Political Report #1462 - Can an Article on Jair Bolsonaro be “Politically Neutral”?

by Steve Ellner 

LAP’s Political Report 1459 titled “The Washington Consensus Arrives in Brazil,” takes an uncritical look at Jair Bolsonaro and his policies. At first glance, the article appears to be neutral and the authors, Marc Castillo and Sírio Sapper, impartial analysts. Neither of these initial impressions are the case and indeed elsewhere both authors have defended the policies of the Bolsonaro government. A careful reading of Political Report 1459 reveals that the article, albeit for the most part subtly, justifies Bolsonaro’s policies and his presidency. At the same time, there is absolutely nothing in it that is at all critical of the Brazilian president. Below I provide quotes from the article which demonstrate the point I am making.

Latin American Perspectives correctly does not adhere to a specific political line or ideology, but we are nevertheless on the left. I also believe it is acceptable that we publish articles that fall outside of the left side of the political spectrum or ones that are politically neutral (if such a thing exists). At the same time, we have not over the years published articles that even remotely support the positions of the political right. 

“Political neutrality” may or may not exist for certain types of subject matter, but it certainly doesn’t exist for heavily charged issues like those related to the Bolsonaro government. To take a much more extreme example to help illustrate my point (but without the intention of casting aspersions on Castillo and Sapper in this regard), an article on Hitler that didn’t say anything good or bad about him could be interpreted as a justification of his actions. The same with an article on a mafia kingpin.

The following statements from the article may at first glance appear to be politically neutral, but in fact serve to enhance Bolsonaro’s highly questioned political legitimacy.

Here the authors point to the alleged success of the Bolsonaro in the fight against crime: 

"Brazil's population is exhausted from the high crime rate. Wanting to arrest the out- of-control crime rate Michel Temer´s administration was noticeably successful in containing crimes in general and specifically property crimes.”

“Bolsonaro’s election victory was partially related to public safety concerns.… Through his presidency Jair Bolsonaro has pushed forth many new initiatives to deal with the grave issue of security in Brazil.”

“All these measures were aimed to shore up public safety in the face of calamitous crime and insecurity that have been and continue to be prevalent in Brazil. Comparing year to year crime statistics published by the National Security Information System (Sinesp) from the Ministry of Justice and Public Security for the years 2019 and 2018 crime fell across the board with homicides experiencing a 20.3% decline, homicides involving robbery fell by 23.8% and robberies of financial institutions fell by 41.5% (March 17, 2021)…. Bolsonaro’s approval rating is largely attributed to Public Safety measures (Venagilia, 2019).”

The article also uncritically discusses the privatization that took place under Temer and has been reinforced by Bolsonaro: “Brazil´s complex political system has inhibited Paulo Guedes and his economic team from making the progress that some expected; nevertheless there has been pension reform, the recent autonomy of the Brazilian Central Bank and the Law of Economic Liberty.”

“The mere presence and continuation of Paulo Guedes in Bolsonaro´s cabinet portends vast credibility and political capital to ease investor worries."

The article then turns to Bolsonaro’s verbal aggression: “To popular media Bolsonaro´s presidency seems to be in a perpetual state of balance regarding his governance, however, there is no better even keel to the tumultuous president´s rhetoric than his agenda for free-market reform that serves to counter any notion of dictatorial perceptions.” The wording leaves the impression that his rhetoric is somewhat innocuous. No mention of Bolsonaro’s notoriously racist, misogynist, homophobic, and anti-immigrant statements.

The article ends on a positive note about Bolsonaro’s legacy: “A robust transformational process has taken hold in Brazil in terms of economic and financial progress with a distinct capitalist bent. Irrespective of who wins the presidency in 2022 the neoliberal economic groundwork has been laid and it is extremely doubtful that there will be any regression as the largest South American country attempts to become a more open and less protectionist.”

Bolsonaro can count on the commercial media to discuss his allegedly positive accomplishments. Indeed, the Wall Street Journal endorsed his presidential candidacy. Latin American Perspectives – as has always been our policy in other contexts – should refrain from publishing articles that fail to underline Bolsonaro’s criminal actions and behavior and those of his ilk. 

Blog Exclusive, Political Report #1959 - The Washington Consensus Arrives In Brasília

by Marc Castillo and Sírio Sapper

Abstract

John Williamson´s renown paper "The Washington Consensus" while causing controversy is nothing more than basic capitalist tenants.  Brazil has been undergoing a "Washington Consensus" transformation for decades now.  During the last several years this evolution has progressed at a more ambitious pace.  This paper examines the actions and mechanisms that the Bolsonaro administration has undertaken to make free market principles more concrete in Brazil.

Keywords:  Free Market Principles, Brazil Economy, Bolsonaro Administration, Brazil, Brazilian Politics

THE WASHINGTON CONSENSUS AND BRAZIL: CONTEXTUALIZATION

The ‘Washington Consensus’ has arrived in Brazil and it is there to stay.  In 1989, US Treasury Secretary Nicholas F. Brady came out with a solution to the immediate debt crisis faced by countries such as Brazil, Argentina, Panama, and Peru among others at the time.  Shaped as a debt refinancing agreement, the initiative proposed extended terms between creditors and debtors under specific requirements to be fulfilled.  Though it is not thought of, several of the economic initiatives used by various Brazilian governments throughout the last several decades have heralded from the famous work of John Williamson called "A Short History Of The Washington Consensus, " these reforms haven given way to privatization and in a way more civil liberties, a Westernization or Americanization process is occurring in Brazil.  

To understand how Brazil got to this consensus it is imperative to comprehend the initial backdrop of the so-called "Washington Consensus."  One of the underlying precepts of the Washington Consensus is a process called "securitization,”  this process allowed debt to be exchanged for national government bonds, which were backed by U.S. bonds.  One of the main mechanisms of monetary stability adopted in Latin American economies during the late 1980s was the fixed exchange rate.  

In order for Brazil to adhere to the fixed exchange rate program, which it finally did in 1993, a series of reforms and compromises had to be undertaken.  In the spring of 1989, British economist John Williamson testified before a Congressional committee in favor of the Brady Plan, a plan where Latin American countries received credit from the United States to not default on debt (Williams  2004: 1).  He argued that it would be good policy to help the debtor countries overcome their debt burden, since Latin American countries were slightly shifting their economic practices (Williams, 2004: 1).  Those adjustments did not represent staunch radical Austrian laissez-faire changes, given that they were even advocated by mainstream economists such as Mário Simonsen and Béla Belassa (Williams, 2004: 1).

John Williamson writing in his acclaimed work, "A Short History Of The Washington Consensus," included social reforms as a means of enhanced social cohesion, opining on the merits of social stability which would in time be fundamental to the free market development process in Brazil.

Williamson´s infamous 1989 Washington Consensus paper highlights 10 points: (1) Fiscal discipline; (2) Reordering Public Expenditure Priorities; (3) Tax Reform; (4) Liberalizing Interest Rates; (5) A Competitive Exchange Rate; (6) Trade Liberalization; (7) Liberalization of Inward Foreign Direct Investment; (8) Privatization; (9) Deregulation; (10) Property Rights.
The term "Washington Consensus" became undoubtedly cliché and controversial. It belies the simple practicality of what it really is. Detractors and others who wish to criticize, enliven or even embellish the term fail to grasp that in reality it is just mainstream policy in developed nations.  They constitute well-established practices shared by wealthy and successful nations. 

The “Washington Consensus guidelines are only general principles, whose implementation can also vary from country to country.  The manner of which such directives are going to be carried out is still dependent on national factors and cultural norms: it is not an absolute standardized top-down solution applied indiscriminately.  Brazil in one way or another has been undergoing these reforms since the mid 1980s and now in the early 2020s the process of moving toward a free market directed society is more evolved and established.

Williamson´s points opposed the abolition of the market economy, which was tried in the communist countries for 70 years and proved a disastrous dead end, but to give the poor access to assets that will enable them to make and sell things that others will pay to buy. That means nation states need to develop and further four key paradigms to ensure success in a market-oriented economy: Education;  Titling programs;  Land reform;  Microcredit (Williams, 2004: 13).  These attributes of an open market economy are what Brazil has been developing and furthering during the Bolsonaro administration.  

ONGOING FREE MARKET REFORMS 

Federal Tax Reduction 

Tax reform is one of the most crucial aspects of free market liberalization.  The current Brazilian Tax Code dates from 1966, when the isolationist and ISI military dictatorship was in power. Little has happened regarding point three, which is tax reform,  of Williamson´s paper . There are different proposals, but no ultimate deadline for Congress to act on it.  Currently there are a few changes regarding federal taxation.  One such alteration on industrialised products (IPI) are no longer applied to roughly 300 different capital goods, among them are diesel engines, forklifts, crane machines, printer and biometric systems’ subparts.

There are four major transformations which already took place during the Bolsonaro administration: pension reform, central bank autonomy, economic freedom law and the new regulatory framework on basic sanitation. Each one is a case study in itself.  All these innovations are hallmarks of Williamson´s pragmatic approach.  The four measures cover nearly all of the 10 points in the Washington Consensus points paper. 

Normative Instruction 85/2020I

A very relevant initiative, but somewhat unnoticed, is the Normative Instruction 85/2020 from the National Department of Business Registration and Integration (DREI).  André Santa Cruz Ramos, a renowned professor and author, known as an avid Ayn Rand supporter, is in charge of the office.  This instruction promotes and cultivates deregulation.  To mention a few of these new changes: (1) associations or cooperatives can freely be converted into a business without any type of new registration; (2) there is no requirement for signature authentication or authenticated copy; (3) considerable extension of automatic business registration (Art. 43); (4) any business constitutive act registration is independent from any form of government authorization; (5) any business is permitted to extend the term for the payment of capital stock; (6) acts, documents and declarations that contain mere cadastral records (for example, changes in marital status, changes in addresses) do not require contractual alterations, being presented as a simple administrative measure.  These articles emphasize the swift pace at which deregulation has become a priority in Brazil as the country is moving toward being more business friendly. 

PRONAMPE

As stipulated, the Washington Consensus lays down social reforms as a means of neoliberal economic improvement.  One of them is microcredit access.  This subject matter is targeted by Law 13.999/20, which extended the term limits of the National Support Program for Micro and Small Enterprises (PRONAMPE).  Microcredit access lines have been extended by the Bolsonaro administration which provide small businesses the opportunity to continue to operate. 

The New Franchise Law 

The federal law nº 13.966/20 renews the franchise opportunities in Brazil.  Following in the steps of federal law nº 13.874/19 (Lei da Liberdade Econômica), the pacta sunt servanda principle shall be applied as the general rule among private contractors.  Unlike what has been done so far, any business contract now is taken primarily as a symmetric (Art. 421-A, Law of Economic Freedom). Thus, there can be no government intervention within the commerce sphere, until proven otherwise (Art. 421, § 4º, Law of Economic Freedom).

The prior franchise law was silent concerning the nature of the franchisor-franchisee relationships.  So the Brazilian Judiciary went back and forth on the idea of franchisor-franchisee bonds being protected by consumer rights.  That would represent a propitious environment for continuous government intervention, since consumer law presupposes an asymmetrical and uneven settlement.  With the renewed franchise law, the parties can freely express private autonomy regarding which contract clauses should be applied or not (Art. 1, Franchise Law/2020).

State companies and non-profit organizations are also able to sign franchise contracts (Art. 1, § 2º, Franchise Law/2020).  In order to be implemented, the franchisor must provide a Circular de Oferta de Franquia, similar to the American Franchise Disclosure Document (FDD) or Uniform Franchise Offering Circular (Art. 2).  This document must be handed over at least ten days before the contract signature (Art. 2, § 1º).  If the deadline is not duly fulfilled, the franchisee has the right to argue for a void or voidable contract (Art. 2, § 2º).  Under such circumstances, the franchisee holds the right to receive all its expenditures back (Art. 2, § 2º).

The parties may also elect an arbitral tribunal to resolve disputes related to the franchise agreement (Art. 7, Franchise Law/2020).  As seen, the arbitration clause is expressly guaranteed by the law.  This new law does not require the presence of any witness during the contract signature, unlike its predecessor.  This new law simplifies the franchise business on the whole, the franchisor-franchisee relationship and its practices.   

Rule of Law

As indicated previously, rule of law represents one of the main pillars of the “Washington Consensus.”  Rule of law is a basic institution that is also a pillar of Williamson´s work.  As rule of law is a basic pillar of functioning democracies it is unreasonable that the Washington Consensus point of private property guarantee should be characterized as "evil machinery."  According to John Williamson (Williams, 1990: 1):

"In the United States property rights are so well entrenched that their fundamental importance for the satisfactory operation of the capitalist system is easily overlooked. I suspect, however, that when Washington brings itself to think about the subject, there is general acceptance that property rights do indeed matter. There is also a general perception that property rights are highly insecure in Latin America."

As Williamson continued to elucidate regarding point 10 of his trademark piece: “This was primarily about providing the informal sector with the ability to gain property rights at acceptable cost (inspired by the Peruvian economist Hernando de Soto’s analysis)” (Williams 2004: 4).  Brazil suffered from a drastic property crimes increase between the end of the 80’s until mid 2010’s.

Property rights are inextricably linked to public safety.  For several years, public safety was not viewed as a first tier subject matter.  Public safety was viewed as a consequence of inequality. Violence was perceived by the authorities as a result of economic inequality.  In order for Brazil to become a safer place, the income gap between the rich and the poor had to be reduced.  Naturally, this view was definitely not shared by the overwhelming majority of the population, rather by a fringe minority in power.  The reason is quite simple: traditionally Brazil is a High Gini coefficient economy. Reducing inequality in Brazil is an extremely complicated task (Brzezisnki 2012: 49-50). Therefore, waiting for this problem to be solved would take much time.  Brazil's population is exhausted from the high crime rate.  Wanting to arrest the out of control crime rate Michel Temer´s administration was noticeably successful in containing crimes in general and specifically property crimes.  

The Temer administration undertook several measures that included: (1) reactivated the Institutional Security Cabinet (GSI) and hand it out to Four-Star General Etchegoyen; (2) instituted the Single Public Security System (Sistema Único de Segurança Pública), the National Plan for Public Security and Social Defense (Plano Nacional para Segurança Pública e Defesa Social) and the National Council for Public Security and Social Defense (Conselho Nacional de Segurança Pública e Defesa Social); (3) authorized direct military intervention through the Law and Order Guarantee Operation (GLO) in Rio de Janeiro state and Roraima state; (4) increased security forces funding, by enabling private investment and by redirecting sports lottery resources; (5) the Federal Military Justice now holds military personnel responsible for intentionally violent crimes committed by military personnel against civilians within the GLO framework.  Michel Temer adhered to rule of law fundamentals that militarized public safety and laid the groundwork for Bolsonaro´s administration.  

Bolsonaro’s election victory was partially related to public safety concerns.  The mercurial Brazilian president has campaigned and continues to campaign on public safety as an ongoing concern.  Through his presidency Jari Bolsonaro has pushed forth many new initiatives to deal with the grave issue of security in Brazil.  Property crimes are still drastically in decline (Kadanus, 2020).  His actions included: (1) passing Anti-Crime Package legislation promoted by Ex-Minister of Justice Sérgio Moro; (2) transferring various criminal organization leaders to federal facilities; (3) apprehending drugs in record numbers; (4)  expreding the National Force towards many states; (5) creating the Secretary of Integrated Operations (Seop); (6) implementing the Portuguese-inspired program Em Frente Brasil, which select key-cities to receive special law enforcement treatment as role models; (7) authorizing military interventions through GLO operations in the Amazon region; (8) piling up intelligence and military agents throughout several government bodies; (9) extending the scope of action of the Institutional Security Cabinet (GSI), the Brazilian Intelligence Agency (ABIN) and the head of the Federal Police, compounding them; (10) facilitating private gun ownership.  

All these measures were aimed to shore up public safety in the face of calamitous crime and insecurity that have been and continue to be prevalent in Brazil.  Comparing year to year crime statistics published by the National Security Information System (Sinesp) from the Ministry of Justice and Public Security for the years 2019 and 2018 crime fell across the board with homicides experiencing a 20.3% decline, homicides involving robbery fell by 23.8% and robberies of financial institutions fell by 41.5% (March 17, 2021).  However, there is still improvement needed as homicide rates have climbed during the pandemic year of 2020 with an uptick of 7% in comparison to the first six months of 2019 (Kadanus, 2020).  Another attribute of public safety that coalesces with civil liberties and even manifests an air of "Americanization" is gun access policy, which the Bolsonaro administration is bolstering. Bolsonaro’s approval rating is largely attributed to Public Safety measures (Venagilia, 2019). 

Regarding to Moro’s Anti-Crime Package, it is fair to briefly point out some of the legal modifications introduced: (1) extending maximum jail time from 30 to 40 years; (2) making parole opportunities stricter; (3) instituting the plea bargain; (4) judicial supervision during criminal investigations. However, this extolled new criminal legislation is partially and temporarily suspended by a Supreme Court decision.  It is not clear exactly how this will come to fruition.  

PRIVATIZATION

In 1988 a group of international economists formed a “National Forum,” in Brazil whose aim was to point out “ideas for the modernization of Brazil.”  The forum was coordinated by João Paulo dos Reis Velloso, a former minister of the military regime and a close friend of Mário Simonsen.  Although it was not the central theme of the forum, privatization appeared strongly in Velloso's speech.  When discussing the “state conglomerates (Eletrobras, Petrobras, Telebras etc.)”, the former minister defended strict control of government spending, however, regarding other state-owned companies, Velloso defended the immediate sale of shares on stock exchanges.  For all his talk concerning privatization, Velloso pointed out areas that should not be sold that included electricity, oil, communication and transportation (Valente, 2013). Years later several of these industries would eventually go through privatization or go bankrupt. Between 1990 and 2015 privatizations resulted in over $100 billion in sales both at the federal and state level (Romero, 2021).

A Contemporary Privatizations 

Petrobrás follows the privatization example of state ownership where the state is a majority investor.  Through this style of state ownership the state accepts to follow certain rules to attract private investors as minority shareholders (Romero, 2021).  If Petrobrás were to be privatized, it would follow Embraer’s golden share clause model. That means the government holds a subsidiary veto power.  Even though these companies are private there is still a level of government influence and a minor opportunity for government intervention.  This level of government involvement in these companies also suffices as a possible vehicle for government exertion of foreign policy.  

On February 23, 2021 a provisional measure was brought to the Brazilian congress by the Minister of Mines and Energy Bento Albuquerque along with the Minister of Economy Paulo Guedes to start the process of privatizing Eletrobrás, the behemoth company of Brazilian Electricity.   This move has been anticipated by many as an inevitable part of the privatization process.  The government stake in Eletrobrás will drop from 61% to 45% and the government is expected to generate $11 billion through the share price rise.  Eletrobrás will likely follow Embraer´s privatization process and will adopt the golden share model.  

In a brazen effort to stave off any impression that he is not serious about economic liberalization, Bolsonaro submitted a proposal to congress to privatize the Brazilian postal service.  Whether the privatization is accomplished by direct sale, sale of majority control or sale of part of the company is yet to be determined (Miazzo, 2021).  The proposal for privatization of the Brazilian postal service mandates that the Empresas de Telégrafos e Correios continue to send mail throughout the country; private companies would not be obliged to deliver to the entire country.  Since there is no economic demand to establish mail service in remote places the government will continue to fulfill its public mandate.    

THE POLITICAL DIATRIBES OF THE BOLSONARO ADMINISTRATION

Despite the political frantics of Jair Bolsonaro there has been an underlying motion in his administration to privatize business and develop the private sector of the country which is perennially named "the country of the future." These reforms have taken place in Brazil at a time when perhaps few are noting the significance of it.  The political mayhem and polarization that has gripped Brazil distracts from some prominent yet slow developments in Brazilian economic liberalization.  

Bolsonaro´s rhetoric is mainly of his own doing firstly to rouse up populist sentiment and gain popularity as this is a staple of power perseverance in Brazil, secondly this sends mixed political signals that leaves opponents and pundits off-balance that can further agendas.  To popular media Bolsonaro´s presidency seems to be in a perpetual state of balance regarding his governance, however, there is no better even keel to the tumultuous president´s rhetoric than his agenda for free-market reform that serves to counter any notion of dictatorial perceptions.   

Brazil's government is attempting to greatly reduce the footprint of the state in the economy whether it be through asset sales, privatizations or  concessions across a range of sectors, all of which it hopes will attract foreign investment into the country (Ayers, 2019).  The fact that the Bolsonaro administration exceeded its 2019 target of $20 billion in divestiture is an accolade in itself.  The government of Brazil set a goal of privatizing state assets worth at least $20 billion and in the first nine months of 2019 it privatized $23.5 billion which the government tallied as revenue $19.25 billion (Ayers, 2019).  

The recent firing of the CEO of Petrobras is an example of the "interesting" character of Bolsonaro, while Bolsonaro does not share the same values as Venezuela's Chavez or Maduro there has been marked concern in the media.  The Brazilian president likely understands the maxim coined by LBJ "there is no such thing as bad press."  Where this recent demission has caused controversy this is merely a blip in the screen of his economic liberalization program that Paulo Guedes leads.  The firing of the CEO of Petrobras was quickly countered by the official start in the process of privatizing Eletrobras as well as the proposal to privatize the national mail service.  These rapid initiatives contrast with Bolsonaro´s recent decision involving Petrobras which demonstrates that after all the hype the Brazilian president is still keen on privatizing state-owned enterprises.  

Brazil´s complex political system has inhibited Paulo Guedes and his economic team from making the progress that some expected;  nevertheless there has been pension reform, the recent autonomy of the Brazilian Central Bank and the Law of Economic Liberty.  

The coronavirus pandemic has been costly to the free-market minded economy minister confiscating hope for fiscal rectitude that he hoped to push through (Pulice, 2020). Reforms on privatization have been slower than desired in 2020.  The mere presence and continuation of Paulo Guedes in Bolsonaro´s cabinet portends vast credibility and political capital to ease investor worries.  The Economist forecasts that even though GDP fell 4.4% in 2020, and is expected to recover in 2021 by growing 3.2% (Economist Intelligence Unit Report, 2021).

CONCLUSION

Irrespective of who wins the presidency in 2022 the neoliberal economic groundwork has been laid and it is extremely doubtful that there will be any regression as the largest South American country attempts to become a more open and less protectionist.  The ideas furthered by John Williamson´s work "The Washington Consensus" seems profoundly entrenched in Brazil and there are many reasons to think so. 

Plan Execution 

The historical implementation of Williamson´s points has a consistent past in Brazil.  At the end of the military regime, the liberalization process slowly took its first steps.  However, the acceleration only began with the Itamar Franco administration, through the Plano Real implementation, an important anchor for monetary stability.  In terms of privatizations, Embraer became a role model of how to proceed.  With the lessons of Embraer in mind FHC privatized Telebrás and Vale do Rio Doce and pushed through a Fiscal Responsibility Law.  The empowerment of Federal Agencies could be understood as another example of FHC´s commitment to the Washington Consensus paper, but it's praxis demonstrated to be more of a push-back than an effective accomplishment. 

FINAL CONSIDERATIONS 

A robust transformational process has taken hold in Brazil in terms of economic and financial progress with a distinct capitalist bent.  Irrespective of who wins the presidency in 2022 the neoliberal economic groundwork has been laid and it is extremely doubtful that there will be any regression as the largest South American country attempts to become a more open and less protectionist. The ideas furthered by John Williamson´s work "The Washington Consensus" seems profoundly entrenched in Brazil and there are many reasons to think so. 

BIBLIOGRAPHY

Ayres, Marcela and McGeever, Jamie. "Brazil Surpasses 2019 target of $20 billion in privatizations." Reuters.  October 3, 2019. https://www.reuters.com/article/us-brazil-economy-privatization-idUKKBN1WI2HY

Bronzatto, Thiago.  “Luiz Eduardo Ramos: É ultrajante dizer que o Exército vai dar golpe.” Veja. June 12, 2020. https://veja.abril.com.br/paginas-amarelas/luiz-eduardo-ramos-e-ultrajante-dizer-que-o-exercito-vai-dar-golpe/

Brzezisnki, Zbigniew. Part 2: The Warning of the American Dream. In: Strategic Vision. Basic books, 2012 (New York)

Cavalcanti, Leonardo.  “8.450 militares da reserva trabalham em ministérios, comandos e tribunais.” Poder 360. July 17, 2020.https://www.poder360.com.br/brasil/8-450-militares-da-reserva-trabalham-em-ministerios-comandos-e-tribunais/

Genro, Tarso.  “O culpado da mortandade não é o Exército. É Bolsonaro e seus políticos liberais e fascistas.” Sul 21. January 21, 2021. https://www.sul21.com.br/colunas/tarso-genro/2021/01/o-culpado-da-mortandade-nao-e-o-exercito-e-bolsonaro-e-seus-politicos-liberais-e-fascistas/

Maretti, Eduardo.  “Para Celso Amorim, Forças Armadas tendem a não apoiar um golpe.” RBA. June 05, 2020. https://www.redebrasilatual.com.br/politica/2020/06/para-celso-amorim-forcas-armadas-tendem-a-nao-apoiar-um-golpe/

Miazzo, Leonardo.  "Bolsonaro leva ao Congresso projeto que abre caminho para privatizar os Correios.” Carta Capital.  February 24, 2021. https://www.cartacapital.com.br/economia/bolsonaro-leva-ao-congresso-projeto-que-abre-caminho-para-privatizar-os-correios/

Pinheiro, Armando Castelar. 2011. “Two Decades of Privatization in Brazil.” In The Economies of Argentina and Brazil: A Comparative Perspective, edited by Werner Baer and David  Fleischer, 252–78. Cheltenham: Edward Elgar.

Pulice, Carolina.  Paulo Guedes’ star fades as Brazil reform agenda stalls. Financial Times. December 22, 2020. https://www.ft.com/content/34e7b7ea-dd69-4665-a4eb-5a42a374d7f0

Ricz, Judith.  "Strong State Influence in the Brazilian Economy: Continuity or Change?" In Seeking the Best Master, ed. Miklós Szanyi. Central European University Press 2019, Budapest-New York: Central European University Press, 2019.

Romero, Cristiano.  "Privatizações geraram US $150 billion em 30 anos." Valor Econômico.  February 17, 2021. https://valor.globo.com/brasil/coluna/privatizacoes-geraram-us-150-bi-em-30-anos.ghtml

Segurança.  "País registra queda de 20.3% nos homicídios." March 17, 2020. Accessed Feb. 13, 2021. www.gov.br

The Economist Intelligence Unit. "EIU Country Report Brazil." Accessed February 23, 2021. http://country.eiu.com/Brazil.

Venaglia, Guilherme. Segurança pública é a área do governo Bolsonaro com maior aprovação.  Veja. April 24, 2019. https://veja.abril.com.br/politica/com-57-seguranca-publica-e-a-area-mais-aprovada-do-governo-bolsonaro/

Williamson, John. A Short History on the Washington Consensus. In Conference “From the Washington Consensus towards a new Global Governance”, Fundación CIDOB, Barcelona, September 24–25, 2004.

Willianson, John. Chapter 2: What Washington Means by Policy Reform. In Latin American Adjustment: How Much Has Happened?. Institute of International Economics. Washington, D.C., April 1990.

About the Authors:

Marc Castillo is a Master in Latin American International Affairs from The George Washington University in Washington D.C.  Marc has written several articles related to Brazil and the Mercosul region.  He has lived, worked, traveled, and studied in Latin America.  Marc is a federal civil servant and a consultant. 

 

Sírio Sapper is a graduate of the Federal University of Rio Grande Do Sul in Porto Alegre, Brazil.  He is a lawyer who focuses on military law as well as general law.  He has written several articles related to Brazil and the Mercosul region. Sirio is an alumni from  Justus-Liebig-Universität Giessen in Germany.  He practices law in Porto Alegre, Brazil.

The Social Welfare Policies in Brazil under COVID-19

By Ingrid Rafaele Rodrigues Leiria*

1. Overview of Brazilian Case

At the beginning of 2020, Brazil and the world were surprised by the presence of a new virus, the SARS-CoV-2, known as COVID-19. By the first half of 2020, the virus had led to the infection of millions of people and the death of thousands worldwide. COVID-19 is easily transmitted, therefore a need for high prevention, frequent hand hygiene, and the use of facial masks by the population (WHO, 2020). However, when we look at the Brazilian case, there is a lot of social-economic problems that may restrict virus prevention and allow it to scatter among people even quickly. Economic inequality can be translated into an inequality in access to water and sanitation, increasing risks of disease transmission (UNESCO, UN-Water, 2020). Worldwide in 2019, 26.1 percent of the global population, did not have access to handwashing with available soap and clean water (Brauer et at., 2020). In 2018, around 32 percent of Brazilians households did not have access to basic sanitation treatment and 6.8 percent of the population with 15-year-old or up were illiterate. In urban parts of Brazil due to an accelerated and not well-implemented urbanization program, it is possible to come across slums also known as “favelas” spread around Brazilian cities. These small districts are characterized as an inequality reflection of the rapid urbanization, which led to a lack of infrastructure planning to receive citizens coming from more remote areas that were looking for job opportunities in big capitals. The residents of peripheries and favelas, as well as homeless people, are those who suffer most from such inequality. In this context, it is essential to have drinkable water, sanitation, and other basic needs as part of the state of welfare and public policies. Due to this social context, it is significant to discuss the effects of social programs active in Brazil in order to focus on the importance of socio-economic development policy — not only emphasizing on times of a pandemic but also to highlight the need for socio-economic inclusion for sustainable development.

2 Welfare State Programs in Brazil: Beyond Income

The definition of the Welfare State has been a matter of discussion throughout the years between scholars. The concept has changed accordingly to its different phases, programs, and countries. The same understandings adapted in Europe was not the same applied in the United States and also differed from those applied in Latin America.  But considering all the changes that a state of welfare can generate in society, most of the welfare state’s definitions are related to a mix of economic and social changes. Among the economic changes are the measures looking for the eradication of poverty and the diminishing of unemployment. And in the social changes could be possible to discuss the equality of opportunity through, habitation, educational and political reforms. This joint of changes could lead to a social and economic transformation lead by the government concerning to recognize the welfare aspirations of its citizens, facilitating the access to health, education, and welfare to all of those in need.

According to The United Nations International Children's Fund - UNICEF (2018) 34.3 percent of children and adolescents live in households with insufficient per capita income to have a proper meal in Brasil. And, when it is examined beyond income, analysing whether these children and teenagers despite their genders have their fundamental rights guaranteed, 61 percent of these Brazilians male and female live in poverty - being monetarily poor and/or deprived of one or more rights as the access to education, information, protections against child labour, access to clean water, and sanitation. Childhood and adolescence poverty have multiple dimensions, which go beyond money. It is the result of the interrelation between deprivations, exclusions, and the different vulnerabilities that children and adolescents are exposed to and that impact their well-being.

When referring to the basic needs of sanitation, according to the IAS report (2020), since 1940, Brazil underwent major social, economic, and political transformations resulting in large and lasting effects on basic needs as sanitation. Brazilian cities expanded with the arrival of immigrants and the migration of the rural population to urban areas, strongly impacting the services and housing infrastructures. The dissemination of the sanitation service as of local interest gained complexity from the urbanization process of cities throughout the 1950s and 1960s. Urban areas began to grow, disregarding the political and administrative limits of the cities. In parallel with legislative changes, the process of disorderly urbanization of cities has made the provision of sanitation services more complex and created greater disorganization of municipal services.

In 2008 occurred the ‘Pact for Basic Sanitation: More health, quality of life and citizenship’ (BRASIL, 2008), which in 2014 culminated in the Federative Pact to universalize access to basic sanitation services by 2033. The Pact initials goals predicted 100 percent of the country supplied with drinking water by 2023 and 92 percent of sewage treated by 2033. Majority of sanitation plans were developed between 2011 and 2013 when there was a prospect of universalizing water supply and sanitation in 20 years. However, with the political and fiscal crisis of the local states and federal government after 2016, these plans were put on hold. Between 2003 and 2017, US$36 billions were invested in sanitation. Considering the structural measures necessary for sanitation, it is estimated that US$ 122 billions of investments will be needed in the period from 2019 to 2033 to achieve universal sanitation in Brazil (IAS, 2020).

When referring to the welfare programs to guarantee education equality, The Bolsa Família, that was an improvement of Bolsa Escola was an important step to social assistantship for Brazilian’s poor income families allowing children to go to school and pursue education. In 2006, around 11 million families had already been contemplated with money transfers under Bolsa Família with the fulfilment of school attendance, maternal health care, and childhood immunizations (Rocha, 2011). Then, with Law No. 11.096 (BRASIL, 2005), the University for All Program (PROUNI) was developed aimed to grant full and partial scholarships to low income families in private institutions. This allowed students that could not afford the tuition fee of private universities, could have the opportunity to keep pursuing their studies with the government scholarship.

Even though these programs have been helping the eradication of education inequality, much yet has to be done. When considering the education of the employed population, workers with complete higher education had an average monthly income of R$ 5,189, about three times more than those with only complete high school (R$ 1,716), and it is about six times above those without instruction (R$ 884) (IBGE, 2016).

When referring to the human rights violations in form of racism, racial discrimination, and related intolerance transmitted across generations. According to the IBGE (2019), the presence of blacks or brown people was more accentuated in activities with the lowest income in Brazil, with a percentage share of Agriculture (60.8), Construction (62.6), and household services (65.1). White people, on the other hand, are the best-paid group, working in information and technology, financial public administration, education, health, and other professional areas.

Another rising problem is informality, which is also more widespread among blacks or browns, with 47.3 percent of them in this condition, against 34.6 percent of whites. This group includes employees from the private sector and domestic workers without a formal contract; noncontractual employees and employers who do not subsidize social security; and auxiliary family work. In 2018, white people earned, an average percentage of 73.9 more than blacks or browns. Also, the inequality still remains when the remuneration for hours worked is verified. The hourly income of the white colour employed (R$ 17) was 68.3 percent higher than the black or brown population (R$ 10). The biggest difference in this hourly wage was between workers with a college degree: R$ 32.8 (US$ 6.56) for whites and R$ 22.7 (US$ 4.54) for blacks or browns. The problem is beyond income since when it is discussed the education numbers, in 1997, only 1.8 percent of young people aged 18 to 24 who declared themselves black had attended a bachelor’s degree, showing that a change was necessary to allow the minority groups to access education. One of the biggest social inclusions movement that is possible to be seen in Brazil is the presence of Racial Quota, which had allowed that more black and brown people could attend the higher education system. Another progression towards racial equality was Law No. 12.288 (BRASIL, 2010) that established the Racial Equality Statute, which aims to ensure the black community the recognition of equal opportunities, the defence of the individual, ethnic rights, and the fight against discrimination and other forms of ethnic intolerance.

3. Challenges to overcome the social problems while fighting COVID-19

When looking to identify the social policies in Brazil, after the 90s the Welfare State started being seen by the positive bias of its contribution to economic development. The State was the promoter of public programs to stimulate socio-economic policy with the active participation of citizens. This partnership led to a reform of the public basic social services, improvement in the quantity and quality of job opportunities and income generation, initiatives to decrease poverty in the short term with programs providing direct income transfer such as ‘Bolsa Família’, and initiatives to reduce inequality in education with PROUNI and the quota system. The policies favouring the citizens’ welfare tend to find balance looking for the population need, regarding the minority groups, in a way to try to help them to be part of the society disregarding any type of discrimination. The speech of equal social distribution is difficult to reach in a competitive capitalist environment, so an alternative could be a fair social distribution. Everyone should have access to the minimum, to a fair health system, to a fair education, and to fair job payment.

The future post-pandemic is still uncertain in the world, in Brazil, and in its cities. Some of the measures to fight the COVID-19 depend on the local, state, and federal government policies to help the population's needs. It is significant to call attention to each locality distinct necessities which ends up requiring the government different attention and effort. However, there are public policies that should be highlighted as the influence of the Unified Health System (SUS). The state together with the private institutions, have the responsibility in times of a crisis to ensure clear and efficient answers to the people as a whole. According to the ‘Health at a Glance: Latin America and the Caribbean’ (OECD, 2020) the total health expenditure across Latin American (LA) Countries in 2017 was 6.6 percent of GDP, which was less than the OECD countries (8.8 percent).  In Brazil, the health spending per capita was US$ 1280, which was bigger than the average of LA countries (US$ 1026) but much smaller compared with OECD countries (US$ 3994). The region had a medium of two doctors per 1,000 population, with Brazil below the OECD average of 3.5. During the pandemic, community actors, NGOs, and social leaders who know the reality of favelas and peripheries has been articulating and planning actions to solve local problems and construct initiatives with the state for the water supply, basic sanitation, health, and education. However, despite their evident importance for community life, these organizations have many difficulties in maintaining the operation of their activities. Therefore, supporting and establishing the work of community organizations is a necessary task, during and after the crisis.

The economic deterioration caused by the coronavirus pandemic has made evident the vulnerability of the Brazilian population. From those inserted in the formal labour market to those in the informal sector, each could easily fall into a situation of poverty in the face of income instability. Even though the impacts of the Emergency Aid (Auxílio Emergencial) on the country's social dynamics were immediate, there are still 52 million people considered poor, with a per capita household income of less than half the minimum wage monthly. Although Brazil has a long way to overcome poverty, the country has already part of the necessary and valuable tools to get there. There is the Cadastro Único, responsible for mapping the poor population, and the Unified Social Assistance System (Suas), which was created with the goal to decentralizing the country's social assistance policy until the municipality.

The federal and state governments have a role to support the most vulnerable population, but it is the municipalities and local governments that are more properly able to identify, according to the citizens’ living conditions, what lead these people into poverty.  The social inclusion should start in the local community due to each peculiarity of each region. Some may need cooperatives, training programs, labour intermediation, or credit. Thus, to be able to overcome poverty, the Brazilian government will have to go beyond cash transfers to lift millions out of the poverty line. For a well-defined social policy, Brazil needs to guarantee access to basic services and help with the inclusion of the poor population into the labour market. More than mitigating the country's current poverty situation with money from social programs, Brazil's main challenge is to overcome medium and long-term poverty.

It is essential to comprehend that COVID-19 is also a matter of social concern, the virus can infect everyone - so it may not discriminate who it will infect - but it discriminates when those who are infected do not have access to their basic needs. According to EPOCA (2020) considering those who had already die from COVID-19 in Brazil, when looking at the victims' colour, it was identified that 61 percent were brown and black, and brown and black population represents 54 percent of the Brazilians. In the North and Northeast, black and brown victims accounted for 86 percent and 82 percent respectively, and these regions are already known to be more economically precarious in the country.  When the most vulnerable population do not have access to public health and medication, when they cannot stay home, - due to the necessary income to support their families – the virus is discriminatory and it is exposing the vulnerabilities of the state’s policies and the need of new planning for social inclusion and sustainable development.

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