Is it Time to Give Up on Brazil?

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I have attended and spoken at plenty of events in Brazil, the US and other countries.  There is usually a favorable view (often tinged with condescension) of the Brazilians, mixed with suspicion about the country’s unique and complex socio-economic culture.  The conclusion has nevertheless always been that Brazil is too big to ignore and that it is a beautiful place temporarily bogged down by failures largely of its own making.

But perceptions about Brazil are changing along with its image.  Faced with a severely shrunken and stagnant economy, vast political disarray and a societal meltdown many Brazilians, both elite thinkers and average citizens are throwing in the towel.  Foreigners are doing the same in the face of street crime and wanton murder and mayhem occurring on a daily basis with further signs of deterioration.  A vague sense of hopelessness and despair mixed with resignation is the prevalent feeling.

The current round of plea bargains, secret recordings, denunciations, indictments and accusations do not leave any major figure in Brazil’s political elite untouched.  Passion and anger seethe and erupt in personal attacks on opposing sides in the streets, on airplanes, and in Congress and other forums.  President Temer stands accused of being the Godfather figure of Brazil’s biggest mafia.  Former Presidents Lula and Dilma and virtually all of their staff member have been unceremoniously brought in for depositions or labor under a cloud of suspicion.  Billions of dollars have disappeared in an almost uncountable number of schemes with little hope of more than a penny on the dollar ever being recovered.  While members of Brazil’s elite sit in jail and others are in line, the judicial system has also come under attack for partiality and corruption.  Dilma’s presidential opponent, Aecio Neves, was only recently removed from his Senate seat due to a compromising recording showing his long-suspected illicit activities.  So Brazil’s three powers: executive, legislative and judicial have little or no credibility among Brazilians.  The 1988 Constitution remains in place yet everyone recognizes that reforms are needed but cannot be made because of gridlock and lack of consensus.  Brazil’s streets show the obvious consequences with over 14 million unemployed, rampant growth of informal activities–semi-legal to totally illegal – street crime, crimes against tourists and the vulnerable and an upsurge of killings in territorial disputes by drug gangs and organized crime.

The picture is not pretty.  Is Brazil headed for a Venezuela-like crisis?

Possibly, but there is a contrarian view, not necessarily of optimism but something closer to opportunism and hope.  It is based on a larger story taking place outside the realm of institutional weakness and governmental breakdown.  There are different threads in this narrative.  Here are a few:

  1. On the institutional level, the corruption scandals and their walk through the judicial system is actually purging Brazil, awakening consternation and revolt in civil society. In the long term, this will lead to resurgence and rebuilding.
  2. As to the economy, Brazil’s bureaucratic and protectionist system has sorely tested national manufacturing. The companies that survive will emerge stronger and can be competitive in the international economy based on the creativity and dynamism.  Brazil’s natural resources, including agriculture, forestry, mining and much else, will also spur economic growth.
  3. Just as the agriculture sector has modernized and now represents the growth sector of the economy, industry too can revive through specialization and a focus on innovation and competitiveness. The Brazilian market is large and Brazil remains a regional power in spite of the last years of decline.
  4. Brazilians again are emigrating in significant numbers.  But many will inevitably return as was evidenced in the boom years leading up to 2014 and the World Cup.  Return migration brings advantages of skills learned abroad, entrepreneurship and investments.  Very few deny that opportunities abound in all sectors for those with eyes to see.
  5. Foreign investors and so-called “smart money” is flowing into Brazil to take advantage of attractive valuations. These “capitalists” are not even necessarily betting on the long run.  They see opportunity for profit by buying at the bottom and selling on the inevitable recovery.  Foreign capital is flowing into traditional sectors such as oil and gas, mining, agriculture and even industry, not to mention innovative sectors such as alternative energy (wind, solar), education and online retail.
  6. Social networking in Brazil ranks second or third after the United States on most measures of usage. While the separation of data, information and productive content remains a universal problem, the access to all types of information gives Brazil’s user population an outstanding opportunity.  Many Brazilians already are successful entrepreneurs in this sector.
  7. Brazilians have always depended on a paternalistic and patrimonial state. But the collapse of the productive sector, the spread of corruption, and its institutionalization are creating and shaping the emerging perception that the model is no longer feasible.  This forces an awakening and perhaps a stronger drive to a more traditional liberal democratic model.  Of course, at this point, this is aspirational and the subject of ongoing debate.  Certainly given the disparities, supportive and corrective social policies in education and income distribution continue to be required.  A minority prefers socialism, perhaps something between Cuba and China, but there is no operational model of how this would work except for perhaps Lula’s first term which had little to do with socialism.
  8. Although there has been a lot written about Brazil being lost, most thinking and informed Brazilians still want an orderly, constitutional, and regulated transition to a new government. Institution building is a slow process and it will only take place through the regular holding of elections and improvements in education and access to information. It is a sticky wicket indeed but still taking place slowly, way too slowly.

So in the end, it is not yet time to give up on Brazil.  It is still a beautiful and viable place in spite of its politicians and government.  More time is needed to transform hope into reality.  Defeatism is bound to lead to defeat.

 

 

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4 comments on “Is it Time to Give Up on Brazil?

  1. Arnoldo says:

    I am surprised with how many people analyzing Brazil fail to see the most painfully obvious discrepancies and the obvious bringing of the Brazilian culture down to its knees:
    -Protectionism
    -Huge government
    -Educational system capitulating to marxist practices (we just approved the so-called gender ideology, most people approve of communist ideas without realizing it)
    -The unabated efforts to discredit every single institution, following Lenin’s Decalogue to the letter.

    Brazilians continue to fall prey to the predatory practices of the Government in terms of fuel pricing, toll, and all forms of taxation.

    There is no economic expansion with high fuel prices and high toll rates on the most important Brazilian highways used to flow goods and produce.
    Brazilians are forced by these practices to stay at home, to shrink, to not open new businesses.

    People try to sound intelligent with technical gobbledygook while the country falls deep into a nasty, terminal type of socialism.

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  2. David says:

    I think you are looking with a short term approach.
    I agreement that in the short term the environment look bleak. But in the long term everything of this nightmares is good.
    In financial Terms the cost of coruption is increasing and all the business man take this in consideration.
    Your ideia is diferent from the foreign investors, look the huge amount of direct investment.
    A believe that a decade from now all this horrible situation will be history.

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    • David, I like your optimism but a decade may not be enough time. Also you have a good point on the cost of corruption because obviously there has been a pretty straightforward calculus of cost benefit that in the long run failed to take into account loss of freedom.

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