Pierpaolo Barbieri: belief

Transcript context

…Putting aside COVID, why does it seem that political economy in Brazil has so much just flung off the rails? You have Bolsonaro maybe against Lula, everything a mess, constitutional crises, never got on a stable track. What’s going on? How do you explain that? Obviously, Brazil for Argentina is a necessary partner. Brazil is at the heart of MERCOSUR, which should have become a European Union for Latin America and never did, never embraced free markets in the way that the free trader of the Americas would have done, but Chavez and Lula and Kirchner stopped it, I think negatively affecting the whole region back in 2004, 2005 when Chavez famously said, “ALCA, ALCA, al carajo. ” I think that what Brazil has is a profound political crisis, where you’ve had a loss of representation on the center-right. The center-right has been hijacked by Bolsonaro, who has a very free-market-thinking finance minister in Paulo Guedes but remains somebody that you cannot predict. One day, you think that Bolsonaro is going to do the right thing. Then he suddenly replaces the managerial head of Petrobras, one of the largest companies in the country, by an army person, and everybody’s thinking about a coup. The following day, he puts forward a very liberal tax reform plan designed by Guedes. That kind of player has taken over the center-right in a similar way to how Donald Trump hijacked and replaced the elite of the Republican Party in 2015 and 2016. Then on the left, you have a deepening problem of the judicial issues associated with Lava Jato, which was a little bit of a Brazilian Mani Pulite, going back to the Italian scandal in the early 1990s that imploded the political scenario until Berlusconi appeared in ’94. So you have a vacuum of power. Lula has been in jail. Now he’s out, and I expect him to form back together the PT, which is the Worker’s Party, the Partido dos Trabalhadores, and I think that Lula will become the rallying cry of the center-left and the left. Then it remains to be seen if Bolsonaro can still build an anti-Lula coalition. But the answer to your question is, you have a radical politically with a liberal — in the British sense — economic agenda, who has been trying to build a coalition that is becoming smaller, and a resurgent left. It’s very difficult for Bolsonaro not to give in to spending as much as he can, as fast as he can, to secure reelection next year. That bodes ill for Brazil’s long-term reform since the Cardoso administration. Brazil is at the risk of throwing out, of wasting the difficulty and the time spent in lowering inflation and building credibility in its domestic economy by spending too much, too fast to stave off Lula’s return. Take Chile — they’re fairly wealthy by regional standards. They have reasonable state capacity. Yet, even with their economic growth, they don’t seem to have made much of a dent in their inequality problem, and the quality of their educational system for maybe even the bottom two-thirds still seems quite poor. Why is that such a hard problem for them to fix?…

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