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Why Brazilians Are Protesting

Latin America’s biggest country is struggling with crime, corruption, and weak economic growth.

by
Jaime Daremblum

Bio

June 22, 2013 - 12:04 am

A major Latin American country has been engulfed by massive anti-government protests. The people marching in the streets are concerned about a range of issues, including crime, corruption, inflation, and inadequate public services.

Such news wouldn’t be surprising if the country in question were Venezuela or Argentina. But the ongoing demonstrations in Brazil — which were initially sparked by a hike in bus fares in São Paulo, but which quickly exploded into a broader, nationwide protest movement — caught many foreign observers by surprise.

After all, wasn’t it just the other day that Brazil was being celebrated as a great success story? Since 2003, the country has lifted tens of millions of people out of poverty. Indeed, its signature anti-poverty initiative — a conditional cash-transfer program known as Bolsa Família — has inspired similar efforts throughout the world. In the years immediately following the 2008 financial crisis, Brazil seemed poised to take the next step in its development. A 2009 Newsweek headline declared it “the crafty superpower.” That was a word you often heard attached to Brazil — “superpower.” In a December 2010 piece, CBS News correspondent Steve Kroft described it as “a fledgling economic superpower.” That same year, Brazil’s annual GDP growth reached 7.5 percent. As late as March of 2011, Latin Trade magazine was still calling it “Latin America’s superpower.”

During this same period, Brazil’s biggest rival in Latin America — Mexico — was struggling to control runaway drug violence. And yet, despite all the global attention given to the violence in Mexico, Brazil actually had a higher murder rate. In fact, Brazilian sociologist Julio Jacobo Waiselfisz has estimated that Brazil’s youth homicide rate increased by a stunning 346 percent between 1980 and 2010. Meanwhile, the country’s overall murder rate jumped by 124 percent, reaching 26.2 per 100,000 in 2010, according to the Sangari Institute. In other words, the 2010 Brazilian homicide rate was 162 percent above the World Health Organization’s “epidemic” level of 10 per 100,000.

The drug violence in Brazil has generally not been as sensational as the drug violence in Mexico, which helps explain why it hasn’t received as much international media coverage. Last year, however, São Paulo experienced a sharp increase in drug-related murders, as police forces battled with members of the city’s most powerful criminal organization. Amid preparations for World Cup 2014, which Brazil will host next June and July, the São Paulo violence made headlines around the world. More recently, Brazilians saw video footage that appeared to show an extrajudicial killing of two teenagers by São Paulo military police. Such killings have long been a source of public outrage, and they have fostered distrust of law enforcement. It is probably not a coincidence that São Paulo was ground zero for the ongoing protests, which have become a nationwide affair. The murder rate in Brazil’s largest city is still much lower today than it was a decade ago, but residents now have much greater expectations of security than they did in the early 2000s.

Speaking of expectations, the rapid expansion of the Brazilian middle class has fueled a rapid rise in public expectations of government. It’s the same phenomenon we’ve seen in developing nations around the world: As the middle class grows, so do middle-class expectations. Chile is the richest, most advanced country in Latin America, but that hasn’t stopped university students from conducting a series of protests over tuition fees and inequality.

In Brazil, taxes are high by American standards, and they’re extremely high by developing-world standards. (Total revenues amount to 36 percent of GDP.) But while Brazilians pay European levels of taxation, they don’t get European-quality public services. That is a major complaint of the demonstrators. “We just want what we paid in taxes back, through health care, education, and transportation,” a 34-year-old Brazilian attorney told the Associated Press. “We want the police to protect us, to help the people on the streets who have ended up with no job and no money.”

To make matters worse, Brazilians have watched their government spend enormous sums of taxpayer money building stadiums for the 2014 World Cup. This has exacerbated popular discontent over lousy public services and shoddy infrastructure, and it has also contributed to growing anger over corruption. The Brazilian Football Confederation is famously corrupt, and President Dilma Rousseff, who took office in January 2011, has already seen more than half a dozen government ministers resign due to scandals. Meanwhile, the so-called mensalão scandal — a congressional bribery scandal that dates back to the presidency of Lula da Silva, Rousseff’s predecessor — has produced no fewer than 25 convictions.

Brazilian officials have promised that the World Cup will bring their country significant economic benefits. We should be highly skeptical of such promises. As economist Dennis Coates has written, “There is a wide array of evidence that sports mega-events, including the World Cup, have little net impact on the number of tourists arriving and staying at the host destination. Without substantial tourists over and above the normal tourist traffic, unless the World Cup fans spend substantially more than the usual travelers, there can be little new impact on the local economy of the mega-event.”

But regardless of what economic benefits Brazil receives from the World Cup in 2014, its economy needs a boost right now. After reaping the fruits of a rapidly expanding labor force and booming commodity exports for several years, the Brazilian economy can no longer rely on swift “catch-up growth.” The days of 7.5 percent annual growth rates — or even 4 percent annual growth rates — are gone, most likely forever. “Brazil will continue growing at pretty anemic rates,” World Bank economist Pablo Fajnzylber said last September. “It will likely not go back to that 4 percent.” Brazilian growth slowed dramatically in 2012, thanks to an overvalued currency and a major economic slowdown in China (which is Brazil’s biggest trading partner). Indeed, Latin America’s largest economy grew by only 0.9 percent last year, and it grew by only 0.6 percent in the first quarter of 2013. Annual inflation is running at 6.5 percent, and frustration with rising prices has prompted many Brazilians to join the ongoing demonstrations.

In short: Brazil needs a new economic model. Unfortunately, many of its policymakers are tempted to borrow from the China model of state-led capitalism. “It used to be that all of Latin America looked to Europe as its ideal model, and that one day Brazil, Argentina, and Colombia would become a Portugal, Italy, Greece, or Spain, if it was lucky,” a Brazilian diplomat told the Financial Times last year. “But now, given the eurozone crisis, that is no longer the case. And, increasingly, China is becoming a more attractive or plausible model.”

Yet the China model is no longer working for China, and it would not work for Brazil. After all, the Brazilian government is already much too involved in the economy, which is why the South American giant ranks 100th in the Heritage Foundation’s Index of Economic Freedom (Mexico is 50th) and 130th in the World Bank’s Ease of Doing Business Index (Mexico is 48th). Brazil’s tax code is far too complicated, its level of taxation is far too high, and its burdensome labor regulations are a major drag on economic activity. Over the long term, reviving and maintaining strong economic growth will require government officials to reduce the “Brazil cost,” i.e., make the country more welcoming to business investment and entrepreneurship. It will also require them to improve Brazil’s weak education system and its hopelessly inadequate infrastructure.

The transition to a more sustainable, free-market economic model won’t be easy. As Brazilian-American economist José Scheinkman said last year, “We have to do the tough stuff.” Many Brazilians won’t be happy with the necessary reforms — which means we should expect more protests in the future.

Jaime Daremblum, who served as Costa Rica’s ambassador to the United States from 1998 to 2004, is director of the Center for Latin American Studies at the Hudson Institute.

Comments are closed.

Top Rated Comments   
Brazilians voted for this train wreck, just like Europeans voted for their calamities and we voted for our tyranny. The peeps all over the world are getting to experience the results of "democracy" driven by international socialism, good and hard.
1 year ago
1 year ago Link To Comment
All Comments   (20)
All Comments   (20)
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Brazil was a corrupt, weak, socialist government run country before I worked there in the 80's. South America is like Europe in that it is a socialist experiment that will never produce good results. In the 80's as now most people lived behind guarded gates to keep crime away. Sad state of affairs.
1 year ago
1 year ago Link To Comment
At least some of Brazil's corrupt politicians have been tried and convicted. I wish we could say the same.
1 year ago
1 year ago Link To Comment
To curb corruption in "Latin"Amerca is like telling an obese person, "You must now start walking, stop eating sweets and stop drinking soda pops and get on a healthy diet. " And the obese person will respond, " I can't help myself. It's too tempting and irresistable. So leave me alone and mind your own business!" And this is from a commentator whose from "Latin" America. I have a pretty good idea about what goes on there.
1 year ago
1 year ago Link To Comment
It matters where the money goes. Those who are too full of themselves inflict harm by ignoring this.
1 year ago
1 year ago Link To Comment
Rio2016 is going to be really interesting.
1 year ago
1 year ago Link To Comment
Brazilians voted for this train wreck, just like Europeans voted for their calamities and we voted for our tyranny. The peeps all over the world are getting to experience the results of "democracy" driven by international socialism, good and hard.
1 year ago
1 year ago Link To Comment
I don't know why this is happening. Brazil's crime is not worse than 30 years ago nor is the corruption. Inflation was much, much worse in the mid-'80s and public services non-existent.

Probably one of the biggest differences is in the tax bureaucracy. It was so incompetent in the '80s and into the '90s, few people actually paid taxes. In the computer age, this has changed.

And prices have gone through the roof. Even in the worst of the '80s, property rates were stable and a bus ride cost nothing. Now, a house cost American prices and a bus almost as much as here. So, Brazilians are being assaulted in the pocket book on more levels than before, and getting not much more in return. Even a shanty house in Vidigal slum in Rio was maybe 3 grand. Today, count on at least 50 grand as it's being gentrified.

Brazil is a basket case of endemic crime and sloth. The artificial economic growth caused by American-style methods of exploiting raw resources is an artificial bubble, as it is truly only an elite being productive, and not a grass roots led effect. The bubble has popped. I'm not surprised. The growth of illegal shanty towns has been massive, something the gov't has always chosen to ignore as too hot to handle.

And their money against the American dollar is close to an all-time high, forgetting the one-to-one attempt in the late '90s. A backpacker's hotel in the mid-'80s was 3 or 4 dollars. Today it's 40 to 80 dollars.
1 year ago
1 year ago Link To Comment
The reason 'THIS' is happening to Brazil now, is that over the last decade half the population was lifted out of poverty and into the middle class. NOW(!) they have something to loose. Shades of the French Revolution. Starving peasants don't revolt. People who fear loosing their positions or possessions revolt. Socialists take note. It is a short step between Rosa Luxemburg and Madam DeFarge.
1 year ago
1 year ago Link To Comment
Well, I guess grinding crime is a kind of a slow motion revolution, cuz that is something very difficult to escape from in Brazil. Wherever there's a city there is a large community of shanties. Real estate speculation is through the roof, which only pushes the poor farther out and down.
1 year ago
1 year ago Link To Comment
" The artificial economic growth caused by American-style methods of exploiting raw resources is an artificial bubble, as it is truly only an elite being productive, and not a grass roots led effect."
Really? America at fault again, for Brazil's choices? To which 'American model do you refer? Not the founding model of letting the people loose to do what they do best, take care of themselves and their families, thus growing a mighty economy, no, lets use the Liberal European Hispano Model of government control, corruption and crony merchantilism so loved by the left.
Watch out for petards.
1 year ago
1 year ago Link To Comment
I didn't say America, I said American-style. We innovated the methods by which Brazil's rich have exploited their country's resources. They copied it, but Brazilian-style. In real terms it has nothing to do with us. The main difference is that there is no true productive middle class in Brazil that innovates from the ground up and so moves upwards. When they say Brazil's middle class was yanked up, that's exactly what they mean. This is a top-down only enterprise, and the bubble popping was predictable. The middle class may as well have been ants. They're at sea and they'll sink right back down to where they came from, because they are not productive, but merely cogs in a machine they have no clue about. Every see a Brazilian construction site? Trust me, there's a lot of sitting around. How much economic growth did it take to hide that, cuz they haven't changed. Brazilians are not natural entrepreneurs nor inventive. They are a Third World country.
1 year ago
1 year ago Link To Comment
Brazilians work quite hard in construction when they come to the US.
1 year ago
1 year ago Link To Comment
Fail, you are simply mistaken.
First, while I do not disagree with your notes on Brazilian culture, I do disagree with your inappropriate anti-Americanism...a pre-amble that belies your intent.

Prior to about 1910 or so, the so called exploitation of North America was based on the agricultural practices of the 18th and 19th centuries, for until the early 20th, over 80% of the population were farmers.
Manufacture really took hold in WWI. Mineral extraction, primarily steel related, was in support of industry. The 'Elites' and "Robber Barons" put people to work, but the small independent tinkerer and tradesman made the economy, not mass 'exploitation'. As a 40 year construction exec I can tell you that building companies are almost all first generation, tradesman founded, firms. There are but 4 publicly traded in the US.

I would suggest a review of history without the colored glasses of a pre-determined point of view.

Finally, a teachable moment, Everything, and I mean everything, is either grown or mined. Everything.

ta
1 year ago
1 year ago Link To Comment
Learn to read, certo?
1 year ago
1 year ago Link To Comment
Heritage Foundation ranks Brazil 100th in economic liberty, out of 177 countries on the planet. (USA is #10, Mexico#50,Chile#7). Brazil rode the commodity boom -- nothing artificial about that. You just have to know that there are business cycles and that free market capitalism is the best way to deal with them.
1 year ago
1 year ago Link To Comment
A commodity boom by its very nature is artificial. Listen, Brazil is a country they don't even have medical books to study to be a doctor. They have to come to the U.S. Why? What has stopped Brazil from being another America, though it is far older? And Brazil is a hotbed of crime. The fear in places like Rio is palpable. You can get robbed any time, any place. The assailants are bold like you wouldn't believe and know no fear. Every possible entrance to older buildings even up to the third floor is a criss-crossing maze of barbed wire and broken glass set in cement. The only place I've ever seen anything remotely approaching that is New Orleans, where many houses are sealed, blank fortresses. I even have a friend whose house has bullet proof windows you can't open. Imagine that in all of America.
1 year ago
1 year ago Link To Comment
Have seen the security enhancements to the buildings in formerly elegant neighborhoods. The fact that such measures were not needed at time of construction is evidence of societal devo (de-evolution).
1 year ago
1 year ago Link To Comment
Mexico has been growing 4% year after year. I suspect it has something to do with the fact that weed has become so popular. Brazil is still a agricultural giant lots of soybeans and corn and cattle.
1 year ago
1 year ago Link To Comment
Clearly they need to import a few tens of millions of people from Mexico and make them citizens. They better act fast before Obama and Rubio beat them to the punch completely.
1 year ago
1 year ago Link To Comment
Another 'Un-Reported' story is the migration of Chinese to South America.
I wonder how long it will be before China is annexing S.A Countries as 'Historicaly CHINESE'? Conquest by immigration.
1 year ago
1 year ago Link To Comment
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