On Brazil’s Economic Future

Foreign Policy recently ran an article on Brazil’s economy that is worth commenting on at some length. In “Carnaval Is Over,” Bill Hinchberger counters current positive evaluations of Brazil’s economic growth and stability in the past several years, instead opting to paint a potentially troubled future for Brazil’s economy, in spite of its current stability and strength. However, the article too often turns to flawed historical and ideological analysis that ultimately makes it more than just a little problematic (and that’s to say nothing of the number of “mays” and “coulds,” which are hardly signifiers of certainties, that appeared throughout out the article).

One of the biggest problems is when Hinchberger compares Brazil’s economy today to the economic “miracle” of 1969-1974, when the country experienced an average of 10% annual growth. However, 1969-1974 was also right at the heart of the military dictatorship that governed the country from 1964-1985, when elevated rates of torture, murder, and “disappearances” accompanied economic growth. Yes, the regime grew in that period, but the dictatorship based its growth upon a high amount of foreign loans in a political-economic context that shut out much unorthodox or innovative thinking even while it alienated the more traditional economic elites who were excluded from the process as the military tried to use statist policies to guide Brazilian development via major infrastructure projects like the Trans-Amazonian highway. Even as some of those projects failed, the economy did grow in those year, but even that growth was remarkably inequitable, with the already-significant income gap between rich and poor growing even more dramatically during the “miracle” and beyond. By contrast, that gap has shrunk somewhat (though it is still substantial) during the Lula and Dilma administrations, thanks in no small part to social programs like Bolsa Familia that are designed to help families make money even while ensuring their children receive an education, something that most would say is an important part of a more capable (and better-paid) society in the near future.

Additionally, Brazilian development and economic growth and stability during the “miracle” of 1969-1974 hinged upon access to inexpensive resources like oil, something that had completely evaporated in the wake of  OPEC’s 1973 oil embargo. A second oil crisis in the late-1970s and early-1980s ravaged Brazil’s economy, which was heavily dependent on foreign oil. By contrast, today, Brazil is the ninth-largest oil producer in the world (ahead of both Kuwait and Iraq), with a much-reduced dependency. What is more, the country is increasingly turning to the use of alternative fuels like sugar-based ethanol for its auto industry and other areas, and ethanol certainly has its own environmental consequences. However, the fact that Brazil is nowhere near as dependent on foreign oil or fuels as it was in the 1970s makes the Brazilian economy today a very different creature than it was in the 1970s. To assume the type of collapse that took place in the 1980s and was contingent in part on oil crises is to deny the basic differences in historical contingencies or change over time across the last 40 years.

This is not the lone issue in the article. In criticizing the recent policies, the article points to a number of reforms that could perhaps forestall economic decline in Brazil, including “overhauling labor regulations to make it cheaper to employ workers.” This suggestion is particularly telling with regards to the priorities of “developed-world” economists, and advocating for lowering the cost of employment is so patently pro-ownership and anti-worker as to make exactly clear where the article’s economic allegiances rest. One can certainly argue the political and/or philosophical disadvantages of consumer cultures, but if we accept that Brazil is at least in part a consumer culture, then it’s hard to see how labor-friendly policies that lead to greater consumer power throughout all of a society and create a broader domestic market (rather than just letting consumerism be the domain strictly of the middle and upper classes) is a bad thing for economic stability. These changes mark yet another way in which Brazilian society and economics are fundamentally different from conditions in the 1970s and 1980s, thanks in no small part to the policies of presidents Lula and Dilma. And while there are no doubt many areas where one could criticize Lula’s policies from 2002-2010, citing O Globo in describing Lula’s administration and policies is about as useful as pointing to Fox News for an evaluation of the Obama administration. Likewise, Miriam Leitão’s criticism of the government’s policies as “improvised” may be the case, but given that Leitão was one of the biggest advocates of neoliberalism in Brazil, it’s hard to necessarily read her diagnosis without a massive grain of salt , and the article does nothing to provide the counterpoint from less conservative Brazilian economists or commentators.

In trying to diagnose and prevent future economic problems, the article points to other areas that Brazil could ensure stability (outside of lowering workers’ pay), including infrastructural investment and reducing what most analysts describe as protectionist policies. But these solutions are neither so simple, nor are they the only options. Just this weekend, Brazilian President Dilma Rousseff countered this “developed”-world narrative and analysis of Brazil’s economy, pointing to the role of countries in Europe and North America flooding Brazil with investment in order to escape their own unstable economies even while they create the very potential problems for Brazil’s long-term stability and growth that Hinchberger himself criticizes. In the process, she rightly shows that not all of the potential problems confronting Brazil’s economic future are the fault of Brazil, and from this perspective, the distinction between policies defined to “defend” Brazil are significantly from “protectionism.” Indeed, the measures Brazil has taken and that the article is so critical of appear more like defending one’s own national economic interests in the present, rather than some major issue that will undermine any future growthIt seems more than reasonable to try to forestall instability in the present; after all, what use is planning for future growth if the present is a mess, even one caused in part by foreign countries’ own economic policies?

Overall, Hinchberger posits that Brazil is living in “its own little vacuum” (as he puts it) of success, but it seems fair to suggest that the article itself is in the inverse vacuum, one where Brazil’s successes are superficial and it will return to the inevitable economic decline that has defined its recent past. In other words, the article is creating and relying upon a predetermined narrative where Brazil can never succeed, not even with social programs that have improved the life of many (but not all) of Brazil’s poor; it’s to deny that, unlike previous eras of growth that were followed by economic collapse, Brazil currently is a society with a growing middle class, and a society that decreasingly dependent on foreign powers for oil, loans, or other resources, all of which may contribute to a different outcome in the future than what took place in the 1980s and 1990s.

To be clear, none of this is to say a long economic downturn could never happen. Certainly, as with any economy, Brazil will witness periods of economic successes and economic troubles. But to presume the next downturn will look like the 1980s-1990s, because there was steady growth in the 1970s just as there is steady growth today, as the article argues, is to fail to acknowledge any change over time, to deny any difference in politics, economics, or society between an authoritarian bureaucratic dictatorship and a democratic republic with a center-left party in power. Making comparisons to the past to predict how things may work out in the future is always a risky business, but to make predictions without any consideration of the past’s difference from the present is, to put it lightly, particularly problematic.

About Colin M. Snider

I have a Ph.D. in history, specializing in Latin American History and Comparative Indigenous History. My dissertation focused on Brazil. Beyond Latin America generally, I'm particularly interested in class identities, military politics, human rights, labor, education, music, and nation. I can be found on Twitter at @ColinMSnider.
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