The chaotic Brazilian scenario

Image: Action Group


The consequences of six years of right-wing governments in power

In an election year that may (or may not!) reverse the balance of power in Brazil in favor of a center-left government, the country is experiencing a disaster scenario, with environmental destruction, economic stagnation, rising inflation, concentration income and deterioration of several social indicators. This is the ominous legacy of nearly six years of right-wing governments in power.

According to INPE data, almost a thousand square kilometers of the Amazon were deforested in the first quarter of 2022 alone, highest value for the period of the recent historical series. The country accumulates environmental disasters and negative news about the environment are recurrent in the media, as in relation to illegal mining in recent months. Not to mention the frightening advancement of the anti-indigenous agenda (and actions). This environmental devastation and disrespect for native peoples would in theory occur in favor of economic growth, which is not consistent with reality.

If confirmed to IPEA forecast of growth of the Brazilian product of 1,1% in 2022, the country will have grown by around 6% since 2017, the first full year of the Temer government. This number, which is already extremely low for an emerging economy, becomes even more worrying when one takes into account the almost 7% drop that the level of activity suffered between 2015 and 2016. Thus, maintaining the growth rate of 1 %, Brazil will only return in 2024 to the real product level observed ten years earlier!

In addition to economic stagnation, Brazil has been experiencing a strong process of income concentration, with a downward trend in the share of gross domestic product destined for the working class since 2016, the year of the parliamentary coup. Add to this double-digit inflation, and the catastrophic Brazilian scenario can begin to be understood.

It is worth noting that, although the pandemic crisis has contributed to this chaotic situation, the process of economic stagnation and income concentration precedes it. Even before the advent of the pandemic, hundreds of thousands of people had already been thrown into destitution, and the country returned to the hunger map. And the situation is only getting worse, so that food insecurity now affects more than half of the population.

It is clear that the government of the Workers' Party has its share of responsibility in the current scenario. The depression that started in 2015 is basically due to economic policy mistakes, a fact that, combined with the absence of structural reforms and the removal of the support bases (in the illusion of governing only from the top floor), made possible the impeachment of 2016 and the rise of right-wing governments. But, now that almost six years have passed since the political inflection, it is no longer possible to blame the PT for everything.

It is always good to keep in mind that, in times of low unemployment (which was less than 5% in 2014), it is in the interests of the capitalist class to slow down the economy in order to generate unemployment and contain wages. This fact helps to explain the austerity agenda introduced in the last decade. And like an addiction that seeks comfort in its own addiction, austerity contributes to the economic slowdown, used as a justification for deepening austerity policies, in a process that feeds back.

Economic stagnation itself is also a trigger for the introduction of institutional changes that deepen it, such as labor and social security reforms, sold as bitter medicine for the crisis. Such reforms remove rights and intensify income concentration, reducing the purchasing power of the working class, which is more inclined to spend, contributing to stagnation.

But every redistribution has winners and losers. While the population lives in poverty, the top floor wins, so that the capitalist class has been increasing its profit rates and its share of the national income. Perhaps the most glaring example comes from Petrobras: while the company distributed more than 100 billion in profits and dividends in 2021, the most vulnerable portion of the population returned to cooking with a wood stove, given the skyrocketing fuel prices. And often there's nothing to cook.

The obvious conclusion to be reached is that the economic and environmental destruction observed in recent years – with its reflections in the fraying of the Brazilian social fabric – is the undeniable legacy of the last six years of right-wing governments. The question is how far this process will go, or whether the year-end elections will put a brake on it. And whether an eventual political renewal will allow the country to reorient its path towards sustainable economic growth with income redistribution.

* Luciano Alencar Barros is a doctoral student at the Institute of Economics at UFRJ.


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