Fernando Alcoforado *
Brazil has always lacked rational decisions in the economy by the government throughout history. The Brazilian governments were irrational from the colonial period until the Republican until 1929 when adopting the agro-export economic model dependent on external markets, promoted the industrialization of the Country with a delay of 200 years in relation to the 1st Industrial Revolution in England, they abandoned the national model development strategy adopted by Getúlio Vargas with the adoption of the model of capitalist development dependent on foreign capital and technology from the Juscelino Kubitschek government to the Jose Sarney government and the adoption of the neoliberal model with the subordination of the national economy to globalized capitalism since the Fernando Collor government in 1990 until the government Jair Bolsonaro. The rational decision of the government in the economy must be oriented towards choosing the options that imply the greatest benefit to society, a fact that has not been occurring throughout the history of Brazil.
A government acts rationally by considering available information, probability of events, and potential costs and benefits in determining its priorities, and consistently strives to make the best choice in its decision-making. In general, rational action in the economic field involves the accomplishment of eight steps to be considered by the decision maker: 1) Trace scenarios or probable futures for the national economy considering the uncertainties associated with each scenario; 2) Definition of the objectives to be achieved taking into account the scenarios; 3) Establishment of criteria in the selection of alternatives of action aiming at the achievement of the objectives; 4) Evaluation of the alternative paths to the achievement of the objectives; 5) Choice of action strategies aiming at achieving the objectives considering the resources available; 6) Implementation of the action strategies adopted; 7) Evaluation of the results measuring the degree of success of the strategies adopted in achieving the objectives; 8) Review of scenarios, objectives and action strategies.
Rationality in decisions of economic nature requires that whoever decides to have all the information necessary to make the best choice. In addition to being qualified to make the most appropriate choice of economic nature, it is crucial that whoever decides to have information about the past and the present, as well as prospective about the expected results in the future. In decisions of an economic nature, it is therefore necessary to evaluate the alternatives considered and to choose the one that provides the best result.
The great challenge faced by government leaders in the contemporary era is represented by the need to plan the development of their countries and production systems in an environment of high complexity and often chaotic changes. Old beliefs in determinism, control, and predictability of economic models do not hold true in the contemporary era. The chaos and complexity of the economic environment makes governments feel like they are being swept away by a hurricane that permeates all political, economic and social life. To deal with the chaos and complexity of the economic environment we cannot continue to use economic and organizational models in which everything related to them is treated in isolation and disconnected at all in the national and global spheres.
Les modèles de gestion traditionnels du gouvernement considèrent la gestion comme une activité de rétroaction négative, c’est-à-dire qu’elle établit une stratégie et dirige l’économie nationale dans la direction souhaitée en corrigeant les écarts entre le plan et les résultats obtenus. À une époque où tout évolue rapidement, on peut dire que les principes régissant ces modèles sont dépassés, car il est impossible de parvenir à un état stable ou à un équilibre dans un environnement économique tel que le présent, caractérisé par l’instabilité. Alors que les modèles de gestion conventionnels centrés sur la stabilité, le déterminisme, soulignent le processus de rétroaction négative qui tend à maintenir le statu quo, ramenant le système à sa position d’équilibre, les modèles de gestion appropriés à l’époque contemporaine devraient privilégier la rétroaction positive qui favorise le passage à une nouvelle étape du développement plutôt que de maintenir le statu quo.
To be effective, the governmental planning process must necessarily take into account instability, uncertainty, its turbulence and its risks. In the contemporary economic environment, it has become commonplace to speak of turbulence and market instability as in 2008 with the crisis of the world capitalist system that affected all countries and companies. One of the major problems of the current planning process is that it minimizes or disregards uncertainties when it is known that change is the only stable rule in the present moment and that the past serves less and less as a basis for projecting the future.
In Brazil, unfortunately, the Bolsonaro government does not act rationally because it does not adopt any strategy that contributes to the attainment of economic objectives which are fundamental to: 1) promote the resumption of the country’s economic growth; 2) to face the ongoing trade war in the world economy; and, 3) take measures to prevent the country from suffering the consequences of the inevitable explosion of the world debt bomb. The government’s top priority should be to promote the resumption of economic growth, by reactivating the economy, which has been in recession for four years, to rapidly reduce unemployment. The government’s priority number 2 should be to act to neutralize or minimize the effects of the ongoing trade war on the world economy that can slow global growth, which could hurt emerging countries such as Brazil, both in terms of exports , and in relation to the growth of foreign direct investment. The government’s priority number 3 would be to strengthen the Brazilian economy that could be affected by the inevitable explosion of the world debt due to the fact that Brazil has an extremely fragile economic system due to the crisis that broke out in 2014 and also to have adopted since 1990 the neoliberal economic model that made it more vulnerable to the impacts of global economic crises.
In order to overcome the country’s current recessive crisis, the Brazilian government would have to solve the problem of public accounts that would include, on the one hand, an increase in public revenues by: 1) taxation of large fortunes with assets exceeding R$ 1 billion; 2) increase of the tax on banks; and (3) adoption of tax on corporate dividends and, on the other hand, reduce government expenditures by: (1) drastically reducing the number of government ministries and agencies and expenditures at all levels of government; and (2) a drastic reduction of the basic interest rate of the economy (Selic) to reduce the size of public debt and the burden of paying interest and the repayment of public debt. Of these actions, the Bolsonaro government only promoted the reduction of the number of ministries that are still high and of the expenditures in some organs of the government. Nothing was done to tax the big fortunes, raise the tax on banks and apply dividend tax.
In order to make Brazil grow again economically, the Brazilian government should immediately implement a broad program of public infrastructure works (energy, transportation, housing, basic sanitation, etc.) to raise the population’s employment and income levels and, consequently, to promote the expansion of the consumption of families resulting from the increase of the salary mass and the income of the companies with the investments in public works. In addition to the public works program, the Brazilian government should develop a broad export program, especially agribusiness and the mineral sector, a drastic reduction of bank interest rates to encourage household consumption and investment by companies, reduction of the burden with the freezing of high salaries of the public sector, the cutting off of stewardships and organs of the public administration, and the reduction of interest payments and public debt amortization to be renegotiated with public debt creditors. The Brazilian government should also reverse the deindustrialization process that has taken place in Brazil since the 1980s, promoting industrialization in strategic sectors for the country’s development. None of these actions is being implemented by the Bolsonaro government, which, besides not promoting the growth of the Brazilian economy, does not contribute to the improvement of public accounts whose deficit could be eliminated with the expansion of the national economy.
Unfortunately, the Bolsonaro administration is irrational because it prefers to adopt measures that do not contribute to the resumption of Brazil’s economic growth, neutralizing or minimizing the effects of the ongoing trade war in the world economy on the Brazilian economy and strengthening the Brazilian economy to facing the threat of global debt explosion. The focus of the Bolsonaro administration has been to address issues that have no immediate effect on the economy, such as pension reform, privatization of all state-owned enterprises, transfer of the Brazilian embassy from Tel-Aviv to Jerusalem, the departure of the agreement on climate change in Paris, among other issues. Most likely, the Bolsonaro administration will thwart the expectations of many of its voters who are seeking not only to fight against corruption, but mainly to resume economic growth to fight against unemployment. The voter’s frustration with the government’s failure to promote a resumption of economic growth will add to the disappointment, especially of nationalists, for the planned privatization of all state-owned enterprises and the occurrence of the “Queiroz corruption case” involving members of the Bolsonaro family.
* Fernando Alcoforado, 79, holder of the CONFEA / CREA System Medal of Merit, member of the Bahia Academy of Education, engineer and doctor in Territorial Planning and Regional Development by the University of Barcelona, university professor and consultant in the areas of strategic planning, business planning, regional planning and planning of energy systems, is the author of 14 books addressing issues such as Globalization and Development, Brazilian Economy, Global Warming and Climate Change, The Factors that Condition Economic and Social Development, Energy in the world and The Great Scientific, Economic, and Social Revolutions that Changed the World.
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