When reading the newspaper editorial FSP, on August 1st, “Lula’s economic policy loses credibility again”, about public accounts, public debt and social spending, I come to the conclusion that our Brazil is heading towards catastrophe. What’s more, it has an irresponsible, wasteful government, the only one to blame for the high interest rates that are expected to rise soon, according to the so-called market’s forecasts, to, believe it or not, stop the spending frenzy of the President of the Republic.
On the same day, in the newspaper Valor Econômico, I read that there is another Brazil. The headlines of the articles read: “Announcement of productive investments in the country increases 24% from January to July”, “GDP growth should accelerate in the 2nd quarter”, “External issuance gains momentum in September”, “Foreign investment in the productive sector grows 29%”. The day before yesterday, September 3, more positive news: “Confidence grows among entrepreneurs, says FGV”, “Alcoa invests R$ 1 billion in its own cabotage operation”, “Órigo raises R$ 600 million to expand solar generation in Brazil”.
Not to mention the good GDP results in the quarter: “Brazil’s GDP grows 1,4% in the 2nd quarter and advances 3,3% in one year” is the main headline on the UOL website. And, as a natural consequence of GDP growth, we have more jobs and income. In the first half of 2024, 1,3 million jobs were created.
What news do we have about the stock market and the dollar? Highs and lows, hysteria and euphoria, basically performances heavily influenced by the US economy and the Fed's interest rate policy, interest rates and GDP growth, and much less by the causes that the São Paulo newspaper points out, such as the Brazilian government's public deficit and the country's public debt, traditional neoliberal recipes for meeting the zero deficit target and preventing increased spending via social programs, such as gas vouchers or social security. However, our experience shows that only with GDP growth, with inflation within the target, can public debt stabilize. This does not happen with a policy of increasing interest rates and cutting spending or increasing taxes.
And, in a way, this is what has been happening with the 9,15% growth in federal revenue in the first half of the year, thanks to the efforts of the government and Minister Fernando Haddad to, without increasing taxes, reduce tax exemptions and avoidances (in fact, tax evasion), such as the reestablishment of the tie-breaking vote in CARF.
On the other hand, planned and ongoing investments in several strategic sectors of the economy – such as oil and gas (Petrobras alone is investing US$ 100 billion in the next four years), sanitation, the port sector (R$ 75,9 billion, between 2023-2026), energy (R$ 38,9 billion in solar energy in 2024 and R$ 7.9 billion in long-term credit for 23 wind power generation projects) – continue to move forward despite persistent high interest rates and a lower supply of subsidized credit.
Protectionist policies
Brazil, in fact, is not growing faster or faster because of high interest rates. This is unbelievable in a world where all countries, mainly through public budgets and subsidies, seek sovereignty and food, energy and technological security; operate their monetary, fiscal and exchange rate policies to protect their markets and industries; subsidize food and energy, as all European countries have done and continue to do to overcome crises, such as those of 2008/9, 2011/12, the pandemic and, now, the Ukrainian War.
Faced with the housing crisis affecting several European countries, Brussels announced the European Affordable Housing Plan at the beginning of September. Not to mention the veritable open trade and technology war against China, a situation in which, in practice, the WTO ceases to exist.
The ideological fury of the newspaper Folha de S. Paulo against Brazilian state-owned companies, public banks and Petrobras is unparalleled today. Only those who know nothing about Brazilian history can ignore the role of the Brazilian state in the development of the country in all its relevant and strategic sectors. Even the private financial sector had to resort to the strong hand of the state to avoid bankruptcy in 1995, when the PROER program was implemented, costing the public coffers R$16 billion at the time.
Today's Brazil exists only because of the role of the State, since the establishment of the Companhia Siderúrgica Nacional and Chesf, the Paulo Afonso hydroelectric plant in Bahia, negotiated by Getúlio as a bargaining chip for the country to enter WWII alongside the allies. Before that, during the depression of 1929, it was the State that saved Brazilian coffee production and made possible the transfer of income for the industrialization of São Paulo. In the 50s, during the second Vargas government, Petrobras, Vale and Eletrobras were created, as well as important government agencies such as BNDES, Camex and Sumoc, laying the foundations for today's Brazil.
The launch pad was ready for Juscelino Kubitschek to build Brasília, Furnas and Três Marias and launch his Goals Plan that boosted industrialization, transportation, agriculture, energy and education. Jango Goulart, in the short period in which he governed, created Celso Furtado's Three-Year Plan and launched his basic reforms, which are still relevant today. Even during the dictatorship, no matter how liberal the Roberto Campos/Octavio Bulhões austerity duo was, they were no match for today's neoliberals and had their Government Economic Action Program.
The dictator Médici created his National Development Plan, but it was General Ernesto Geisel who revived the tradition of development plans under the leadership of Reis Veloso, facing the second oil crisis, not with austerity, but with the implementation of the basic and chemical industries in the country and the consolidation of state-owned companies, particularly Petrobras.
To remember is to live. In 1939, Brazil had its first attempt at planning with the Special Plan for Public Works and National Defense Equipment; then, in 1943, the Works and Equipment Plan; and, in 1950, the famous Salte, Health, Food, Transportation and Energy Plan, during the ultraliberal government of General Eurico Dutra, elected in 1946 with indirect support from Getúlio Vargas, then in voluntary exile in São Borja.
In a world at war and undergoing profound geopolitical changes, preaching a minimal state and privatization at all costs is either ignorance or bad faith. In the case of Folha, in addition to economic and financial interests, it also has an ultra-liberal Jurassic ideological position that ignores the fact that we are a coveted power with the historical conditions to achieve the development that China and India are pursuing.
To achieve this, the national state and its business elite – which has not yet renounced Brazil, as the rentiers and the others who make up the empire’s servile entourage have done – must unite to face the challenges of the 21st century. To play a relevant role in global geopolitics in this and the coming decades, we need to change our position in the international division of labor with a social, scientific and technological revolution.
With the social revolution, we will redistribute income, wealth and property through tax reform and the resumption of the financial sovereignty necessary for our national development before it is too late, including providing Brazil with a military power that protects the country and defends its sovereignty. With the scientific and technological revolution, we will invest in the knowledge and production of today's cutting-edge technologies, such as artificial intelligence, so that Brazilian companies can develop systems that meet the country's social demands in health and education, for example, improve the productivity of our industry, generate qualified jobs and allow us to compete in the foreign market in high value-added market segments.
* Jose Dirceu he was Minister of the Civil House in the first Lula government. Author, among other books, of Memoirs – Vol. 1 (Editorial generation). [https://amzn.to/3H7Ymaq]
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