Bolivar Lamounier on Brazil’s Class C

http://brazil-weekly.com/opinion/why-you-shouldnt-get-too-excited-about-brazils-new-middle-class/?goback=.gde_4640694_member_211529522

This is an interesting interview in English and presents concerns about the limits and sustainability of Brazil’s new and growing middle class.  The article refers to the so called “Class C” which has been typically defined by marketers and media in terms of income without an in depth look at other sociological variables.  The important point is that due to the weakness of Brazil’s educational, especially the public but also the private entities in the sector, the newly minted members of class C do not have the educational, technical, information background to sustain their position in the face of declining economic performance and over indebtedness.  Like other observers, Lamounier sees the credit/consumption model of growth running out of steam.  As people fail to pay their debts, the financial sector will reduce lending which will affect production which in turn will hit profits.  The virtuous cycle ends and we face stagnation.  If that actually is going to happen, I am not sure.

One thing though that stands out in my mind is that investments in education in Brazil provide very reasonable returns even in down cycles.

 

 

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