Brazil’s New Samba: What America Can Learn From Brazil’s Poverty Reduction
When the world meets in the city of Rio de Janeiro to celebrate the 31st Summer Olympiad in August of 2016, they will be visiting a Brazil very different from the one that existed for most of the 20th century. The old Brazil, long synonymous with financial crisis, political instability, military dictatorship and gross economic inequality, has given way to a new Brazil that has become a beacon for those seeking a solution to the problems of runaway global capitalism. Indeed, Brazil’s efforts have demonstrated that even the most unequal of societies can make great strides in lifting huge numbers of its citizens out of poverty without sacrificing either economic growth or liberal democracy.
The first component and the keystone of the modern Brazilian miracle is politics. In 1985, military government in Brazil gave way to civilian rule with the election of Tancredo Neves of the PMDB (Brazilian Democratic Movement Party), the centrist opposition group that had long opposed military rule, as the first civilian president of Brazil since 1964. The Brazilian transition to democracy, part of the so-called Third Wave of such transitions that occurred in the late 20th century, was inaugurated as realization that the country’s economic problems – which at the time included balance-of-payments issues, a sinking currency, massive amounts of foreign debt and hyperinflation – could not be solved without greater buy-in from Brazilian society.
The societal pact which emerged out of this economic emergency was a tacit agreement between the Brazilian left and right to abandon ideological extremism in favor of a pragmatic centrism that focused on solving the country’s many problems. As part of this deal, the left in essence gave up its demands for immediate, massive redistribution to the poor via economic nationalism and trade protectionism while the political right agreed to democratization and a long-term commitment to the idea that Brazil’s disenfranchised could no longer be kept outside the system indefinitely.
In other words, the market system and property rights were retained while the left received acceptance by the right of its permanent political enfranchisement and a de facto long-term commitment by the right to alleviate Brazil’s yawning social inequalities that political equality implied – so long as such efforts remained within the boundaries of market capitalism, broadly defined. Politically, then, the far right and far left were rejected in equal measure and the political system settled along a left-right spectrum that would be recognized in any modern liberal democracy.
A new Brazil
Once the ideological extremes were effectively cut out of the political system, the new Brazilian polity that was born in 1985 – La Nova República, or New Republic – was led by a center-right coalition of interests that slowly and painfully remade Brazil’s economy. During this time, the currency was reformed, state-owned firms were privatized, the public sector was rationalized, land reform reinvigorated and the domestic economy was opened up to both foreign competition and investment. Above all, exports were promoted – a sea change from the era when exports, primarily agricultural, were taxed in order to fund inefficient, government-sponsored heavy industry. It was, to say the least, a long, extraordinarily painful process that at other times would have sparked widespread protests and the threat of military intervention. What prevented that was the political buy-in from society at large that came with democratization.
It worked, and the Brazilian economy emerged at the dawn of the third millennium as a major global exporter and a center for foreign investment. Unlike the earlier era of economic growth prior to 1985, Brazil’s economic renaissance was far more sustainable for three reasons.
First, the memory of the recent dictatorship tempered demands that would have otherwise brought wild policy swings into the economic equation, thereby fostering uncertainty and making economic reform far more difficult than it already was.
Second, a focus on export-led development and macroeconomic stability created the resources and breathing room needed for Brazil to weather the wrenching economic changes that political liberalization had wrought.
Third, Brazil’s economic reforms coincided with the opening up of China, India and much of the rest of the world to trade and investment, and it was well-placed to meet the demands of both as the Asian giants hungered for Brazil’s natural resources and agricultural products.
It started with an election
While crucial to effectively rebooting Brazil’s economy and political system, the policies implemented by Brazil’s democratic center-right were not as effective in addressing the systemic problems posed by poverty and inequality – the great obstacles to stability which made democracy so fragile to begin with. What was needed was an explicit political commitment to effective income redistribution that could both provide support to Brazil’s immense number of poor and provide a sustainable pathway out of poverty for its children and young people.
This commitment came with the election of Luiz Inácio Lula da Silva (or Lula, as he is popularly known) as president, a hero of the Brazilian labor movement who was jailed by the military regime and who ran for president three times before finally winning in 2002.
Lula, leader the Partido dos Trabalhadores or Worker’s Party, is a man who, without a formal education, rose from the ranks of Brazil’s working-class to leadership positions in the country’s powerful trades unions, eventually becoming a founding member of the leftist party he would lead as a presidential candidate. Lula both then and now is the epitome of the term “man of the people,” and his election as Brazil’s president is as symbolic and important as Obama’s was in the United States. For the first time, a member of an oppressed and mistrusted class long disenfranchised and excluded from political power had won his country’s highest and most powerful elected office. How would a man from the working class, a trade unionist and an ideological opponent of corporate capitalism govern the new Brazil? The country, and the world, held its breath.
Lulu as a leader
As it turned out, they need not have worried. Lula, despite his past anti-capitalist rhetoric, was no bomb throwing radical, authoritarian populist or enemy of the market. He kept the left’s implicit agreement to retain the market system and respect property rights. Financial markets and foreign investors, their fears alleviated, kept their money and confidence in the new Brazil.
Lula, in turn, used his enormous popularity and Brazil’s equally enormous appetite for change to push through wide ranging social reforms that, for effectively the first time in Brazil’s history, created a social safety net of interlocking welfare programs that meaningfully addressed the country’s yawning social inequalities.
In many respects the system of transfer payments and government programs that emerged during or was otherwise strengthened by Lula’s presidency resemble Franklin Roosevelt’s and Lyndon Johnson’s New Deal and Great Society Programs in the United States. Access to education was expanded. Malnutrition was addressed. Universal access to health care, already in existence from early in Brazil’s history, was strengthened and expanded.
Moreover, coordination of these programs was rationalized through the creation of a new ministry of the Brazilian federal government that oversaw reform by taking responsibility for the programs out of the hands of Brazil’s state governments even while it cooperated with local municipalities for their implementation. This meant the provision of welfare to Brazil’s neediest was universally established through local governments that were given incentives to cooperate with Brazil’s federal government, thereby bypassing Brazilian states altogether. This avoided the trap federal assistance to the needy often runs up against here in the U.S. – incompetent, corrupt or ideologically-resistant state governments that subvert federal welfare policies or funds for their own ends.
While the changes in policy and governance were important, the true centerpiece of Lula’s social reforms are a collection programs known as Bolsa Família, or Family Allowance – a revolutionary system of conditional cash transfers to the poor that has won accolades from left and right alike and has led to the adoption of similar programs elsewhere.
Bolsa Família works by providing both a subsistence payment — known as the basic rate and to which there are no strings attached — and cash payments to families conditioned upon children being vaccinated and regularly attending school. The maximum number of children for which the benefit is available is capped at three and the benefits are means tested so that only the neediest Brazilian families qualify for assistance.
Furthermore, the benefit comes in the form of an electronic debit card issued by a government-associated bank that allows for withdrawals to be made at more than 14,000 locations nationwide. Finally, replicating standard practice in the microfinance industry, the card and its funds are usually only authorized to be used by a female head of household – greatly increasing the likelihood that the money will actually go toward helping poor children.
The results of have been remarkable. Research, for instance, attributes 20 percent of Brazil’s decline in inequality since 2001 to the effects of the program while doing so efficiently and cheaply. It helps some 44 million Brazilians at a cost of about 0.5 percent of national GDP, and accounts for approximately 2.5 percent of Brazilian central government expenditures.
The World Bank, which has contributed funding to the program, states categorically that Bolsa Família has “improved educational outcomes, children’s growth, food consumption, and diet quality,” while at the same time reducing the incidence of child labor and the exploitation of needy children. Altogether, Bolsa Família’s system of benefits is estimated to have increased the income of Brazil’s neediest families by 25 percent – an astounding figure – all while not reducing the willingness of Brazil’s neediest to work in any detectable way. Indeed, the best research indicates that many poor Brazilians, assured that the basic needs of their family are taken care of, are often willing to take risks they would not have chanced before – like starting a new business or attending school.
A peaceful nation tackling domestic problems
Finally, third, the most underappreciated aspect of Brazil’s transformation since the dark days of the 20th century is the near permanent peaceful international environment Brazil finds itself in. South America has not faced a significant external threat in over a century, and in terms of interstate conflict, Latin America has been largely peaceful for even longer.
The end of the Cold War sucked the fuel out of Latin America’s leftist insurgencies and right-wing dictatorships alike, while the fall of military governments throughout the continent helped drain away the lingering nationalist animosities remaining between the continent’s countries. United by a common cultural heritage, religion and similar in terms of their demographic makeup, the countries of South America are remarkably peaceful as far as wars go and getting even more so. Additionally, its states and peoples are creating cultural, trade and multilateral political ties that may eventually rival Europe in terms of density, sophistication and importance.
What this translates into is a peace dividend that continues to pay year after year and decade after decade. Contrast this with the United States, where expenditures for war and military preparedness seem to grow, not contract, as time goes on.
A comparison to put it in perspective
Whereas the U.S. has spent billions on next-generation military technology that is either not needed, doesn’t work or has been riddled with problems, Brazil has invested in its people. Whereas the U.S. has expanded its overseas commitments and taken on the mantle of a globe-bestriding imperial hegemon, Brazil, unburdened by military commitments overseas, focuses laser-like on improving the well-being of its neediest citizens. Instead of crusading abroad in search of trumped-up threats to democracy like the United States, Brazil campaigns at home against the true enemies of democracy: poverty, ignorance, desperation and despair – the allies of political extremists everywhere.
America, having forgotten what tyranny is, has been busy reproducing what makes it likely. Brazil, having recently emerged from under it, is working to make sure its ultimate causes are rooted out and eliminated at home.
Thus, Brazil has happened upon a winning mix of the four “P’s” that, once upon a time, we here in the United States once found equally attractive – peace, pragmatism, patience and rational, well-crafted public policy.
Brazil, to be sure, is by no means perfect. Crime is endemic, environmental problems abound, and poverty and inequality are still terrible problems. But, as the world pays more attention to the Latin American giant as the 2016 games approach, we here in the U.S. would be well advised to take lessons from the experiences of a sister republic that has much to teach. If we listen, instead of lecture, maybe we, too, can learn the secrets to Brazil’s remarkable new success.
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