The privatist rage of Folha de S. Paul

Dora Longo Bahia. Escalpo Paulista, 2005 Acrylic on wall 210 x 240 cm (approx.)
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By CESAR LOCATELLI*

In articles and a book, Aloysio Biondi countered the arguments that the newspaper would use again 23 years later

“We became brutal. Brazilian society has become brutalized. The media became brutal. We journalists are brutalized. (…) The current rulers no longer care about the people, the human being. But we are all guilty too. By silencing. For standing idly by. We do brutalize, yes” (Aloysio Biondi, no. popular newspaper, in July 2000).

Were he alive, Aloysio Biondi would certainly have strongly opposed the editorial of the Folha de S. Paul, “Privatization is good: false notions surrounding the country's successful privatization program must be dispelled”. He would do the same with the main headline of the Sunday newspaper (28/8) “In 30 years, privatizations leverage the country's economy”.

How the Sheet intends to publish a series in six chapters emphasizing that “sale and concession of state assets advance and revolutionize the economy”, we will do the same resorting, however, to criticisms of privatizations, supported by data as was their characteristic, made by the former reporter, former -editor and former columnist for Sheet.

 

“The privatization assault continues”

In an article, “The privatization assault continues”, in the Folha Market section, on June 12, 1999, Biondi reveals the pattern used by the FHC government: “The FHC government continues to devastate state companies and state governments. If Cesp's tariffs were revised, its profits would increase and the money would go to the government of São Paulo, the people of São Paulo, who are its 'owners'. The FHC team harms São Paulo, Governor Mário Covas does nothing, except confirming, with his omission, that four years ago he completely bowed to the interests of the FHC team. Poor population of São Paulo, whose rights have been violated”.

Delaying tariffs, however, was not the conduct for privatized companies: “Announced violent increase in energy tariffs of privatized companies. It wasn't just because of the devaluation of the real. The government signed contracts with buyers committing to give annual increases for energy and telephone services, which was largely hidden from public view. Detail: readjustments were not announced for state companies that produce energy, such as Cesp, from São Paulo. They have been without readjustments for two years, with a 'flattening' of 16% in their prices”.

Refuting the thesis of Everardo Maciel, the then Federal Revenue Secretary, that large companies and banks paid very little income tax, as there would be loopholes in the law, Biondi fired: “The FHC government gave one more gift, an advantage, to the ' buyers' of telephone companies, reducing their Income Tax, since the end of last year. As? It allowed, through a mechanism that technicians call 'accelerated depreciation', that they post as expenses (reducing profit and tax) twice as much (20%) as other companies can deduct (10%). There is no 'loophole', repeat: there are ordinances, resolutions, decrees, provisional measures favoring large groups”.

 

Why is it so easy for privatized companies to profit

Book excerpt Privatized Brazil: an assessment of the dismantling of the State, explains why it was so easy to obtain large profits in the recently privatized companies: “- Ah, but the state-owned companies always make losses, take money from health and education… It is incredible how these companies are making profits, right in the first year after privatization …”

This argument was also widely repeated for the population. He is also fake. Point by point, the reasons for the quick 'profits' of privatized companies can be explained: “Tariffs and prices – the readjustments of 100%, 300%, 500% before privatization guarantee profits for the new owners. And there are last-minute increases, such as the 58% readjustment for energy bills in Rio, a few days before the Light auction”.

“Dismissals – also before privatization, the government has made massive dismissals of state-owned workers, that is, it spent billions with the payment of indemnities and labor rights, which would actually be the responsibility of the 'buyers'”.

“'Swallowed' debts – this is a point that has never been clear to the Brazilian people: over the 30 years since the late 1960s, the government has often used state-owned companies to 'hold down' inflation or benefit certain sectors of the economy , generally because they are considered 'strategic' for the country”. "Like this? There were periods when the government avoided readjusting prices and tariffs for products (such as steel) and services provided by state-owned companies, in an attempt to reduce pressures and control inflation rates. These 'flattening' and 'freezing' prices were mainly responsible for the losses or low profits presented by some state-owned companies, which started to accumulate debts over the years – thus suffering a new 'bleeding' of resources, represented by the interest they had to pay on those debts.

“Rightly or wrongly, state-owned companies were used as a weapon against inflation by governments that thought that combating high prices was the country's main priority. The problem is that it was never sufficiently explained to the population that this decision ruined state-owned companies, giving rise to false accusations of 'incompetence' and 'bottomless bags' against them. When the wave of privatizations came, the government did exactly the opposite”.

“Transferred debts – an important parenthesis fits here. When the government publishes the results of the privatization process, it always likes to say that, in addition to the 'sale' price, one must also take into account the debts that the state-owned companies had, and which were transferred to the buyer. In this argument there is a double lie. First, as demonstrated above, there are debts that the government 'swallows', and which it and the media never talk about…”.

“Secondly, in the case of debts that remain under the responsibility of the 'buyers', it is necessary to remember that they will rely on the company's own revenues to pay them. Unlike the government, which is left with the 'swallowed' debts and has to pay them with money from the Treasury, from taxes, that is, from the entire Brazilian population. Our money”.

“Pension funds – just like large private companies, also state-owned companies maintain special retirement plans or pension plans for their employees. In several cases, the 'buyers' were also released from these commitments. Like this? The government – ​​states or the Union – “transferred” retirees to its payroll or took responsibility, in the case of pension funds, for the payment of benefits to existing employees. (…)”. (p. 12 to 15).

*Cesar Locatelli holds a master's degree in economics from PUC-SP.

 

Reference


The pdf file of the book Privatized Brazil: An assessment of the dismantling of the State can be downloaded for free at link from the Perseu Abramo Foundation.

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