Chapter 3

Redistribution to the Rich

Abstract

In unequal societies, the judicial, political, and regulatory systems tend to be unable to restrain the ability of the very rich to disrespect rules and property rights. Institutions are weak and do not protect other members of society against expropriation by the rich, which reinforces inequality by means of concentrating investments, human capital, and access to credit.

Brazil has some features that fit this description. The first is high barriers to international trade, which come from the ability of national producers to obtain government protection for their businesses. The second is the sluggishness of the courts, weak property rights, and weak regulatory agencies that are susceptible to political ...

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