Fernando Alcoforado*
The economic and financial performance of a government as well as a company is measured by the results obtained. A company is economically and financially successful when its production grows, is profitable and has a growing market share, among other factors. A government is economically and financially successful when it contributes to the increase in production and employment in general, the country has a growing GDP, has tax collection higher than public expenditure, and has a current account balance of payments surplus, among other factors. If we take into account the economic and financial results obtained, the Bolsonaro government has been a resounding failure.
Brazil’s GDP grew below 1% in 2019 according to the Central Bank, which is below the estimate for the world economy, of 3.3%, and less than half the growth of the group of emerging countries. The Bolsonaro government does not create the conditions to leverage the Brazilian economy because it does not contribute to the increased demand for goods and services that depends on the population’s income, or comes from investment that depends on the State that does not invest because it does not have resources or the market which does not invest because the economy is stagnant and the economic and political environment is uncertain. With the economy stagnant, 13 million unemployed and without investment from the government and the private sector, demand is not in a position to grow.
In addition to the meager GDP growth in 2019, which is expected to be repeated in 2020, there is a deficit in government accounts, which was R$ 139 billion in 2019 without to compute the payment of interest and amortization of the public debt, which corresponded to R$ 1.425 trillion (44% of the Union budget) and the balance of payments deficit of US$ 35.6 billion. The level of occupation of the workforce as well as the level of unemployment and the average income are performing worse than in 2015. According to IBGE data until November 2019, the behavior of the industry was poor, and disastrous in relation to 2014. Economic stagnation and labor reform have contributed to a dramatic drop in government and Social Security revenues.
The current Government’s only action in the economy consists of adopting provisional measures and bills, as if that could reactivate the stagnant Brazilian economy. Budgetary adjustments and bureaucratic reforms are not drivers of economic growth. Brazil has a large population with about 170 million low-income people with very poor or miserable people. This part of the population has substantial needs for education, health, sanitation, housing and urban mobility and these needs can only be met by public investment. Brazil has a historic deficit in infrastructure. In addition to conventional items – such as roads, railways and ports – science and technology are not being treated as a priority. There is no way for private investment to meet these needs as advocated by neoliberalism. For the economy to grow and develop, it is necessary to have a well-designed economic plan that was not even elaborated by the current Government, which is limited to a roadmap of adjustments and reforms that progress slowly and will never be the starting engine of a national development project.
The current economic team of the Bolsonaro government operates based on the prescription of the neoliberal model. The fixed and unique idea is to increase the market space, that is, the private sector, at the expense of the public sector, privatize state-owned companies, reduce public investments to zero and cut spending on the country’s needy population, blocking the granting of Bolsa Família, pensions, maternity benefits, disability benefits, unemployment insurance, with two million desperate people in the waiting lines without a solution in sight. The cuts in spending on the needy population meet the wishes of the financial market, in addition to the perverse effect on the population that needs public services more than ever. These cuts reduce demand because they mean less income for consumption and thus affect the GDP, whose official projection for 2020 is unlikely to be realized because there is no prospect of private investment in the productive economy, since it has idle capacity in all sectors..
The investments intended by the Ministry of Economy in concessions and privatizations have no effect on the productive economy because they are transfers of property without effects on employment and growth. On the contrary, privatizations generally produce unemployment. Today, the scenario is bleak. Bolsonaro has already warned that the goal is to sell state-owned companies in the sector – including Petrobras and Banco do Brasil. According to him, this investment will come from the private sector, a promise that is linked to the “fiscal adjustment” proposed by Paulo Guedes, Minister of Economy.
In the projections of the International Monetary Fund and the World Bank, the first more optimistic than the second, the World GDP should grow between 2% and 3%, projections that are forecasts that historically are below the projected. Following the most realistic line of the World Bank, the world is expected to grow 2.5% in 2020, which is the same projection that the economic team of the Bolsonaro government traces for Brazil and that if realized will be much lower than the country’s historical average between 1950s and 1980s and much less than Brazil needs to recover the loss of GDP since 2014, an accumulated real and significant loss of 10%, meaning impoverishment of the population, and to meet the enormous needs of education, health, sanitation and housing, in addition to mainly of employment and income of the population. Therefore, a 2.5% growth if achieved will be insufficient for the accumulated non-economic growth liability.
The manufacturing industry performed poorly in 2019, showing no improvement in 2020. There is no new factor that supports a projection of 2% to 2.5% of GDP growth for 2020, noting that the forecasts of the so-called Focus Bulletin of the Central Bank have been upward wrong in the GDP projection since 2015. There is a trend in the financial market, where Focus’s informants come from, to overestimate the growth of the economy, because it depends on insuring their customers in the applications. As for unemployment, nothing indicates a substantial improvement in 2020. Official statistics are being optimized by the increase of so-called “self-employed”, an underemployment in informality that enters official statistics as new jobs, when in reality they are occupations of desperate young people without work, which they risk their lives daily on motorbikes to earn meager exchanges at the end of the day, with no prospects for career, education, training and future. There are 30 million young people aged 18 to 30 with precarious jobs.
To reactivate the Brazilian economy, the Bolsonaro government should preliminarily abandon the neoliberal economic model implemented in 1990 after which the federal government abdicated national economic planning. The neoliberal model, responsible for Brazil’s economic debacle, should be replaced immediately by the national developmentalist model of selective opening up of the Brazilian economy with active participation by the State in economic planning, as occurred in the 1930/1980 period when Brazil achieved its greatest economic development and Social. The analysis of Brazil’s 10-year GDP growth rates from 1901 to 2010 with a projection from 2011 to 2020 demonstrates indisputably that the best performances of the Brazilian economy with the highest growth rates occurred between 1930 and 1980, which were obtained thanks to the active participation of the Brazilian State in promoting its development.
Since 1990, the federal government has given up planning the national economy influenced by the neoliberal theses that considered that it was up to the market to promote the expansion of the economy. From 1990 to 2016, Brazil showed very low GDP growth rates. Between 2011 and 2020, the Brazilian economy should advance on average 0.9% per year, according to FGV. This rate is lower than the 1.6% of the so-called “lost decade” in the 1980s. In 2015 and 2016, for example, GDP had a negative growth of 3.5% and 3.3%, respectively. It was a negative milestone for the country’s economic history. Brazil has not had two consecutive years of recession since 1930 and 1931 when the world was affected by the effects of the 1929 economic crisis and the New York Stock Exchange crashed. Now, Brazil is experiencing 5 years of recession with no prospect of a short-term solution. In the past two years, GDP has grown by less than 1%. These figures demonstrate the failure of neoliberalism from 1990 to the present in Brazil. It is, therefore, an act of injurious homeland to maintain the harmful neoliberal economic model for Brazil.
The federal government should draw up an economic plan that would contribute to the resumption of Brazil’s development that presents to the population and the productive sectors a perspective of overcoming the current crisis and resuming economic growth. The lack of a governmental development plan is one of the factors that lead to the immobility of the private sector in making investments in Brazil, leading to a real paralysis. The development plan should guide and coordinate companies in the country that, organized in networks, and helped with trade, technology and credit policies can successfully compete in the national and world economy.
There is an urgent need for the Brazilian State to take over the national economy, abandoning the failed neoliberal economic model to reactivate the Brazilian economy and full employment. The Brazilian government should consider as a number 1 priority to reactivate the economy with the immediate execution of a broad program of public infrastructure works (energy, transport, housing, basic sanitation, etc.) with the participation of the private sector to combat the current situation of mass unemployment raising the levels of employment and income of families and companies to, consequently, promote the expansion of the consumption of families and companies resulting, respectively, from the increase in the salary mass of families and the income of companies with investments in public works to make Brazil grow economically again.
In addition to the public works program, the Brazilian government should develop a broad export program, especially in agribusiness and the mineral sector, the drastic reduction in bank interest rates to encourage household consumption and investment by companies, the reduction of the burden tax with the freezing of high salaries in the public sector, the cut of perks and public administration organs and the drop in the charges with the payment of interest and amortization of the public debt to be renegotiated with the creditors of the public debt for the government to have resources for investment in economic and social infrastructure. Without the adoption of this strategy, Brazil will inevitably be driven to economic ruin and political and social upheaval.
This whole set of measures should be put into practice based on the planning of the national economy that ensures economic growth and the development of the country on a sustainable basis. With the national developmentalist economic model of selective opening of the economy, the Brazilian government should adopt a policy capable of overcoming as quickly as possible the current obstacles represented by the economic and technological dependence on the outside. This challenge will only be overcome if the federal government develops a lot of effort and determination alongside the national productive sectors, R&D centers and Universities in order to develop their own technology to replace imports and / or to import technology from countries with which strategic alliances are made on sovereign bases. It should be noted that the developmentalist national economic model of selective opening of the economy is the antithesis of the neoliberal model in force because it privileges national interests and not those of the market.
In view of the need to strengthen the Brazilian State to plan the national economy, the Brazilian government should suspend the payment of the domestic public debt for a period of 5 years or renegotiate with its creditors in order to extend its payment so that the government can to have the necessary resources for public investments to reactivate the economy. This solution cannot be postponed because 44% of the Union’s budget is used to pay the domestic public debt service. Taking into account the speech of the Minister of Economy of the Jair Bolsonaro administration, Paulo Guedes, who is a fundamentalist of neoliberalism, the federal government is unlikely to take an active role as an inducer of economic growth by drawing up a development plan with the adoption of the measures presented above to promote the reactivation of the economy and the rise in employment levels in Brazil. Very rarely, the Bolsonaro government will adopt the measures proposed above because it is subject to the interests of the United States government and international capital, in addition to being dominated by neoliberal blindness.
* Fernando Alcoforado, 80, awarded the medal of Engineering Merit of the CONFEA / CREA System, 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 author of the books Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona,http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development- The Case of the State of Bahia (VDM Verlag Dr. Müller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011), Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), Energia no Mundo e no Brasil- Energia e Mudança Climática Catastrófica no Século XXI (Editora CRV, Curitiba, 2015), As Grandes Revoluções Científicas, Econômicas e Sociais que Mudaram o Mundo (Editora CRV, Curitiba, 2016), A Invenção de um novo Brasil (Editora CRV, Curitiba, 2017), Esquerda x Direita e a sua convergência (Associação Baiana de Imprensa, Salvador, 2018, em co-autoria) and Como inventar o futuro para mudar o mundo (Editora CRV, Curitiba, 2019).
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