Chapter 15 addresses economic inequality and its impact on democracy in contemporary Latin America. It illustrates the significance of inequality with discussions of Brazil and Chile, and shows that wealth and income are unequally distributed and that certain categories of citizens (rural dwellers, indigenous people, informal workers) are among the poorest Latin Americans. It stresses that it is paradoxical that several decades after Latin America achieved democracy – a political system based on the idea that citizens are political equals – social inequality remains deep and pervasive. Yet it accounts for the difficulty faced by democratic governments in reducing economic inequality through redistributive policies in terms of the structural and instrumental power of economic elites, the control of the media by economic elites, and the actions of politicians and state agents. The chapter also stresses that persistent economic inequality has negative consequences on democracy and shows how recent political developments in Chile – for decades seen as the poster child of political and economic success in the region – are a warning sign against complacency with economic inequality.

Chapter 8 expands on the theoretical implications for the study of state building, public safety, and taxation. It also discusses the security benefits that elites’ investment in strengthening the state has brought about in the region. Further, the final chapter addresses the sustainability of the state-building efforts discussed in the book and their potential consequences for other aspects of political and economic development.

Chapter 5 describes and explains the state of democracy in contemporary Latin America. It shows that the most common problem of democracy is that democracies are low-quality or medium-quality ones. It stresses that even though Latin America has achieved and stabilized democracy, a notable success, it has not democratized fully. It also notes that democracy has broken down in some countries (e.g., Honduras, Venezuela). It argues that multiple factors account for the state of democracy in contemporary Latin America. Ideological differences over neoliberal economic policies have fueled some problems of democracy, as is shown in the cases of Honduras and Venezuela. Changes in various aspects of the international context have helped to stabilize democracies. Additionally, the region’s problems of democracy are also explained by some enduring features of Latin American politics: the exploitation of advantages that accrue to incumbency in political office, the influence of economic power, and the weakness of the state.

The case of El Salvador illustrates how temporal variation in the strength of government–elite linkages played a role in explaining the difference between a failed attempt in Mauricio Funes’ administration and a successful one in Salvador Sánchez Cerén’s administration. Even in the context of one of the highest levels of violent crime in the world, the country’s first left-of-center administration failed to adopt elite taxes in order to increase public-safety expenditures. It wasn’t until the government formed a coalition with right-of-center parties and linkages with the business sectors improved, that an increased tax burden on the wealthy became possible.

Chapter 3 explains how the conventional crisis-oriented approach in the literature cannot explain variation in efforts to involve elites in the state-building enterprise. Instead, it argues that both demand and supply factors must be taken into account and disaggregates the components of each, including whether elites can satisfy their demand for public goods in the private market, the ideology of the government, and the extent to which linkages between business elites and the government exist. Chapter 3 also evaluates alternative explanations, including the availability of nonfiscal resources such as oil rents and foreign aid and the degree of inequality in society.

Chapter 2 discusses how the sense of nationhood in Latin American countries has evolved since 1880, and how the construction of nations has been closely linked to racial and ethnic identities. It shows that nations were not built from scratch, and that nation builders were conditioned by legacies from pre-Columbian and colonial times. It also demonstrates that nation building is an ongoing, never-finished project. Indeed, it identifies three distinct periods in the process of nation building. In a first period, an elite vision of the nation, which took white, civilized Europe as a model, prevailed. In a second period, a national-popular vision of the nation took center stage, and el pueblo (the people) was considered the true essence of the nation. Finally, in a third, ongoing period, nationhood has been understood in multicultural terms and, for the first time in the history of Latin America, the distinctiveness of indigenous peoples and of Afro-descendants has been recognized and treated as legitimate. It argues that, over time, the sense of nationhood has become more inclusive of different races and ethnicities.

Chapter 3 identifies and discusses three periods in the record of democracy of Latin American countries since 1880. In a first period, one of oligarchic dominance, most countries had a variety of types of authoritarianism and only a few countries had experience with partial democracy. In a second period, that of mass politics and regime instability, the entry of the masses and women into politics created pressure for democratic change, and the region started to gain considerable experience with partial and fuller democracy. However, tensions due to the transition from elite to mass politics and then the Cuban Revolution led to political polarization, high levels of violence, and rule by right-wing dictatorships. Waves of democratization were followed by waves of de-democratization. Finally, in a third, ongoing period, Latin America entered a democratic age. Nearly every country in the region has had a democratic regime. Democracies have become more inclusive, as restrictions on the right to vote, that excluded women and the poor, were no longer imposed. Democracies have also endured. This chapter shows that the history of democracy in Latin America is one of considerable progress.

Focusing on Colombia’s “Democratic Security Taxes,” Chapter 4 is the first of four case studies illustrating causal logic of elite taxation in the adoption of security taxes. Since 2002, the government in that country has adopted a series of taxes on the wealthy to address a deplorable public-safety situation. The revenue from the taxes has played a central role in funding efforts considered successful in reducing violent crime. With a historically difficult conflict and traditional set of elites, Colombia is a least likely case in which elites would have become invested in financing the strengthening of the state. Moreover, with the approval of elite-funded security taxes on multiple occasions across administrations, the Colombian case allows us to study the conditions under which this investment in state building becomes sustained over time.