By EDUARDO BORGES*
A portion of the Brazilian elite is disconnected from the contemporary economic debate and remains faithful to its atavistic and despicable aporophobia
By getting rid of Jair Bolsonaro, Brazil got rid of two debris, one political and the other economic. As for the first, he got rid of a reactionary, archaic and authoritarian mentality, which naturalized hatred and established the foundations of a shattered society. As for the economy, it got rid of the debris represented by the outdated and archaic ultraliberalism defended by Paulo Guedes and reprocessed by some outsourced economists who respond to the interests of the so-called “market”.
In recent days, these outsourced workers have gained some visibility in the mainstream corporate media by positioning themselves “critically” to the so-called “PEC of the transition”, the Proposal for a Constitutional Amendment that would help the Lula government to pay Bolsa Família in the amount of 600,00 reais without having to abide by the spending cap rule. Let us remember that the budget for 2023, sent by the Bolsonaro government, only ensures payment in the amount of 400,00 reais.
This first great economic challenge of the Lula government has become a small laboratory of what tends to be the future relationship between the PT government and the share of the national GDP. Well, in the lines that follow, let's reflect a little on how much a portion of the Brazilian elite is disconnected from the contemporary economic debate and continues to be faithful to its atavistic and despicable aporophobia.
In recent weeks, amid the debate over the spending ceiling, Faria Lima (the center of Brazilian capitalism) decided to frame President Lula (let's not forget that Bolsonaro pierced the spending ceiling by 795 billion reais and they did nothing) claiming that some speeches by the president about fiscal control could not only cause fiscal imbalance, but the collapse of the Brazilian economy. The theme has even generated a “war” of public missives between renowned Brazilian economists, clearly demarcating the social nuances of the members of this academic segment.
Regarding the intemperate reaction of the “markets”, it only reproduces the old attempt of the national GDP to protect presidents and governments. They've been doing this since the Empire. Ensconced in their glass palaces in the comfort of air conditioning, these people only see numbers instead of human beings. Just a small sketch, by any government, in granting the less favored a minimum of protagonism in the public budget that the vultures of the “market” react without any shame or social sensitivity.
The bourgeoisie tries to base its class prejudice and economic usury on a half dozen supposed specialists (true rent-seeking mercenaries) made up of subjects with completely outdated economic thinking, but who serve the dirty service of creating social panic (incorporated in an imbecile way by a part of the middle class that considers itself rich) necessary to keep the ruler in charge under the tutelage of his private interests. Let's get to the facts.
Elected by an overwhelming portion of the poorest, the third Lula government cannot carry out a management that is not one of corresponding to the interests of this sector of the population. Faced with 32 million people going hungry and a high unemployment rate, Brazil needs to change its focus radically towards social issues. However, this does not mean acting irresponsibly in relation to fiscal balance, but simply re-signifying (within the current debate of liberal thought) the orthodoxy of the neoliberal playbook.
I reproduce Lula's speech that has provoked the reaction of the "markets" and the unwary of a dazzled middle class that pathetically mimics the "concern" of the barony of the Casa Grande: "Why are people made to suffer on account of guaranteeing How about fiscal stability in this country? Why do people say all the time: 'you have to cut expenses', 'you have to make a surplus', 'you have to cap your expenses'? Why do the same people who seriously discuss the spending ceiling not discuss the social issue in this country? Why aren't poor people on the macroeconomics discussion sheet? Why do we have an inflation target and no growth target? Why don't we establish a new operating paradigm in this country?”
Do you understand what promises to be the strategy of the opposition to Lula's third government? Do you realize that the progressives in that country will have to fight a daily battle to convince public opinion that it will be necessary to take sides and vehemently defend popular sovereignty against the attempt to impose power by our plutocracy? This speech by Lula, which at first could be considered obvious for a ruler whose public function is to improve people's lives and look after the most vulnerable, was not seen with good eyes by our capitalists.
During the week, corporate media newspapers distilled their selfish elitism through various editorials (the anti-democratic acts of Bolsonaristas lunatics did not receive the same treatment) shading the risk caused by Lula's speech. Ultraliberal economists have thrown up their idiosyncrasies in a “scientific” guise, creating the right environment for the political elite that flirts with the extreme right to keep the coup rage burning. Fiscal adjustment became the great God. Aware that they can use financial power to unbalance the political game within a physiological and reactionary parliament, the economic elite keeps burning the old flame of seizing institutional powers and accommodating the State to the limits of its interests. They have been doing this forever and have no qualms about supporting scams or discretionary actions.
Let's go back to the facts. Lula talks about putting the poor in the budget, as a result of the Ibovespa plummeting, the dollar rises, the dazzled middle class is amazed, the anti-democratic Bolsonarists gain new breath and the intellectual mediocrity of our liberals is openly unmasked. Before explicitly supporting a coup action, the Brazilian economic elite, led by “donkeys with initiative” like Paulo Guedes et caterva, entrenched themselves in the cliché discourse of fiscal balance and debt versus economic growth and social inequality, creating a stupid and false dichotomy.
Faced with this script, I sought in liberalism itself an answer that would refute our liberals. There follows, therefore, an argumentative sketch of how much we perish from liberal economists with a minimum of intellectual quality. After the 2008 crisis, which provoked a decade of global crisis, some of the mental structures of Neoliberalism were strongly questioned. Some of the most important liberal economists have focused on how to resolve the equation created between fiscal balance and social inequality. Full proof of how outdated our economists are (by ignorance or social insensitivity?) was an article published in 2016 in the IMF magazine. That's right, you didn't get it wrong, in the magazine of the International Monetary Fund. The article was signed by economists Jonathan D. Ostry, Prakash Loungani and Davide Fuceri,[I] under the title “Neoliberalism: oversold?”[ii] (Neoliberalism: exaggerated?). The text is a real lesson in reality (do our liberal economists, critics of Lula's speech, not know about this article?) and makes it clear how the old neoliberal prescription of the Washington Consensus is beaten as much as the brain of our eminent liberals.
The text started from the reflection of the reality established from the 80s in which the macroeconomic management of countries, mainly those on the periphery of the system, would achieve economic development if they followed the rules of the neoliberal primer imposed by the IMF itself. More than thirty years later, prosperity did not come and the population did not enjoy the benefits of the projected economic growth. A portion of Brazilian liberals, those who today criticize Lula's socially responsible speech, remain connected to this illusory chant of the 1980s.
Despite reporting some positive aspects of neoliberalism (which makes their criticisms even more unsuspected), the authors of the aforementioned article brought up the following reality: “However, there are aspects of the neoliberal agenda that were not delivered as expected. Our assessment of the agenda is limited to the effects of two policies: removal of restrictions on the movement of capital across a country's borders (so-called capital account liberalization); and fiscal consolidation, sometimes called “austerity”, which is shorthand for policies to reduce fiscal deficits and debt levels”.
The two policies mentioned above are now being rescued in the form of a bloated “scientific” argument against Lula's speeches. Demonstrating how much Lula's discourse is contemporary, after reaching the conclusion that the neoliberal prescription increased social inequality, the authors of the article make the following statement: "The increase in inequality, in turn, harms the level and sustainability of of growth. Even if growth is the only or main objective of the neoliberal agenda, advocates of this agenda still need to pay attention to distributional effects”.
In other words: it's distribution, stupid! That's what Lula wants to say with his socially focused speech. Revealing the incoherence of our liberals who try to reconcile economic austerity with economic growth, let's see what the authors of the IMF wrote: “The increase in inequality generated by financial openness and austerity can undermine growth, exactly what the neoliberal agenda intends to promote. There is now strong evidence that inequality can significantly reduce the level and durability of growth.”
Did you realize how much the agenda focused on the issue of social inequality (Lula's proposal) became an agenda even among liberals? It is melancholy to see a portion of our middle class share the anti-poor discourse of our economic elite, when not even the center of capitalism no longer shares this idea. The agenda of the Brazilian left over the next four years must be the tireless defense of social equality. The four years of the Bolsonaro/Guedes duo strongly reached the minimum legal and political framework that still supported public policies to promote social equality.
A concrete example that our economic elite is not ashamed to be more realistic than the king was given in 2017 at the Davos Forum. On the occasion, the then director-general of the IMF, Christine Lagarde, gave a speech deconstructing the speech of Minister of Finance Henrique Meireles (Temer government). She demanded that Brazil was concerned with the issue of social inequality to the detriment of the orthodoxy of neoliberal prescriptions. She spoke, apparently, to the desert. Meireles disdained Lagarde's speech. What is the fear of the Faria Lima people when they reject with contempt and coldness any reasonably progressive debate that insists on placing the poor and social inequality at the center of the discussion of public policies?
When our elite and part of the dazzled middle class repeat the mantra of “total liberalization of capital flows”, look at the position of foreign economists: “The IMF also recognizes that total liberalization of capital flows is not always an appropriate end goal and that further liberalization is more beneficial and less risky if countries reach certain thresholds of financial and institutional development”.
In other words, according to the IMF, the total liberalization of capital flows should only occur if there is a sovereign and autonomous project for the financial and institutional development of countries. When Lula signals the return of the PAC and investment in infrastructure, that's what he's thinking about.
Austerity is music to the ears of our liberals. The corporate media reproduces this mantra with aplomb in their pages. However, see what the center of world capitalism is already thinking about the blessed “austerity”: “Austerity policies not only generate substantial welfare costs due to supply-side channels, but also harm demand – and, thus worsen employment and unemployment”.
But our elite prefers to remain recalcitrant, turning its back on everything that might benefit the less favored. Now it's the fiscal adjustment and austerity, soon it's the deepening of the labor reform and the end of the CLT, are we going to pay to see? But the irresponsibility of the oracles of our “market” reconciles ignorance regarding the contemporary economic debate with a total lack of intellectual honesty by completely discarding any support for their criticisms in the historical process of the Brazilian economy in the last 20 years. Let's go back to the facts again.
In 2002, when Lula took office in his first government, the net debt of the General Government and Banco Gentral was 59,5% of GDP. We were experiencing difficult times of financial speculation with an increase in the exchange rate and the internal debt. Lula inherited a large public debt from FHC, but his fiscal policy (today feared by the market and other reactionaries) simply paid the debt contracted by FHC with the IMF (we became creditors of the Fund). What followed, during the Lula and Dilma governments, was a sharp reduction in public debt, reaching in 2013 almost half of the FHC era, with almost 30% of GDP. Where were the horde of rentiers, reactionaries, bolsonaristas, and other lunatics between 2002 and 2013 when all this was happening to the Brazilian economy?
By reducing the value of the debt/GDP ratio from 60% to 30%, the Lula government was even more realistic than the IMF itself proposed. In the aforementioned text published in the Fund's magazine, the authors, when referring to the subject, state: “The economic history of recent decades offers many examples of these restrictions, such as the limit of 60% of GDP established for countries to join the euro zone (one of the so-called Maastricht criteria)”.
In other words, what justifies that today the said market and the barons of the corporate media have any fear in relation to Lula's fiscal policy? Surely the answer lies in its structural class prejudice. There is no other explanation given the facts of real life. Apparently, the eschatology of the supporters of the Bolsonarist sect caught our liberal elite in full.
In summary, when Lula insists on making the issue of social inequality the main focus of his future government in his speeches, Lula is only dialoguing with what is most contemporary in the debate on liberal capitalism. On the other hand, his history of fiscal responsibility, already proven in his previous governments, does not justify the reckless anger of the economic elite.
When the whites of Faria Lima, mimicked by pathetic middle-class people, as white as those of Faria Lima, but not as rich as them, fatten up the “Lula risk” discourse (some even shuddered at the very foundation of imagining Fernando Haddad as Minister of Finance), are only reproducing the anti-people thought that emerged in the colony, was reprocessed in the Empire and became structural in the Republic. Anything other than that is a typical white people problems.
*Edward Borges He is a professor of history at the State University of Bahia. Author, among other books, of Coup: the coup as a political method of the Brazilian elite (Cutter).
Notes
[I] Jonathan D. Ostry is Deputy Director, Prakash Loungani is Division Head and Davide Furceri is an Economist, all in the Research Department of the IMF.
[ii] https://www.imf.org/external/pubs/ft/fandd/2016/06/ostry.htm
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