Lenin's body remains preserved in Moscow's Red Square, but his revolution's ideals were buried in 1989. So totalitarianism waned, becoming a relic. Vertical grids of power fell, enabling power to flow through robust, innovative, and bureaucratic-evasive capitalists. Right? Look at Brazil from 1964 to today. First you will see a military coup that overthrew Joao Goulart, resulting in 20 years of military dictatorship. By 2010 the major media anoints former president Lula as a patron saint of progress and prosperity. Lula's legacy for now shines brightly. But, this legacy shines so bright that it may blind us.
The contrast between the military coup in 1964 and Lula becoming president in 2002 show two polar opposing images, creating a rosy narrative of dictatorship falling in the thrust of populism. Lula, a former lathe operator and labor organizer, becoming president just 17 years after military dictatorship ended provides true signs that democracy actually empowers common men. Common men are not just pawns shuffled around at the whims of dictators, but serve as active agents of change.
But, what sort of agent of change was Lula? Did he deliver Brazil into a more democratic state, functioning independently of external powers? Much media coverage shows Lula as a figure who persevered on his terms, weakening neoliberalism's stranglehold on Brazil's economy. A deeper analysis that goes below aggregate statistics often cited in the media tell us a different story. Now no discussion of the facts impugns Lula's character, but shows that he assumed power under conditions that feature the residual and demonstrable power the Neo-Liberal complex wields over Brazil.
Lula near the end of his second presidential confidently recounts his refusal to take additional loans from the International Monetary Fund (IMF). [1]. Lula gained economic freedom from funding Brazil's debts with IMF loans rife with sovereign-reducing conditions. Just ten years earlier Lula assumed the presidency in 2002 deafened by sucking sounds of foreign capital leaving Brazil in fearful dread the he would act on his left-wing and labor union roots. This forced him to hit the red eye to Washington and seek more loans from the IMF. But, does this independence signal a meaningful and lasting state of post neoliberalism?
The downfall of a military dictatorship thereby creating space for an ascending populism suggests the potential of external powers imposing themselves on Brazil is fading. But, a thorough analysis of Lula's administrations shows his actions still reflect somewhat the wishes of Washington Consensus. Progress occurred under transient conditions rather than structural changes, which challenge Brazil's ability to remain on its more independent course.
Lula's administration (2002-2010) oversaw impressive economic gains, resulting in a reduced poverty rate. Those living below the poverty line dropped from 50 million to 30 million. [2]. Also, since 2005 student university enrollment doubled. [3]. Moreover, 25 million people rose to middle class status [4]. By any account those are legacy-solidifying results. Legacies though can overlap into myth.
We all know statistics often obfuscate truths extracted from broader and deeper phenomena. And, in this case closer reviews of some of the stats often reported should stir some suspicion. For instance, Brazil's powering millions of its people into middle ranks occurs somewhat by the categorizing of what constitutes "middle class." This categorization places those earning $7,000 a year in the middle class. [5]. Equally important, the decline in inequality warrants further review as well. Many statistics can bolster claims showing either increases or decreases in equality.
Two statistics, though, should create some doubt that Brazil is a model of surging upward mobility. First, Debt payments totaling $120 billion annually accrue mostly to 10-15,000 families. This greatly dwarfs the 6$-9$ billion the government spends on its Bolsa Familia, which is a social program consisting of in-kind transfers paid to poor families. [6]. Second, income distribution as measured by Gini coefficients show inequality declined during Lula's administration. The Gini coefficients are widely used as a reliable measures of relative income inequality. But, these coefficient exclude another statistic that helps show progress in reducing income inequality.
Wages that represent increasing percentages of total income, especially in developing economies, are good indicators of increasing equality. Non-wage sources of income-such as interest payments and capital appreciation-are earned primarily by wealthier people. Thus, wages that account for a decreased percentage of national income suggest that wealthier persons are benefiting more from economic progress. Wages as a percentage of income in Brazil when Lula left office are less than that in 1990. [7]. Other measurements of Brazil's economic performance deserve close analysis as well.
Many commodities experienced price increases during the beginning of Lula's presidency. This commodity boom increased global demand for Brazil's major exports, steel, soy, and iron. Net exports were the largest contributor to Brazil's economic growth during Lula's first term. This trend increased Brazils trade balance from $24.9 billion in 2003 to $44.8 Billion in 2005. [8]. Brazil's economic dependence on demand for commodities is one source of vulnerability. Brazil has ventured into more high tech industries, but research and development expenditures are still roughly 1% of its GDP. [9].
Lula's need to reverse capital flight from Brazil and concerns that his labor union roots would signal a leftward turn to defaults on loans (which happened in Argentina in 2002) explains why he adhered to neo-liberalism during his first term. But, the gains realized from the commodity boom gave to him more freedom during his second term to deviate from this orthodoxy.
Whether we compare Brazil's economic performance from 2002-2008 to previous eras in its history or to its South American neighbors in the ergo period, we see noteworthy though not record-setting progress. Brazil's economy grew during Lula's tenure at an average annual rate of 4.1%. [10]. This growth rate exceeds that experienced during 1980's-the lost decade-and the 1990's of 1.5% and 2.8%, respectively. [11]. But, economic growth averaged 7.5% during the period beginning in the late 1940's through the early 1980s. [12]. Thus, our assessing the strength of Lula's economic management depends on whether one sees a bottle as half full or half empty.
Look at Brazil's neighbors and that bottle looks more half-empty. Argentina was literally an empty bottle considering it defaulted on its debts in 2001. Both Argentina and Venezuela experienced higher economic growth during Lula's second term. [13]. Of course growth rates don't always reveal other underlying strengths in an economy. But, I haven't seen any detailed analyses of Brazil's economy that shows its success is understated due to dynamic strengths evading the calculation of its growth rates.
Argentina's contrast with Brazil over the last decade deserves more attention. Capital flight occurred during 2002 because it appeared Brazil was poised to elect a populist. In particular some foreign investors were not rolling over their investments in brazilian securities that matured after January 01, 2001. Prior to his election Lula announced in his "Letter to Brazilian People" that Brazil would adhere to the austere-obsessed markets, including his promise to honor existing agreements with the IMF. Brazil recovered thereby elevating itself above IMF's austerity watch.
Argentina defaulted and devalued its currency in 2001 and 2002. Both measures defy the IMF's wishes. Nonetheless, Argentina, like Brazil recovered. Argentina during 2002-2010 experienced the fastest growth in South America, reduced its poverty rate by two-thirds, reached record employment levels, and tripled social spending adjusted for inflation. [14]. Argentina's performance shows that prosperity is not an exclusive domain reserved for those who follow the Washington Consensus.
Brazil's economic miracle ceases to be such when subjected to critical scrutiny. Lula did make credible progress in steering Brazil from the scourge of neo-liberalism. But, just as Santorum's discussions of freedom are shrouded in cliches, we must ask whether Brazil's increasing independence from the U.S. will lead to the former's forging a more vibrant and functioning democracy? If Brazil continues to set its fiscal and monetary policy with increasing independence from the austere neoliberalism of the U.S. and IMF, will a class of Brazilian bondholders emerge imposing a similar political and economic structure on its fellow citizens? The question still awaits an answer. Brazil's emergence as a world power is too recent for us to see the shape and substance of this superpower. Brazil's progress is contingent to significant degree on volatile factors that, if weakened, will throw it into turmoil.
Lula defied some parts of neoliberal orthodoxy. Equally noteworthy, he defied the neoliberal epicenter, the U.S., on the diplomatic front on two critical issues. Lula recognized Palestinian statehood, and inviting Mahmoud Ahmadinejad to Brazil and refusing to support the blockade of Iran. [15]. These two actions conflict with U.S. official policy, showing Brazil intends to enter the top-tier of world powers more on its own terms.
This analysis begets a critical question: are military coups in developed nations like Brazil outdated? Are they truly seen as barbaric measures? Or, do they not occur because the domestic leaders (i.e. Lula) despite their rhetoric still adhere to the Washington Consensus? Suppose Brazil embarked on a wide scale wealth redistribution scheme whereby workers' interest take precedence over bondholders. Would the neoliberal's response reintroduce Brazil to 1964 again? Probably not, but the gushing praise of Lula shows a world easily resorting to hyperbole and hagiography. Future events that shatter this lofty image of Lula could channel that same vigor used once to praise him into an historical revision wherein he is demonized. In that setting what would follow? I ask this question because elites prefer we ask nothing. They see the future for us.
Lenin's body remains preserved, serving as a bizarre monument to the folly of waging a war on mankind to deliver its survivors to utopia. Today, South America features living figures-Chavez, Lula, Kirchner, Morales, and Correa-whose actions show wisdom consists of burying another folly: the Washington Consensus or Neoliberalism.
1. Barber, Lionel and Jonathan Wheatley. "The real reward." FT.com. 8 Nov. 2009. Web. 01 March 2012.
2. Anderson, Perry. "Lula's Brazil." London Review of Books 33.7 (March 2011): 3-12. Print.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Vernengo, Matias. "The Brazilian Economy After Lula: What To Expect?" CESifo Forum Jan. 2011. Print.
8. Arestis, Philip, Luiz Fernando de Paula, and Fernando Ferrari-Filho. "Assessing the economic policies of President Lula in Brazil: Has fear defeated hope?" Working Paper Number CBS-81-07. Centre For Brazilian Studies. Centre for Brazilian Studies. U of Oxford.
9. Anderson. "Lula's Brazil."
10. Vernengo.
11. Vernengo.
12. Vernengo.
13. Filho, Ferando Ferrari. "Brazil's response: How did financial regulation and monetary policy influence recovery? Brazilian Journal of Political Economy, vol. 31, no 5 (125), pp 880-888, Special edition 2011. Print.
14. Weisbrot, Mark. "Argentina's Critics Are Wrong Again About Renationalising Oil." the guardian.co.uk. 18 Apr. 2012. Web. 19 Apr. 2012.
15. Anderson. "Lula's Brazil."
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