the unloved

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By ANDRÉ MÁRCIO NEVES SOARES*

The president of the BC affronts the interests of the country, especially of the less favored sections of the population

In today's Brazil, if there is anyone who should be unloved, it is the president of the Central Bank, Roberto Campos Neto. It's good to emphasize my expression in the conditional “must”, because I don't have access to his private information. However, only a person who is ill with the country, peevish and tied to private interests can be responsible for this ignominy that was the maintenance of the interest rate at 13,73% per annum in the June Copom meeting. One of the highest interest rates on the planet, by the way. And, however, his attitude of affronting the interests of the country, especially of the less favored sections of the Brazilian population who struggle daily for their survival, was not surprising.

In this sense, I think it is opportune to make a brief digression on this issue of the independent Central Bank. In fact, only for the main economies of the planet, namely, those that make up the G-7 and those that are part of the European Central Bank (some countries are in these two groups) does it make any sense to discuss whether or not to have a Central Bank independent. Japan itself has suffered from this type of agency, being one of the causes of a monster stagnation of more than three decades.

For the others, especially the countries considered to be of late capitalism, an independent Central Bank makes no sense. The reason? Well, there are many, not just one. To begin with, there is no empirical evidence that a country has increased its economic development just by having an independent Central Bank; moreover, the independent Central Bank has the ability to restrict the entrepreneurial role of the State, as currently occurs in Brazil, by not allowing the financing of its expenditures, precisely because they do not finance large deficits; Another question that he is against, this strictly political one, refers to the democratic question.

In fact, the position of president of the Central Bank should have, as a priority, a technical profile. However, it is also a political office, insofar as whoever appoints it was elected by the people. Therefore, in the end, it is to the people, and not to the rentiers, that the president of the Central Bank owes satisfaction.

Therefore, if on the one hand the independence of the Central Bank can be good to avoid political casuism, it can also be very bad if in the most important chair there is a technician grounded to the last teeth with an ideology contrary to the interests of the country, such as in our case.

If we consider, hypothetically, that the technicians who sit in the chair of president of the Central Bank are all of high caliber, I would like to know what is most harmful to a country like Brazil: an excellent staff, from the most respectable universities in the world, but who, by taking a different course in terms of monetary policy than the one the country really needs, due to technical convictions, ideology or even mere stubbornness, and therefore needs (and can) be removed from office; or that same cadre that, for any of the reasons above, or for all of them, adopts a monetary policy contrary to the sovereign interests of the country, but that cannot be removed from office by an “immovable” mandate?

At this point, I believe it is important to state that it is not just a matter of highlighting the reservations regarding the independence of the Central Bank, as if there were only disadvantages. It is obvious that there are also numerous advantages for any country to have an independent Central Bank, within reach of any reader who wants to go deeper. Rather, it is about trying to understand, critically, the difference between the independent Central Bank of the USA, for example, and the independent Central Bank of some country with a late capitalist economy, such as Brazil.

The first does not need to go so far into the political sphere, as the country's economy, still the largest in the world, is financed by the external debt of peripheral countries in their currency, the dollar, mainly the economies of the global South, but also by other regional powers, especially the second largest economic power today, China.

The second, Brazil, cannot (and should not) have an independent Central Bank, not yet, as it is precisely the economic policy dictated by the government that must be able to leverage all the resources necessary for national development. Moreover, if the country has an autonomous federal autarchy that has complete autonomy vis-à-vis other public bodies, but that uses this autonomy to maximize the functioning of the financial system to the extreme, the conflict of interests is crystal clear.

Well, if a country like Brazil, where the richest 1% class, I would say even the richest 0,1% class fraction, holds half of all national wealth, it is more than evident that a rate of interest of 13,75% per year, and the real interest rate (discounting inflation) of 6,82% per year is the highest in the world, making any macro and microeconomic attempt by companies to make new investments and a significant increase household consumption.

On the contrary, not by chance last week the German automaker Volkswagen stopped its production activities of new units until further notice. Those who saw the images of the sea of ​​cars stored at the factory were impressed.[1] And it won't just be Volkswagen, but GM has also announced that it will stop. On the side of less well-off consumers, how to pay their debts to clear their names in the square and be able to return to the capitalist trade of fetish consumption? How to finance a vehicle, any white goods or even a property in the country with the highest real interest rate in the world? Unviable, right, dear reader?

In fact, things are so bad that even the Brazilian Senate, in the person of its president Rodrigo Pacheco (PSD-MG), gave a very robust hint this week against the suicidal monetary policy of the market hounds who are entrenched in the Copom.[2] Hopefully the Lula government will soon be able to defenest these bureaucrats, self-proclaimed doctors in economic science, but who are actually specialists in how to leave a country in the lurch, with saucer not hand with the main international organizations of financing of the national debt - internal and external -, like the IMF and the World Bank, among others, like in the time of his grandfather, Roberto Campos, minister of economics during the military period.

* André Márcio Neves Soares is a doctoral student in Social Policies and Citizenship at the Catholic University of Salvador (UCSAL).

Notes


[1] https://www.uol.com.br/carros/noticias/redacao/2023/06/28/carros-encalhados-volkswagen-tem-patio-abarrotado-de-veiculos-veja-imagem.htm;

[2] https://noticias.uol.com.br/colunas/reinaldo-azevedo/2023/06/29/cmn-debate-hoje-meta-de-inflacao-pacheco-da-ultimato-ao-bc-a-moda-mineira.htm;


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