The Olympics' first winners: Rio's 1 percent
If you drive a few minutes south of Copacabana, the beach that's currently teeming with American athletes and tourists, you'll stumble onto the richest neighborhood in Rio de Janeiro. Leblon, named after a French plantation owner, is a quiet, stylish enclave of young investment bankers and affluent families; when I walked through the area Friday night, I passed juice shops, gelato counters and a café selling $14 burgers and Caipirinha-flavored shakes. I stopped to watch the opening ceremony at a bar packed with well-heeled 20-somethings, one of whom told me that the reported turmoil surrounding the Games was overblown. "Now it's inevitable," he said. "People are like: Let's have fun."
Marco, 25, is a lawyer who grew up not far from Leblon, in Rio's glamorous South Zone. His father is a lawyer too. He said he had heard there were protests near some of the stadiums but that he hadn't seen them firsthand. He complained about the traffic, which was "stressful." I asked him if he thought the Olympics would hurt or help the favelas, the sprawling hillside neighborhoods where millions of locals live in abject poverty, and he admitted that, despite being born and raised here, he had never visited one. "Didn't have a reason," he said, shrugging.
The Olympics might be taking place in Rio this month, but they're really being hosted by two cities: The glittering beaches and upscale districts where most of the athletes, dignitaries and journalists who have descended on the region are staying this month, and, well, everywhere else. This is a microcosm for Brazil writ large. While spending programs directed at the urban poor have narrowed the wealth gap over the past two decades, those hard-fought gains have slipped during the recent recession. Unemployment and poverty are rising, and the GINI coefficient, which tracks inequality, is up.
Nearly half of the billionaires in Latin America, according to Forbes, live in Brazil, where the top 20 percent of the country earns nearly 60 percent of its income. "The poor got a lot better off in the past 15 or 20 years -- but the very rich also got a lot richer," said Alex Cuadros, a journalist who recently published a book about the country's titans of industry called "Brazillionaires." Districts such as Leblon, Ipanema and Barra, where the Olympic Park and media village were built, have become hotbeds for Rio's ascendant upper class. Many of the people who live in these neighborhoods live cloistered, privileged lives. They send their children to private schools, use private hospitals and live in gated complexes with enviable views. Some millionaires avoid the city's crowded streets altogether: They can skip traffic by flying over Rio in helicopters, which cost more than $1,000 per hour.
Cuadros, who spent several years investigating the affluent class, said the rise of Brazil's super rich is "intimately tied" to the current economic crisis, which was caused by a toxic brew of imploding commodity prices, soaring debt and government corruption. "The government subsidized large corporations owned by billionaires by giving them huge tax breaks, especially in the last six years, and hundreds of billions of dollars in low-interest government loans," he said. These elites also have benefited disproportionately from the run-up to the Olympics. Construction magnates -- some of whom are caught up in the current political scandal -- were given massive contracts to build overwrought infrastructure projects; officials are investigating some of them for skimming money off the top.
While the government has invested in a smattering of projects that will benefit the lower class, Cuadros points out that it has poured money into developments in wealthy southern neighborhoods such as Barra, the new endpoint for the much-touted subway line (which also runs through ritzy Ipanema). Once the Games are over, the athletes' village -- built by a billionaire with close ties to Rio's mayor -- will be turned into a luxury condominium complex. "There is a vast north side of the city where millions of working Brazilians live, and desperately need infrastructure," Cuadros said. "Despite the gains of the poor, and despite the social programs of the last decade or so -- the bias has always been toward the interests of the elites in Brazil."
Now there's this crisis, and who is being forced to give things up? It's the poor, far more so than the rich.Alex Cuadros
Between the financial crisis and the ongoing probe into ties between government and industry -- which has brought several businessmen to their knees -- the city's elites have taken a few hits. But many are already bouncing back. According to Bloomberg News, Brazil's billionaires have seen their fortunes rebound this year more than their peers in any other country in the world; as of May, Jorge Paulo Lemann, the country's richest man, added $1.9 billion to his assets. And while the government is flailing under a mountain of debt, Cuadros said Brazil's tax system, which is highly regressive -- dividends, for example, are untaxed -- is unlikely to change.
"Now there's this crisis, and who is being forced to give things up?" he said. "It's the poor, far more so than the rich."
When cities bid for the right to host the Olympics, they typically hone in on the concept of legacy, painting vivid dreams of how the Games will bring about positive, sustainable change. Rio was no exception. But while the projects littered across the city have lined the pockets of the rich, it seems unlikely that many of them will improve the lives of those who need it most. According to a recent census, some 8 million Brazilians live in urban areas without garbage services. Imagine if the government had invested a fraction of the Games' $12 billion budget into those neighborhoods instead.
In Leblon, where the cobblestone sidewalks were spotless and the air smelled like orchids, complaints about the event were few and far between. When the ceremony spotlighted the city's favelas, bathing a facsimile of the slums in neon lights, the people in the bar craned their necks. For some of them, it was the closest they'll get to the other side of Rio, a city that contains multitudes living miles apart.