In Cooperation with INGSA: Panama City, Inequality and Covid-19

Introduction

This essay will present the problem of territorial inequality in Panama from a multidisciplinary perspective, a case which also applies to other middle-income countries. Territorial inequality is here defined as the pressure generated by asymmetries in access to territory due to sociocultural and socioeconomic causes. The concept of territorial inequality has the virtue of horizontally incorporating economic, social, and environmental criteria. With the help of history, these forces have ended up anchored in city-space; lack of access to property, unequal urban infrastructure investment in impoverished areas, dominant patterns of urbanization that portray the poor as clients of corporations instead of other more constructive ways like that of empowered citizens. The phenomenon of inequality has become more important after the Covid-19 crisis as new barriers have risen without the extinction of the old ones. Pressure has mounted on the economic system due to government debt and fewer resources. The same applies to the private sector. These dynamics make centrality- the importance of an urban center when compared to the peripheries- even more vital, aiding the process of social and economic stratification.

This essay will describe what we have learned after embarking on research studying different aspects of territorial inequality in Panama City since 2013, through 3 different projects. In the first case, starting from 2013 we focused on studying the interdependence of the economic, social, and environmental systems that make up the city, and their role in allocating capital and poverty. We studied literature coming from different disciplines, linking economic and social decisions to territorial dynamics in the city. This project led to the publishing of 2 books, Urbanofobia (García de Paredes, Pablo, 2015) and Panamorfosis (García de Paredes, Pablo, 2018) (Both available here Pablo GDP), summarizing the findings. In the second case of our doctoral project, the methodology we used to understand social-spatial representations involved virtual reality experiments with 51 students from different faculties, ages, and backgrounds, at the University of Panama (Inicio | Universidad de Panamá (up.ac.pa)). The objective was to explain how our travel patterns affect representations of other social classes and city areas, and how did those representations translate into decisions regarding economic and social choices, like where to live, work, sell our products or buy. Using qualitative and quantitative data, we deployed factorial and hierarchical analysis that showed that composite variables like the ratio of available time over daily travel patterns (distance from home to work or study locations) are sensible predictors of certain worldviews and representations. In other words, behavior in space also affects economic and social behavior, further expanding the complexity in inequality studies. Finally, this essay draws from a third research project that includes 135 in-depth surveys carried out at three different neighborhood typologies in Panama City, as part of our work as INGSA knowledge associates (2021 INGSA Knowledge Associates – INGSA) examining the use of housing sector evidence in housing policy during Covid-19.

Drawing on these three research projects, in this essay we look at some of the possible factors for growing inequality in a post-Covid world, using our research to try to explain the system of territorial inequality. It is essential to clarify that inequality is complex. Its modeling is not universally applicable among developed and underdeveloped countries. It is widely understood that in Latin America, inequality is a historical, territorial, social, and ethical problem. That is not to say that Latin America has always been unequal. Even though some factors date back to colonialism and are operationalized today through racism or culturally accepted stereotyping, the region has seen years of a more egalitarian society in the past (Williamson, 2009). We will contend that it is a historically sound hypothesis to regard the fast unplanned expansion of Latin American cities during the 20^th century as one of the main culprits of current-day inequality. According to this hypothesis, urbanization patterns are one of the main drivers of inequality. It might be the case that neoliberalist urban planning supports colonialist worldviews, but the evidence does not support the contrary hypothesis that colonialism inspired the neoliberal city.

The case of Panama; poverty reduction without sustainable job creation

Our ongoing interest has been finding and explaining the factors that sustain inequality in middle-income countries. In the case of Panama, our research shows how territorial, economic, and social elements combine to generate barriers to economic growth within peripheral areas. They facilitate the domination of social groups at two different dimensions: the internal dimension, through dominant traditional elites, and the external dimension in the case of contact with enduring colonial distributions of power within the world system (Wallerstein, 1974). The means of production are historically unequally distributed, mainly due to a growth pattern originating in the 20^th century, that persists today and has been taken to another level with the financialization of the world economy. As a result, capital allocations in financial markets further increase inequality. Financial markets are more developed in rich countries and the Latin American region excess capital moves north. Today, territorial conflicts overshadow racial issues stemming from colonialism as a driver of inequality. As an example, historical events like the Mexican revolution or the independence of Panama were connected to conflicts over land[1], and nowadays antinarcotics operations are equally multinational in scope, merging territories and blurring state boundaries.

Our first attempt at describing the territorial problem of Panama will begin with what we call the external dimension. Panama City has had a demographic boom since the 1970s, resulting in an unplanned city, totally mono-centric and practically linear in its geometry, with 75.69% of households in the form of individual single-family residences (INEC, 2021b). Since then, the Panamanian state allowed the expansion of North American sub-urbanism as the dominant housing typology to the detriment of denser neighborhoods and pedestrianized commercial avenues in all local cities. This has proven to be a serious mistake.  The population in countries like the US and Canada have a revenue base leveraged by multinational companies, which enabled the territorial expansion of suburbia. Panama does not have the support of a large corporate base, nor a state-financed one. The economic expansion of Panama over the last 30 years can be divided into 3 periods in which inequality decreased significantly: stage 1 originates after the United States invasion in 1989 that dismantled the scaffolding of the military regime. During stage 2, from the 2000s until 2014,  Panama had a construction, immigration, and financial offshoring boom while the state carried out major infrastructure works. From 2014 to the present, stage 3, the city has progressively entered a period of economic decline and decadence, and Covid-19 arrived at a very delicate moment in the country’s history.

With 65.08% % (INEC, 2021a) of Panama’s just under four million inhabitants living in urban areas, the current GDP composition is closely related to these above mentioned development stages. As a result of these economic developments, manufacturing has declined significantly. The sector has been abandoned as a national income source in favor of neoliberalist policies favoring services, construction, asset speculation, and the financial sector. Until recently, the national economy depended on three pillars- A low-tech service industry, state employment, and the construction industry. After the collapse of off-shoring (Panama Papers) and the bursting of the real estate bubble (end of massive immigration from Venezuela), only state employment and the service economy create employment growth at the local level. The social and territorial consequences of these stages of development have been particularly elusive to social scientists and have been the focus of our work in recent years.

Inherently connected to the external dimension presented above, the internal dimension is mediated by social complexities. Since inequality is a complex and multidimensional problem, it is better studied using an approach that is environmental, social, and economic. In Figure 1 (below), we can see the three areas of exclusion in the Panama City that generally approximate income level boundaries. Although the borders are not barriers but schematic limits, we use lines for didactic purposes. The three exclusion zones are representative of the historical-centripetal spatial organization in Panama City (Garcia de Paredes, Pablo, 2015). Strong gentrification processes depart from the center radiating towards the peripheries. This process of centripetal gentrification happens because of the scarcity of resources and employment linked to the external and internal forces of the country’s development model. In other words, activities that create value added are very concentrated and no forces push those resources out to the outskirts of the city; infrastructure investment is generally low in these areas and the labor force has little education. As an example, manufacturers do not establish themselves at the borders of the city where the labor force sits idle due to a strong alignment between the country’s development strategy and private capital investment. Investors prefer real estate speculation, logistics and other revenue sources instead of the non-aligned production of goods that could eventually create a more resilient and balanced economy.

The indicated zones can be described as follows: Zone 1 is the zone with formal employment and higher income. In type 2 zones, employment conditions are varied, and income is generally lower. In type 3 zones, employment is mainly informal. The coexistence in the center and during the displacements of these populations could not be more disparate. Our research shows that, just as architectural typologies change from one zone to the other, the use of tools such as cars and computers, changes dramatically. The result is a diverse matrix of meaning revolving around each social group, linked to their house location (according to our zones) and lifestyles. The diverse socio-cultural profile of the population connects to specific territories due to spaces of representation (Warf, 2021). The differences in architectural typologies, urban infrastructure, tool use, and racial topologies are strong. social relations, skills, and tools are completely reinterpreted by these groups, increasing differences and alienation. In other words, the shared plane of communication is limited, and the gap continues to widen due to accelerated digital globalization. As the access to digital culture is equally stratified, growing digital barriers lead to labor exclusion which translates into more sociocultural exclusion.

Sociocultural consequences of the development model

As a result of years of economic expansion in the region and the country, poverty had decreased considerably, until the arrival of Covid-19.  and with decline in poverty, inequality shrank from 56 (Gini coefficient) in 2003 to 49 (Gini coefficient) in 2018 (CIA, 2021). Along with the reduction of poverty other positive developments included expansion in university education, improvements in urban infrastructure, increased subsidies for the poor, improved public health, and the local economy’s access to imports.

Among the negative aspects, one can highlight the lack of urban planning, a declining manufacturing sector, low quality primary and secondary education and a neglect of scientific research and technology development. However, the original sin of Panamanian neoliberal capitalism is the lack of territorial planning. This is where the sociocultural consequences of the economic model are concentrated. According to Vygotsky’s cultural-historical paradigm, the experiences of the territorial-material and social system are an essential part of the formation of the individual. Therefore, successful planning cannot be achieved without paying attention to territorial inequalities. If one achieves growth through speculative means, while social- territorial structures remain the same, there is a risk that such spatial dynamics might unravel created wealth. Such disregard to territory can render the socioeconomic system vulnerable to external or internal shocks. This dynamic is strengthened within a society where the system of inequality is constantly reinforcing itself, due to the internal and external dimensions. Starting from this critical perspective originated by cultural-historical theories (Panissal & Bernard, 2021), we will present the findings of the three different research projects.

 

The system of territorial inequality

 

The illustration of the system of territorial inequality (Figure 2) allows us to visualize how three complex phenomena arise from the interaction between the economic model’s formation (internal and external dimensions) with a given society and territory. First, in phenomenon A called socioeconomic alignment, the formation of social groups is consolidated by a gradient of access to the center of the city or town. The more power a social group has within the system or economic model, the greater its access to the center. We define access as the ability to occupy, buy, sell, live in, appropriate, and move around.

In the phenomenon B or sociocultural consolidation, those social groups specialize and constantly renegotiate their position through the type of work they do, their income, previous household location, and family history. In other words, they develop identities and attachments along their lifestyles, conditioned by their profession and daily travel patterns.

Sociocultural consolidation can be exemplified by mentioning a specific social group. Let us imagine that we study professionals working in the local finance sector. They use the city in a particular way, and their salary allows them a specific type of access; the number of kilometers traveled, their residential choice, be it close or well connected to the financial cluster, their preferred mode of transportation, their privileged access to credit, etc. All these actions will depend on the relative position of their economic sector and their employment characteristics compared to other professions.

Finally, phenomenon C, reverse socioeconomic alignment shows how social groups with different sociocultural profiles manage to influence the political economy. Through reverse socioeconomic alignment, the rich for example influence the rules of the market in their favor, and the working classes use syndicates to obtain higher wages with respect to capital revenues. the inaction of the social class is also an example of reverse socioeconomic alignment.

 

 

In sociocultural consolidation, social groups develop sociocultural identities based on their level of access to the city center according to the zones of exclusion. First, people assume the role they have negotiated (factory workers, doctors, journalists, etc.) within society’s economic model, mediated by external (neoliberal capitalist forces in the world system) and internal forces (linked to economic variables). They then attach meanings to their daily itineraries in connection with their social class and territorial position. This formation of a particular culture attached to the position and social class, is known through a type of duality within the social sciences, partly as social representation (Jodelet, 2006) and as spatial representation (Hátlová & Hanus, 2020). Our research shows that cosmologies and imaginaries belonging to each social class, role, and type of urban itinerary are formed in this dynamic process of routines, habits, and repetition. In other words, daily spatial habits are strong predictors of culture in heterogeneous middle-income country environments because of their shared deep stratification, while race has declining importance. These findings have consequences for social and economic policy.

Considering this, architectural and urban typologies close to the city center constitute appropriable landscapes for certain classes and not for others. What this means for policy is that providing access to the city center without paying attention to itineraries might prove a waste of public funds. Since traveled paths are as important as having access to the center, it does not suffice to change one without changing the other. Groups that live in rural areas or on the outskirts of the city and must travel more to reach the city center, will achieve a lower landscape appropriation level regardless of access. This hinders the social imaginaries that are key to the economic and social reproduction of the capitalist system and undermines the possibility of decolonial landscapes to emerge (Mattioli, 2018). This partly explains why people below the poverty line feel excluded.

In our third study (n=135), they describe themselves as not represented by the authorities and without power to interfere in the direction of the economic model. That is the case of the populations (figure 3) surveyed during the month of March 2021. In summary, sociocultural consolidation connects with architecture, the city, and territory through mobility and residential habits. Housing types (materials, organization, size), their relative position, and the objects each house contains or is connected to (i.e., public transport) are all elements that sustain the system of territorial inequality. In this way, the city and the home connect creating class representations. We refer to this as social spatial representation to highlight and illuminate the intercorrelations between these aspects.

 

In reverse socioeconomic alignment each group recurs to their power or number to influence economic activities and resource allocation. These forces remain poorly explored in territorial inequality studies. The system’s inequality levels rise when the upper and dominant classes manage to strengthen their relative position by lobbying for laws or acquiring crucial land around the city center. Additionally, our results in the empirical projects (n=51 and n=135) showed that people strengthen their identities through spatial appropriation, making their own power to affect the economic system relative to their sense of social power. While the rich are conscious of their power, the poor experience lack of such. That is how structural social factors keep populations under poverty (Bourgois, 2001) keeping inequality high. Their role, profession, or occupation becomes a structuring factor, defining their identities in ways that are difficult to change through economic planning or other types of public policy. Similarly, exclusion from the labor market is condemnation for the lower classes due to identity links between unemployment and the self. Alienation within poor communities and prejudice within rich and middle-class communities are born, establishing social-spatial boundaries between rich and poor, effectively maintaining dominant positions through the system of territorial inequality.

Effects of Covid-19 on territorial inequality in Panama

As a result of territorial inequality, social groups in middle-income countries exhibit profound socio-cultural differences, in ways that remain hard to grasp to scholars in developed countries. With the arrival of Covid-19, sociocultural diversity caused variation in risk mitigation and adaptation strategies. People in different social groups and classes adopted conscious and unconscious strategies to manage the pressures of the Covid-19 crisis. These strategies can become factors that either amplify inequality or attenuate it. Among the behavioral data we collected during the pandemic we observed people’s coping strategies. In low-income areas people strengthened their interpersonal information networks. Others engaged in ad hoc purchases of medical supplies, such as analgesics or over-the-counter flu medicines, to compensate for health insecurity (García de Paredes, 2020b) (Araúz, 2020). We observed a worsening of feelings of alienation and hopelessness among the poorest groups in urban areas.

During the confinement period, official media discourse psychologically and unjustly penalized the lower classes of the city through a social distancing mandate that was impossible to accomplish by the poor populations. This phenomenon was evident in our surveys of informal areas. People said that it was not easy to keep social distance while living in overcrowded conditions and taking public transportation, and their self-declared levels of infection with Covid-19 were alarmingly high. With regards to communication, no public policy was put in place to moderate the conflicting message of social invisibility. The state’s communication meant, -in a tacitly self-defeating declaration- that poor people’s problems were invisible. This further reinforced alienation during this crucial time, in complete accordance with the logic of our system of territorial inequality.  If we consider the higher echelons of government as mainly populated by elites with their cultural discourses around power (García de Paredes, Pablo, 2019), it makes sense that the problems of the poor rest badly understood within government circles, especially due to social-spatial representations that make communication between distant cultures hard to achieve. Policymakers might assume that being in the same country grants a level plane for communicating public policy. Our research shows otherwise, pointing towards a second barrier for evidence-informed policy (Parkhurst, 2017); the elite’s social-spatial representations which accommodate erroneous assumptions. We identified these misunderstandings to be relevant to policy trajectories during the Covid-19 crisis.

Within the surveys we carried out on middle-class neighborhoods we observed an acute loss of wellbeing due to the disarticulation of their daily routines, employment, and general leisure and travel habits. This pattern has more communalities with the experience of Covid-19 in higher-income countries (Bonacini et al., 2021) within their low-middle income classes. In our surveys of the upper classes, this pressure was controlled using vast available resources, especially in the shape of available property in coastal and mountainous regions of the country. Many high-income citizens moved to other cities and made significant modifications to their city homes to adapt to mobility restrictions. Economic means and ownership of second homes became key elements in coping with the pressures during confinement.

Employment loss and disappearing demand for labor have not ceased. This is a crucial element within our analysis considering that more than 40% of local workers are in precarious working conditions in Panama. We believe this implies a possible growth of territorial inequality. Therefore, while the upper classes expand their areas of territorial coverage during the pandemic, the lower classes see their areas of action more restricted (Hagerstrand, 1970) further narrowing their social-spatial representations, socialization opportunities, and ecological development (Bronfenbrenner, 1979).

We contend in this essay that in the future, problems of territorial appropriation may lead to worsening inequality. As we saw in the system of territorial inequality, especially in sociocultural consolidation, phenomenon B, territorial appropriation is part of the negotiation carried out by social groups to form a specific sociocultural identity. What happens when certain social classes are reducing their areas of coverage while others are expanding them? What different levels of cognitive adaptation might emerge? Will they be beneficial to the lower social classes? Whether consumption or production decisions, like choosing a profession, or choosing social relations, they are all decisions constructed in the territory through repetition. How can the lower classes improve their relative position if they have less information to base their decisions? How do each group’s role and social position compare to wealthier classes? Are all vulnerable groups equally prepared to adapt? These questions are all related to territorial inequality. At times it is easy to forget that business decisions or the future of cities are related to cultural traits embedded in social-spatial representations pertaining to specific cultural groups (J.R. Kantor, 1982) that influence policy. The environment, with its buildings and urban typologies (García de Paredes, Pablo, 2018) deserves our attention and that of policymakers. More social conflict and pressure on vulnerable groups stemming from a lack of attention to the built environment can only hinder the development of the country.

Paradoxically, we also found some counterintuitive facts. In our analyses of pre-pandemic data we had found that people with higher incomes and shorter home-to-work commutes (Dias & Ramadier, 2018) were predisposed to ignore the lower classes and develop certain types of class prejudice against them (García de Paredes, 2020a). This explains the pervasiveness of cultural stereotypes in unequal societies. In part because of dominant class culture, these people exercise a seemingly willful ignorance of the ways of life of the dominated classes, making them invisible. Specifically, when asked what the lower classes do for a living and how they spatially relate to the city (places they go for supplies, for example), wealthier individuals responded with disdain and seemingly willful ignorance. In other words, they prefer not to know, rendering poverty an invisible problem. Such strategy might be employed to help them avoid the ethical complexities of living in highly unequal cities.

Will this behavior change at a time of growing social conflict due to unexpected pressures on family incomes?  At this time of economic crisis, social conflict will not diminish. The prejudices against the lower classes have every incentive to increase. Both for class conflict and health reasons, the living conditions of lower classes will not be voluntarily improved by the classes immediately above them, who are guarding their hard-earned positions in a context of low economic opportunities and neoliberal structures. Judging by the dynamics observed in our studies in vulnerable areas, the pressure on income has only created more selfishness and less solidarity in society. On the other hand, if social conflict were to decrease, we could conjecture that inequality would decrease in the medium term. Social conflict is also reflected in territorial inequality and serves as a final accent on the pertinence of applying our system of territorial inequality to the analysis of highly heterogeneous societies.

Conclusion

The case of Panama shows interesting dynamics representative of highly unequal middle-income cities. It is a historically unequal society. The last 50 years have seen an unparalleled demographic and economic boom without precedent in its 500-year history. Because of Covid-19, that boom has experienced a dramatic downturn that has been strengthened by structural conditions tied to the territory. Everything seems to indicate that the gap between social groups will increase as city spaces are renegotiated to the detriment of the poor. Current labor dynamics are turning daily life into a new culture of survival and precariousness for middle-class citizens, which is a new phenomenon for a good part of the young workforce who have only known booming economic years. The resulting conflicts, within social groups and generations, cannot be resolved without focusing on the territory. One cannot change a system if one is not a part of it. In this context, what prospects remain for sustainable cities and ecological transitions when dealing with other crises such as climate change?

Urban planning can change the economic model and its sociocultural consequences (García de Paredes, Pablo, 2018). Action on the territory includes rearticulating local economies to enhance the sale of local products and revamp manufacturing in the face of fledging service and construction sectors.  Other tools include boosting small businesses by partitioning state contracts, increasing the interdependence of neighborhood economies via strategic localization of small local markets with government incentives to bring economic activities out of monopoly businesses like a supermarket or multinational chains and onto locally produced goods and services, creating incentives for buying from small businesses within those monopoly owned chains, to increase competition against international brands within those products were Panama has competitive and strategic advantages. Diverse architectural typologies with pedestrian spaces are ideal for introducing these changes, which means that zoning laws must change to bring economic opportunities and better resource allocation.

Due to the Covid-19 crisis, existing socio-spatial pressures are reinforcing social group imaginaries and pulling people further apart, resulting in more social conflict. The lower classes will become more alienated, and their world views more disparate when compared to those of other social classes, complicating the economic landscape and future public policy traction. Social institutions such as paid labor, family, government, or business organizations become broken within the lower classes’ representations. Evidence shows it is hard to make sound economic planning decisions without looking at territorial inequality variables. Sound territorial appropriation levels can be accomplished by guaranteeing access to urban centers at the national level. How is production supposed to grow in highly exclusive urban environments when space is unavailable for the poor? External changes that advance the relative position of the country in the region or the world, and internal changes that decrease social conflict, can improve territorial appropriation and access to urban areas. This is mainly due to the interlocking pieces of the economic, social, and environmental systems, exemplified by our system of territorial inequality. Constructive environmental actions affecting territorial inequalities are felt on the sociocultural profile of the lower classes and will improve the socio-economic prospects of the whole population. Such changes could bring hope and real job opportunities to build a more egalitarian society. What our findings show is that contemporary city morphology is not simply a background against which the life of humankind evolves, it is a web of meaning that allows choices to be made, modulating behavior in complex ways.

 

[1] In the case of Mexico, the haciendas did not allow ownership by the poor. In the case of Panama, the problem was where to build a canal. In Mexico, land conflicts led to the 1910 revolution, and, in Panama, they led to the split with Colombia.

 

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