In with the Old


Institutional gymnastics in Brazil deserve a gold medal. Politicians orchestrated a slick maneuver that led to President Dilma’s impeachment but saved her, at least temporarily, from the loss of the right to hold political office in spite what the Constitution mandates. This bit of political chicanery orchestrated by Renan Calheiros, the Workers Party (PT) and Supreme Court Justice Lewandowski, and likely sanctioned by President Temer, amply illustrates the permanence of Brazil’s political culture of accommodation and innovation through the use of the “jeitinho”.  The move further weakens respect for the Constitution, the Supreme Court and the overall political process.  In the end, it means institutional degradation and for anyone looking from the outside in, they can only scratch their head and wonder if Brazil will ever have rules that apply in a universal fashion.  If you are a foreign investor thinking about playing in this trillion-dollar market, what is your impression?

The impeachment (with attenuation) raises basic questions that demand answers: Is Brazil’s culture perverted in such a way that institutions cannot solidify and function? For how long will the Brazilian political body be subject to the whims and wiles of manipulative and astute members of the political elite?  Why do the major economic players condone and acquiesce in such ad-hoc maneuvering?  What is necessary for institutional stability and growth?

The short answer goes back to Brazil’s historical heritage, the weight of slavery and patrimonialism. Brazilians are aware of and frustrated by contemporary anecdotes about the difficulty of encountering the promised future.  Some say that Brazil needs another 500 years to shake off the elitist centralization inherited from the Portuguese crown plus another plus another 500 years to remediate the sins of the world’s most intense slave trade.  In 1800, slaves made up more than half of Brazil’s population and Brazil still has the largest share of African blood in the Western world.  Paradoxically, miscegenation, partially driven by demographics, led both to the myth of racial democracy but also reaffirmed Brazil’s unequal distribution of power and property based on racism.  “White” society prevailed over the many gradations of darker and poorer.  Brazil took its time in abolishing slavery (1888) and even by the end of the Empire (1889), suffrage in the newly proclaimed Republic favored the rural based patrimonial elites who could control “their” people and guide the limited suffrage that would come into place.  Illiterates were barred from voting and education was restricted, thus favoring the status quo.

From the abolition of slavery and the Republic to the present day, the vestiges of the system remain in place.  Even the shift of population from 90% rural in the 19th century to 90% urban in the 21st has only slowly, extremely slowly, begun to reverse this inheritance.  Brazil remains stubbornly unequal in education, income and the distribution of power and participation. This unevenness can be seen along the racial spectrum from white to black, rich to poor, the privileged to the destitute, from those who live in hillside favelas to those with beach-front homes.

Even as Brazil industrialized, urbanized and made great strides in wealth generation and economic opportunity, social advancement remained highly dependent knowing the right people.  Brazilians always have had to value what is called a high IQ or in Portuguese, Quem Indica – Who do you know?  Years ago, young women aspired to marrying a functionary of the Bank of Brazil and today young people are still avid seekers of employment in the public sector and preferentially to a post based on personal referral.

Since the 1930’s and even before, economic development has been state led.  Those with political power and those able to create economic surplus looked to the government for investments, loans, incentives, protection, and the benefits to be derived from positions and sinecures in state run enterprises.

With power and resources, those in government treated society and the population in a paternal and/or populist manner. Look at how members of Congress members of the president’s administration behave. Their policies and favors are for friends and family.  Although society and the economy have grown in sophistication and complexity, the political system remains largely traditional.  It is and always has been the duty of the governing to anticipate, control and genuflect toward popular demands.  In Brazil, the government has a long history of signaling and promoting social and economic benefits.  Thus today’s labor code (CLT) with its roots in the Estado Novo dictatorship provides Brazilian workers with the benefits of European social democracies before these were actually demanded and negotiated in a political struggle.  Cooptation and control prevailed over political mobilization and the winning of rights through active political participation.

While Brazil is a capitalist economy, nothing gets done without the government.  Statist ideology, state capitalism, state control and intervention are all too present.  Brazil needs to decide the role of the state in the 21st century economy.  Dilma was ejected because the state fell down on its ability to perform and coopt.  The new President promises changes and is trying to promote a more traditional style of capitalism with competition, rules, private property and the right to profit.  However, the current system is stacked against this.  And while, the Worker’s Party has expanded the state as an employer since 2003, this tradition started much earlier with entrenched interests in the state with its tentacles in all sectors is difficult to budge.  Politicians don’t want to change as they can allocate resources in the form of jobs and benefits.  Those on the receiving end or even potentially on the verge of power also lack incentive to change.

Economic complexity, a population of 210 million, a GDP that has shrunk to less than 2 trillion, societal diversity and increasing yet still poor levels of education are all factors demanding a new model.  Not much will happen with President Temer.  He has only one bullet and that is to somehow revive the economy and this will be a challenge.  Moreover, his term is too short and if he tries to run for reelection in 2018, that act will trigger another crisis.  Brazil needs to find leadership but the population also needs to decide on a future where the state has a greatly reduced role in collecting and allocating resources.  Because this will involve pension reform, tax reform, privatization, de-bureaucratization, losses of access to easy jobs and privileges, the process can only take place over a long time frame.

It remains to be seen if the old can survive until the future arrives.

Libertadores, “Yes, We CAM” and Romario’s protest

It has been a very exciting week for fans of Atletico Mineiro.  My home town team just classified for the finals of the Libertadores and if the club wins the final, it will go on to the World Club Championship game in Tokyo.  The “Yes, We CAM” slogan is a play on words taking Clube Atletico Mineiro (CAM) and mixing it with a slogan that Obama used.  Actually, Obama copied the slogan from Mexico’s PAN Party and “Si se puede” slogan they used in Calderon’s election over 6 years ago.

The game against Argentina’s Newell’s Old Boys was one of the best that I have witnessed in many, many years of watching.  Atletico needed to win 3 x 0 in order to move to the final after having lost 2 x 0 in the first game in Rosario.  A 2 x 0 result required deciding kicks from the penalty mark at the end of the game to decide who would advance.  CAM’s Bernard scored beautifully off a stellar pass from Ronaldinho at 3 minutes into the game and then Atletico attacked like crazy for the rest of the first half but could not quite score.  The Argentines are masters of gamesmanship and delay tactics and did everything they could to block the home teams incessant attacks.  Finally in the 90th minute of the second half, Guilherme scored on a rebound from about 25 yards out.  In the kicks from the mark Atletico came out ahead 3 x 2 with Victor the goalie stopping Maxi Rodrigues’ and Newell’s last shot.  All of Belo Horizonte (except for Cruzeirenses) have been walking on air anticipating the final against Paraguay’s Olympia, the Defenders of El Chaco.

On the same day that Atletico buried the Argentine hopes, former World Cup Brazilian team star, Romario, made an important speech in Brazil’s Congress.  As a member of Congress representing the state of Rio de Janeiro, Romario has been a pleasant surprise to many political analysts.  When he was elected many felt, he would be self serving and vain (as he often was on the field) but instead he has proven to be honest, hard working and a thorn in the side of Brazil’s political establishment and especially the traditional elitist interests of Brazil’s football confederation.  When Brazil won its Third World Championship, Joao Havelange was FIFA President.  Havelange closely courted the generals in Brazil and fully supported the idea that the national team win in 1970 should contribute to the legitimization of military rule.  Havelange molded the Brazilian football confederation and made his son-in-law president.  Both of course have been found to be corrupt and venial.  The current president of the confederation, Jose Marin, has the same origins.  He supported the dictatorship and likewise has a reputation for theft.  Romario denounced the confederation’s lobby and apparent attempt to buy votes of deputies so that billion dollar debt of organization and its club member could be forgiven.  (The debt arose largely from the individual club’s not paying their labor and social taxes, plus penalties and interest)  The confederation argues that futbol and the clubs play such an important role in providing entertainment, employment, and service to the national character that these private debts deserve an “amnesty” which if not ceded will lead to the ruin of the clubs and the national past time.

Romario points out in his speech that Brazilians have been out on the streets demanding better services, the end of corruption and political transparency and that the lobbying maneuvers of the confederation serve only to perpetuate the status quo and the old elitist ways.

I am certain that Atletico has debts with the government and I am also certain that having to pay these back taxes will lead to the sale of talent and a decline in the quality of my team’s play.  At the same time, I am against subsidizing and caving in to the confederation lobby.  It is just another example of how Brazil’s heavy patrimonial tax and bureaucratic structures are impeding progress.  The problem is how to undo the past and confront all of the interests that are both powerful and deeply embedded.

Did “Brasil” Silence Brazil?

The Selecao just won the Confederations Cup for the third time with a splendid victory, beating Spain 3 x 0.  Brazil played spectacularly and totally took apart the number 1 team in FIFA’s ranking and the reigning World Cup Champion.  The Selecao’s aggressive midfield play, outstanding defense and the individual merits of Fred and Neymar made Spain look like the traditional underachiever that it had always been up to 2010.  Maracana was full and the fans were chanting and shouting and standing throughout the game.

Outside the stadium, protesters attempted unsuccessfully to breech the police lines and there is talk of a general strike planned for Monday, July 1.  With Brazil’s victory, the protests will lose steam and talk in the streets, at home and at work will go back to “futbol” and how Felipao has once again made his mark as Brazil’s best  national coach.

President Dilma was originally scheduled to be at the final but she has been caught off guard by the extent and the duration of the movement against pretty much everything that exists in Brazil’s status quo.  After being booed at the opening game in Brasilia, her advisers – fearful of a Brazil loss and the increasingly bad mood of the population – advised her to keep her distance.  This turns out to have been a mistake.  Over the past month, and, in particular, in the last two weeks, Dilma’s ratings with the population have sunk by half.  A month ago, she was viewed as an easy winner in the 2014 elections and probably in the first round.  All this is now in doubt and challengers such as Marina Silva (formerly a Green Party candidate and Joaquim Barbosa (the President of Brazil’s Supreme Court) have ratings that now threaten Dilma.  Had she attended the game, it is likely she would have had a bounce in her popularity.

I predicted on Facebook that the game would be a tie in regulation and overtime thus forcing a decision by kicks from the mark.  I and others blew that call.  Virtually everyone in Brazil projected Spain as the favorite and expected Brazil to be manhandled.  So I may also be wrong in predicting that the streets will be silent for a time.  Certainly, all of the problems of overspending on the Cup, together with poor infrastructure, precarious healthcare, lousy education, discrimination, crime and security all remain major challenges.  Still, I think that the protesters have made their mark for now and with the end of the trial run (the Confederations Cup) they have lost their international stage.  I see people gradually drifting back to their normal activities at least until the Pope’s visit.

Opportunities for mass protests on the world stage will reappear and there will be new mobilizations. But the reality is that real change will take place slowly and in small doses as Brazil’s elites reluctantly cede power.  Broadcast TV, consumerism, big corporations and the need to actually work will trump, for the time being, the desire for change that does not include clear means to a well-defined end.

Protests End but Challenges Remain

Ok, it may be a bit premature to declare the end of Brazil’s protest movement.  After all, we’re still on the count down clock to the World Cup and then the Olympics.  With Brazil on the world stage for a short time, many undoubtedly will want to take advantage of the spotlight.

The protests of the past 10 days have been very healthy overall and a tonic for Brazilian society.  The last time we had something on this scale was in 1992 with the impeachment of Fernando Collor.  Before that, protesters were calling for “Diretas Ja” (direct elections) in 1985.  And, before that, you had to go all the way back to the 60’s and the military dictatorship when there were student-led demonstrations in defense of Jango (President Joao Goulart – Brazil’s civilian president) and the conservative counter-movement in defense of tradition, family and property, and ultimately in support of the authoritarian military solution that only ended in 1985, partially because of public protests.

In the the 1970’s and 1980’s, the objectives of protesters were  easier to identify.  Military generals were in uniform and wearing dark sunglasses.  There was censorship, arbitrary acts and political arrests on the part of the military sometimes followed by torture.  Direct elections and a constituent assembly were the immediate goals of protesters on the path toward democracy.

Almost 20 years after the end of military governments, Brazil is still under construction or as the protesters have stated on their placards: “Please excuse the noise, but we are building our country.”  Indeed, civic movements, public pressure and a renewed interest in power (politics) contribute to the institutional building process.  This is a  slow process. Those impatient have to recognize that things take time, especially given Brazil’s political history and heritage.

The protests will come and go.  They will slow down now as the Confederations Cup comes to an end and as those in the streets see that their message has been delivered.  The diffuse nature of the movement also contributes to the sporadic nature of the protests.

It has been great to see so many groups demanding recognition and change. However, there is a tendency, especially on the part of the press, toward (mis)characterization of the movement by emphasizing the more sensational.  Certainly, the Parade of Sluts (Desfile das Vadias) provokes a certain prurient interest. But that is probably not the lasting thrust of the movement.  Perhaps the groups protesting against the homophobic president of the Congressional Human Rights Commission are more spot on.

Brazilians love to joke and increasingly the “passeatas” are becoming the target of cartoonists and humorists.  This is also fine but indicates to me that the movement is being taken down a peg in terms of “seriously” contesting the regime.

Civic participation in Brazil is more active now.  However, polling and analysis of the protesters shows they are wealthier and better educated than average Brazilians.  This, in turn, shows that mass participation is probably more sporadic than many want to admit.  Moreover, political fissures between the left, right and within left and right are becoming more and more visible.  There are a lot of people out there calling for things such as the closure of Congress and the revocation of Congressional terms.  These people seemingly fail to recognize the role of parties and the validity of elections in the democratic process.  When people step back and soberly evaluate, the limited nature of street protests becomes more apparent.

All in all, the protests will ebb and flow more in reaction to immediate events.  They will likely slow now and reemerge as next year’s Cup approaches.

Games, Fun and Excitement (protests) in Brazil

Well, the first round of Confederation Cup games has successfully concluded and to the amazement of many, things came off pretty well.  Brazil soundly defeated a tired Japan team 3 x 0 in Brasilia.  Dilma was roundly booed, as were the other “authorities”.  Rio got to see Italy push past Mexico fairly convincingly at 2 x1 with a full Maracana.  Spain defeated Uruguay 2 x 0 and showed why it is ranked number 1 and will be a very serious contender for the title next year.  The game in Recife had a minor glitch after the keys to one of the arenas were lost.  Finally, Tahiti debuted with its first goal on the big stage of international competition but the Nigerians prevailed 6 x 1 in Belo Horizonte.  All in all, the stadiums pretty much functioned as expected but there were some glitches like the 3G not working in Brasilia.

Outside the stadiums, the picture has been a bit different.  Sao Paulo attempted to raise bus fares by about 10 U.S. cents. Fare hikes usually draw attention. But now there have been large and, at times, violent conflicts.  Sao Paulo has been the epicenter, but the protests have spread to other Brazilian cities, including Rio, Belo Horizonte, Brasilia and Salvador.

There is a small organized group calling for free public transportation and most people see this as fairly romantic and unrealistic. But the movement has been a catalyst for more generalized discontent.  Everyone sees the soccer tournaments as a world stage with lots of media potential.  Brazil’s government also continues to suffer from a lack of legitimacy, even now 25 years after the end of the military dictatorship.  This discontent hangs around in spite of regular elections and is driven by the perceived lack of responsiveness of the political class to the “real needs” of the “people”.

Young people, students, and some politicians are taking up the banner that the World Cup is wasteful and that Brazil has other priorities.  Indeed, protests that began over bus fare hikes have grown to include striking teachers, policemen, and other public servants who are unhappy over poor salaries and awful working conditions.

More diffusely, there is general unrest due to all of Brazil’s well-known weaknesses, including too much corruption. The high cost of living and prices increasing even more during international soccer events in Brazil, including the high costs of tickets to the games, have cast a spotlight on inequality in Brazil.

Add to this the shortage of good roads and schools, the lack of doctors and health-care professionals, paltry pensions for private-sector employees, and a minority of overpaid and underworked high-profile public sector executives (known as ‘Marajas’ in Brazil), and the list seems nearly endless.

The attempted bus fare raise coalesced this diffuse malaise with the aid of social media and even the regular media which cannot afford not to publish the sensationalist pictures of instances of police brutality and depredations (some caused by protestors but some caused by the very forces which are suppose to be protecting public order).

The question everyone is raising, including high-ranking government officials,  is where all of this is headed.  President Dilma, wisely said today that peaceful protests are legitimate.  So far the workers unions, largely allied to the state and the PT, have not joined the protests.  (How much they might benefit is unclear as workers in the formal sector have “vale transporte” or free subsidized use of bus service already).  So without more massive popular support and without union resources, the federal government can push the problem back on to the state and municipal authorities who are in charge of local services.

Right now, the movement is too diffuse and there is no clear leadership and the goals are not well articulated.  There are no generals to overthrow.  There is only a popularly elected leftist civilian government which only partially can deliver the demands of protestors and others in Brazil.  The Confederations Cup, World Cup and Olympics may seem like bread and circus, especially to the traditional middle class, but most people are proud that Brazil has the events and are willing to put up with the accompanying waste and the ongoing opportunities for illicit gain.

Until Brazil’s political culture evolves to a much higher level of maturity, it is unlikely that the current protests will have much impact and little will remain after the tear gas has cleared, except the very slow process of institution building.

So if you are going to the games, plan around the protests.  If you are out protesting, be prepared to run from the police, their batons, smoke bombs and tear gas.  If you are part of the police force, please don’t kill anyone and that goes for the protesters as well. There may be groups out there seeking to create a martyr.  I hope Brazil is beyond that, but you never know.