Pleasing the market will not save the government

Image: Magali Guimarães


From meeting to meeting of the COPOM, with mediocre reductions of 0,25%, the crisis is certain

The legacy left by the previous government is really cursed. In the economic field, minister Paulo Guedes's mandarinate left grenades in several pockets. The explosions from these grenades are visible to the naked eye. The Guedes/Bolsonaro administration scrapped the State's instruments of intervention in the economic domain. And in a blague acacia, the problem with consequences is that they come later.

A fuel price policy that penalizes society as a whole and only benefits Petrobras' large shareholders. At the same time, the privatization of assets created a myriad of private enterprises in the area of ​​refining and logistics that cannot be sustained without gaining control of the entire production chain. The same situation is repeated at airports, which are profitable only if they form part of an airport system. The underpriced privatization and without criteria of ports, airports and highways already increases logistical costs in Brazil.

The division of the electricity sector culminated in the handing over of control of Eletrobrás, amazingly, to the controllers of Lojas Americanas. The work of these characters in the electricity sector is demonstrated in the virtual bankruptcy of the Light distributor in Rio de Janeiro.

The damming up of public and private investments, added to the loss of industrial density, produces a supply crisis, which shows its effects in the paralysis of the automotive industry. Despite the microprocessor crisis between Taiwan and China, with a promise of a resolution in 2025, in the case of Brazil this damming is largely a consequence of the fiscal tightening practiced by the former Ministry of Economy, since the price increase occurred very aggressively to poorest, triple compared to the richest. The profane relationship between car rental companies and tax exemption, another bomb of neoliberalism in the automotive production chain, exacerbates the crisis of loss of industrial density.

The case of Lojas Americanas is the tip of the iceberg of the Brazilian retail crisis. Despite fraud and inconsistencies in balance sheets, retail has lost sales due to unemployment and loss of income. This retail crisis spills over into the economy through a credit crunch. Credit crisis is deadly for economic activity.

There is a contracted recession in the Brazilian economy. The “independent” Central Bank maintains a basic interest rate that not even part of the financial sector can bear its carrying cost. At the same time, the Bolsonarist Guediano president of the Central Bank is impassively watching the back-and-forth exchange speculation and does nothing to face the crisis, yet another, of liquidity that is approaching.

The Lula government is already setting out to provide microeconomic responses to the crisis that is approaching. Measures such as the resumption of specific investments, implementing programs such as Desenrola, to remove people from Serasa, and correction of the income tax table are timid and insufficient to face the seriousness of the situation.

Macroeconomic measures are needed. It is impossible to expect to assess the “independence” of the Central Bank at the end of the mandate of the current Bolsonaro/Guedes nominee. And it is necessary to act on obstacles to government action, as in the issue of privatization of Eletrobras. The same must be done about Petrobras' pricing policy. These are measures that do not depend on a vote in Congress.

To these challenges, the Minister of Finance responds with barrettes to the market. The measures proposed by the minister are strict and restricted to microeconomics, based on the population's credit. It is important, but insufficient. If, after the 2008 crisis, the Lula government used credit as an anti-cyclical measure, it succeeded because of an enormous consumption liability established by historical inequality and poverty. There were many Brazilians who never had access to basic items.

The examples are many and cognitively simple. If millions lived without electricity and turned to the Luz para Todos Program, the government could allocate credit for the purchase of white goods, such as a refrigerator. The same for Smart TV and household appliances in general. However, the context is different. Although there are still Brazilians without access to electricity, the resolution of the debt will not result in a macroeconomic solution, because, in addition to the demand not solving a crisis whose origin is the supply, nothing indicates that the unwound will buy and exchange what they bought and got into debt in the previous decade. If they buy, nothing indicates that it will be in sufficient quantity to overcome a crisis.

Gabriel Galípolo, the number two of the Ministry of Economy, in an interview with the newspaper The State of S. Paul, on February 23, stated that the government's focus is on reversing the trend of credit contraction, an effect of the fraud by the Americanas trio in which banks reduced the supply of credit, with high interest rates, applied by the “independent” Central Bank . To this end, the announced remedy is the Desenrola program. How the program and its effects relate to the diagnosis of number two is a mystery.

In view of the diagnosis, the ministry has two complementary paths: to provide liquidity to banks, which was already done in the pandemic with the release of a substantial part of the R$ 1,3 trillion promised by Paulo Guedes, and to lower interest rates. About the first, the ministry says nothing. It prefers to treat it as a problem between the private sector and the judiciary and market confidence, even if the negative effects on Eletrobrás, with a potential increase in tariffs and costs, are imminent. Regarding the second, the current minister prefers to flatter the errand boy of Paulo Guedes and Faria Lima, as seen at the G20 meeting, disputing the reduction of a measly 0,25% at the next COPOM meeting, on March 21 and 22 , to try to make something else fall, probably another 0,25%, in another 45 days (mid-May). By then, the first semester has already been compromised.

High interest rates, declining income, high unemployment with a trend towards increasing informality and statistical blackout are the elements that the Ministry of Economy does not face because this confrontation depends on significant changes in the Central Bank and on macroeconomic measures. If the government does not minimally control the exchange rate and interest rates, as it tries to control them indirectly through fiscal regulations, a crisis is certain. The economy will not wait for the proposed fiscal framework or the tax reform. The liabilities and bombs planted by Guedes and Faria Lima in the six years of the Temer/Bolsonaro government are everywhere. The February IPCA was 0,76% with high unemployment and low average income. This is the objective data.

In recent years, Fernando Haddad has made an effort to get closer to the market. One of the paths taken was to work at Insper, think tanks exclusive neoliberal of the market. For this, he left teaching at USP. His stance on re-encumbering gasoline ended up creating a problem for Lula, who saw his minister publicly fried by the political wing in just two months. The mere formation of a political wing in opposition to the ministry didactically demonstrates its predominantly neoliberal position. Lula made lemonade out of lemons: he started to use the political wing to impose agendas on the market through Fernando Haddad – case in point?

The country is in a hurry right now. From meeting to meeting of the COPOM, with mediocre reductions of 0,25%, the crisis is certain. If Jair Bolsonaro won, it wouldn't be a problem. The project in the second term was for total destruction and robbery, with legalized and naturalized genocide of indigenous people and the sale of all national assets, companies left over from the first term to the beaches. But Lula's project is distinct and antagonistic. For a reconstruction and construction project, Roberto Campos Neto's policy will destroy the government from the inside out. Measures related to Fernando Haddad's microeconomics will have the effect of dipyrone on advanced cancer or chloroquine for Covid-19.

*Leonardo Sacramento is a pedagogue at the Federal Institute of Education, Science and Technology of São Paulo. Book author The mercantile university: a study on the public university and private capital (Appris).

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