February 23, 2014

BRAZIL: Sidestepping To The Right?

Don’t look now, but the Leftist government Brazil may be considering taking a big step to the right. Angry protestors clogged the streets decrying the ineptness of Ms. Rousseff’s government last June, and the country’s economy today continues to stagnate. But now economic policy might shift. . . .

With Brazil’s current economic model, which remains largely under state supervision, real growth will be hard to come by. Brazilian big business had always assumed their domestic markets were big enough to allow for significant protectionism. But it is now becoming increasingly apparent that more trade is needed, and some private sector big wigs and prominent academics are calling for the country to liberalize its markets. Custo Brasil, an old nickname for the country’s less-than-ideal business environment, is finally facing calls for reform from Brazil’s middle-class, who have been emboldened from years of economic growth. The government can hardly continue to ignore them.

With Venezuela reeling from unrest and fiscal failure, and Argentina courting economic disaster, a Brazilian change of course would be a dire blow to the Latin left. President Rousseff had hoped to lead the country in Lula’s leftist wake, but as she prepares for re-election, economic and social realities seem to be dragging her in the opposite direction.

Politicians know what to do to foster economic growth. If they do something different, it’s because they have other goals.

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