in this sector grew from R$400 million to R$2 billion, with direct monthly spending on security and surveillance activities varying from R$193 million to more than R$ 1 billion, while the number of jobs grew from 266 thousand to 500 thousand.

For the majority of the population, however, this protection is not accessible. The Continuous National Household Sample Survey showed that, in 2021, around 1.8 million Brazilians were victims of robbery (1.1% of the population), of which 63.2% were black or mixed race and 38.6% of the victims had not even completed high school. Wealth concentrated at the top generates widespread insecurity below.

Common problems require State action. As in health and education, public security policy cannot be outsourced to ordinary citizens, under penalty of generating more insecurity for police forces, family tragedies and poor allocation of resources in the economy.

The most effective way to combat crime is to reduce wealth inequality and expand the supply of public goods, via progressive taxation and inclusive economic growth.

The democratization of opportunities reduces the supply of labor for crime and creates a safer and more equitable environment for everyone, not just those who can pay.

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