Monotonous litany of neoliberal economists

Image: Jan van der Wolf
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By FERNANDO NOGUEIRA DA COSTA*

The preaching of the neoliberal creed, a daily occurrence in Brazilian economic journalism, does not vary or bring anything new. Check out the 10 Commandments of this liturgical prayer

Litany It's boring talk because it's always repeating the same ideas. It is a long and tiring enumeration of dogmas with monotonous and tedious repetition of complaints and recriminations, in the case of neoliberalism, against the State. It's a nonsense...

The preaching of neoliberal creed, every day in Brazilian economic journalism, does not vary or demonstrate anything new. It's dull, boring, monotonous for having a single tone. Check out the 10 Commandments of this liturgical prayer, structured in the form of short invocations to The Market as God – ubiquitous, but inconsistently omnipotent e omniscient, because if the future is announced, it loses the power to change it.

  1. Free Market and Deregulation: neoliberals preach the belief in the free market as the efficient (and sufficient) force in allocating resources and deregulating everything for the market to function without state interventions.
  2. Less State Intervention in the Economy: advocate for a limited role of the State in the economy, arguing that interventions create distortions in the functioning of The Market.
  3. Privatization of State Companies: propose transferring ownership and management to the private sector, claiming this will promote efficiency and competitiveness.
  4. Reduction in Public Spending: especially in areas such as social assistance, health and education, in order to promote fiscal responsibility and balance the public budget.
  5. Belief in Market Self-Regulation: because competition naturally adjusts prices and encourages efficiency – a repetitive “magic word”.
  6. Focus on Monetary Stability: prioritize price stability and monetary policy to control aggregate demand as a means of avoiding inflation.
  7. Free Trade and Globalization: are favorable to international free trade and globalization, again, for promoting economic efficiency and growth.
  8. Public Goods Theory: argue that only some goods (such as national defense, justice, and law enforcement) are appropriate for public provision, while others are more efficiently delivered by the private sector.
  9. Meritocracy and Acceptable Inequality: they defend a society based on merits, where individual success, from “the luck of the cradle”, is rewarded and inequality is seen as a natural result of the functioning of The Market.
  10. Criticism of Social Welfare Policies: Extensive social welfare policies can create perverse incentives and disincentivize job search.

In the movie "Casablanca”, released in 1942, when the protagonist Rick shoots a Nazi officer and the French captain is at his side, upon the arrival of his police officers, he simply says: “They killed the major, arrest him the usual suspects".

The reference “the usual suspects” has become a cliché around the world. In Brazil, whenever something happens in economic policy that draws the attention of public opinion, requiring a plural public debate To clarify the different points of view that exist between economists from opposing schools of thought, the first reaction of the “big” (sic) Brazilian press is always this: interview only “the usual suspects”. It only provides a platform for neoliberal economists to speak out against “the PT government”.

Typically, empty (and repetitive) complaints They preach that monotonous litany of prioritizing fiscal adjustment to avoid public debt or potential inflation. It's repeated ad nauseam, on a daily basis, in Brazilian economic journalism.

Without imagination, neoliberals fight against numbers! There has been inertial inflation under control for 20 years (except in 2015 and 2021), a stable public debt/GDP ratio – and a stagnant economy in the Era of Neoliberalism since 1980!

In fact, the only priority of rich people's supporters is to avoid the “euthanasia of rentiers”, when the inflation rate exceeds the fixed interest rate, and the increase in the progressive tax burden. Tax on Great Wealth is not even discussed.

For example, the industrial plan, announced by the government on 22/01/24, was viewed with fear by “experts” (journalists thus hide their usual sources) or among “economists” (another concealment so as not to burn their professional reputation together with colleagues) that the policy is “more of the same”. Everything new would have already been seen in past PT administrations, imposing a high fiscal cost.

Critics have not even analyzed the new industrial policy (NPI) and have already placed themselves against in the name of an ideological and prejudiced vision of the past, adopted beforehand for them. Without studying, for example, Mariana Mazzucato's recent books, they just say the commonplace of those ignorant of everything new: “it's more of the same”. I haven't read it, but I'm against it!

Brazilian economic journalism is practically an exclusive branch or spokesperson for economists from FGV-RJ, PUC-Rio and, more recently, INSPER. Interestingly, they do not consult anyone from the top five in the Ranking of Undergraduate Courses (RUF 2023) in Economics: USP, UNICAMP, UFMG, FGV-SP, UFRJ. FGV-RJ only comes in 6th. place, above PUC-Rio in 11th. and INSPER in 14th.

To immediately disqualify what was announced, they say the NPI did not have concrete and objective goalsIncluding intermediate goals. Read fanciful numbers typical of your consultancies.

In a timeless platitude, they accuse it of being too focused on the means and not enough on the ends. At six missions established in the plan with goals, challenges, priority areas and actions, such as 1. sustainable and digital agro-industrial chains, 2. health-industrial economic complex, 3. infrastructure, sanitation, housing and mobility, 4. digital transformation of industry, 5. bioeconomy , decarbonization and energy transition, and 6. technology for national sovereignty and defense, are criticized for still being “generic”!

They state that the return of “local content” would be “terrible” because it defines a proportion of national investments to be applied to the production of a certain good or service. They claim “countries with efficient industry matter a lot”, without highlighting a difference: With growth it's normal to care more – and not vice versa.

If it is local content, in the neoliberal vision, the taxpayer always pays, if it is a commercial barrier, the table pay. It’s the “Tico-e-Teco” thinking (2 neuron without S) ...

They accuse: “the industrial policies adopted in the PT past had high fiscal costs and were inefficient, generating poor allocation of resources”. First of all, they do not analyze the political circumstances (and interest rate policy) that sabotaged the continuity of the PAC in the Dilma II government. Nor do they observe, among other successes, the MCMV, the evolution of urban mobility and the success of PETROBRAS' investment plan in the pre-salt. The Brazilian economy is becoming a major oil exporter!

Worse in the neoliberal litany is the usual complaint: “public accounts are in the red, the impact of the misuse of public resources generates even more negative effects on the economy”. They point to high real interest rates and the lack of growth in private investment because the government does not have a primary surplus!

Is Brazilian inertial inflation related to the primary deficit?! The interest arbitrated by the Central Bank of Brazil comes from the pressure of aggregate demand caused by the government?!

A priori, they say they have “very difficult to believe” the plan is capable of working and having positive effects in the future. “Is it more of the same” industrial policy or criticism?

“We would need to do the opposite, contain costs”, says the “sabian” (sic). He misses the infamous Ceiling Law, which maintains stagnation. He does not see the possible effect of growth in national income on tax revenue.

Without analyzing the possible dynamism, it maintains a static reasoning, “short blanket” type. “If these industrial plan loans are granted at below-market interest rates, the Treasury will have to pay a interest equalization account in the Budget, increasing Union spending. It will compress other expenses and generate pressure on the primary result target”.

“To grant subsidies, the government has to take money from taxpayers with the highest tax burden.” Now, won't the BNDES take care of investments in LCD (Letters of Credit for Development)? Loans create deposits!

Another neoliberal criticizes beforehand the program announced by the government for not combating, according to its wisdom, the main problem of the country's manufacturing industry: low productivity. You should review your concepts. Productivity will only increase with the resumption of industrial growth in the long term, accompanied by innovations.

You need to “draw” for him: productivity = GDP/N, that is, production by the number of workers employed. Urban services have low productivity and technologically advanced industries have high productivity. Without the industrial sector, Brazil will not transition from a middle-income country to a high-income country. It's that simple…

*Fernando Nogueira da Costa He is a full professor at the Institute of Economics at Unicamp. Author, among other books, of Brazil of banks (EDUSP). [https://amzn.to/3r9xVNh]


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