Fernando Alcoforado*
The neoliberal economic model implemented in 1990 is largely responsible for worsening Brazil’s social problems today. Social devastation has been the main result of the neoliberal economic model in Brazil inaugurated by President Fernando Collor in 1990 and maintained by Presidents Itamar Franco, Fernando Henrique Cardoso, Lula da Silva, Dilma Roussef, Michel Temer and Jair Bolsonaro. The current economic recession, social inequality, mass unemployment and the extreme poverty of the country demonstrate the infeasibility of the neoliberal model implemented in Brazil. The social devastation suffered by Brazil with social inequality, mass unemployment and extreme poverty is demonstrated through indicators of concentration of income, unemployment, social inequality and extreme poverty.
Brazil has the second highest concentration of income in the world, according to the Human Development (HDR) report of the United Nations (UN) published in December 2019. Brazil is only behind Qatar, when analyzed the richest 1%. In Brazil, the richest 1% concentrates 28.3% of the country’s total income (in Qatar this proportion is 29%). That is, in Brazil almost a third of the income is in the hands of the wealthiest. The richest 10% in Brazil, on the other hand, account for 41.9% of the total income. Brazil is the country with the highest concentration of income when compared to the countries in the group of developing countries of the BRICS (Brazil, Russia, India, China and South Africa). India appears in the ranking with 21.3% of the total income in the hands of the richest 1%. Russia has 20.2% and South Africa leaves 19.2% of its total income with the richest 1%. Meanwhile, China is the country of the BRICS with the lowest concentration, in this sense, with 13.9%.
Comparative research led by Thomas Piketty, author of The Capital in the 21st century published in 2014, points out that 27.8% of the national wealth is in few hands in Brazil. Almost 30% of Brazil’s income is in the hands of just 1% of the country’s inhabitants, the highest concentration of its kind in the world. This is what the 2018 World Inequality Survey indicates, coordinated, among others, by the French economist Thomas Piketty. The group, composed of hundreds of scholars, provides a database that allows comparing the evolution of income inequality in the world in recent years. The World Wealth & Income Database points out that the richest 1% of Brazil held 27.8% of the country’s income in 2015.
According to the data collected by Piketty’s group, Brazilian millionaires were ahead of millionaires in the Middle East, who account for 26.3% of the region’s income. Brazil also stands out in the cut of the richest 10%, but not as intensely as is observed when comparing the richest 1%. The data shows the Middle East with 61% of income in the hands of its richest 10%, followed by Brazil and India, both with 55%, and Sub-Saharan Africa, with 54%. The region where the richest 10% hold the smallest share of wealth is Europe, with 37%.
The European continent is considered by researchers as an example to be followed in the fight against inequality, since the evolution of disparities in the region was the least among the indicators since 1980 that is due to the social democratic policies adopted by several governments. To solve the problem of social inequality, the researchers propose, in general, the implementation of progressive taxation regimes and the increase of inheritance taxes, in addition to more rigidity in the control of tax evasion. The researchers also highlight the importance of public investment in areas such as education, health and environmental protection.
Since the 1980s, large transfers from public to private equity have occurred in almost every country, rich or emerging, which has grown worldwide with the adoption by governments of neoliberal policies. In several countries, including Brazil, national wealth has increased substantially with the expansion of private equity and the reduction of public equity, says the survey. According to the authors, the reduction of public assets obviously limits the ability of governments to combat inequality (EL PAIS. Share of the richest 1% in national income. Available on the website <https://brasil.elpais.com/brasil/2017/12/13/internacional/1513193348_895757.html>. The figure shows Brazil with the higher income concentration among all surveyed countries, in light green).
In addition to presenting the worst indicators of social inequality in the world, unemployment rates in Brazil are at extremely high levels (12.8 million unemployed) with the prospect of remaining at high levels in 2020, 2021 and 2022, according to ILO. The data are part of a survey carried out by the International Labor Organization that does not foresee any improvement in the situation. In absolute terms, the ILO indicates that 2019 ended with 12.8 million unemployed in Brazil. In 2020, the forecasted number remains at the same level and drops to 12.7 million in 2021. Between 2022 and 2024, the total remains between 12.5 million and 12.6 million. Therefore, the ILO does not see anything important to allow the unemployment rate in Brazil to return to what existed in 2014.
In addition to the indicators of social inequality and unemployment, extreme poverty in Brazil already totals 13.5 million people. The group of poor people in Brazil survives on R$ 145 (US$ 33.02) per month. The number of poor people in Brazil is greater than the population of Bolivia, according to the IBGE. The number of poor people has been growing since 2015, reversing the downward curve of poverty in previous years. Since 2014, 4.5 million people have fallen into extreme poverty, living in miserable conditions. The contingent is a record in seven years of the historical series of the Brazilian Institute of Geography and Statistics (IBGE). The rise in unemployment and the drastic reduction of resources for social programs and to Bolsa Família program widen the gap of the poorest.
Poverty mainly affects states in the North and Northeast of Brazil, especially the black and brown population, with no education or incomplete basic education. The growth of extreme poverty coincides with the beginning of the recession that began in 2014 and continues in Brazil thanks to the inaction of the Bolsonaro government. An IBGE data, however, draws attention. Of the 13.5 million poor, 13.6% had some occupation, albeit informal, with less than 40 hours of work per week. The way out of this population’s misery depends, among other measures, on the reactivation of the economy so that they can enter the labor market and have an income that takes them out of extreme poverty and the access that people have to social programs.
To have access to social programs, the government will have to invest an additional R $ 1 billion per month to serve Brazilians in conditions of extreme poverty that will hardly occur because the government of Jair Bolsonaro is focused on deepening fiscal adjustment, and on the idea of reducing the role of the State, according to the neoliberal model that has been embraced by the country since the government of Fernando Collor in 1990. In addition to this, the government’s social insensitivity to the country’s serious social problems.
To combat social inequalities, unemployment and the extreme poverty of the population, the federal government should assume the reins of the national economy, abandoning the failed neoliberal economic model to reactivate the Brazilian economy and full employment with the immediate implementation of a wide public infrastructure works program (energy, transport, housing, basic sanitation, etc.) with the participation of the private sector to combat current mass unemployment by raising employment and income levels for families and businesses to, consequently, promote the expansion of consumption by families and companies resulting, respectively, from the increase in the wage bill of families and the income of companies with investments in public works to make Brazil grow economically again.
In addition, the federal government should adopt the immediate audit of the public debt followed by renegotiation with the extension of time of the payment of interest on the country’s public internal debt, aiming at reducing government charges with the payment of the public debt to increase public savings for investment, promote the increase in public revenue with the taxation of large fortunes, dividends from individuals and banks and the elimination of superfluous expenses in all the powers of the Republic with the reduction of public agencies and commissioned personnel. These measures would contribute to the federal government having the resources to reactivate the economy and strengthen social programs to combat social inequalities and extreme poverty.
Given the prospect of worsening social inequalities, unemployment and extreme poverty in Brazil, what would be the solution to mitigate these problems within the framework of capitalism, in addition to the effort to reactivate the economy? The solution would consist of the adoption by the federal government of public policies aimed at the development of the social and solidarity economy to alleviate unemployment and the reinforcement in the implementation of basic income or minimum universal income to alleviate poverty with the Bolsa Família Program.
In their book L´économie sociale et solidaire (Paris: Presses Universitaires de France, 2016), Géraldine Lacroix and Romain Slitine affirms that the Social and Solidarity Economy is one of the solutions to alleviate the problem of unemployment and to open the way to invent in the future other ways of producing and consuming contributing to greater social cohesion. According to Lacroix and Slitine, the Social and Solidarity Economy offers answers to numerous questions in contemporary society. This book contains information that the social and solidarity economy corresponds to 10% of GDP and is responsible for 12.7% of employment in France. In Brazil, the social and solidarity economy represents 1% of GDP [REDE BRASIL ATUAL. Com autogestão, economia solidária já representa 1% do PIB no Brasil (With self-management, the solidarity economy already represents 1% of GDP in Brazil). Available on the website <http://www.redebrasilatual.com.br/economia/2015/08/economia-solidaria-ja-representa-1-do-pib-no-brasil-3696.html, 2015>].
The Social and Solidarity Economy is a new model of economic, social, political and environmental development that has a different way of generating work and income, in different sectors, whether in community banks, credit unions, family farming cooperatives, fair trade issue, in exchange clubs, etc. The Social and Solidarity Economy constitutes a new way of organizing work and economic activities in general, emerging as an important alternative for the inclusion of workers in the labor market, giving them a new opportunity through self-management. Based on the Social and Solidarity Economy, there is the possibility of recovering bankrupt companies, and to continue them, with a new mode of production, in which the maximization of profit is no longer the main objective, giving rise to the maximization of the quantity and the quality of work.
It can be said that the adoption of the Social and Solidarity Economy is, without a doubt, the solution that would allow, within the framework of capitalism, to face mass unemployment that tends to grow in a dizzying way in the future with the replacement of skilled workers and not qualified by robots in the labor market. This is an important alternative for the inclusion of workers in the labor market, giving them a new opportunity to work with a new mode of production in which profit is no longer the main goal. The adoption of the basic income policy or universal minimum income for the poor population is one of the solutions to alleviate poverty as it would allow the poor to start having money to meet their basic needs in terms of food, health, housing, etc.
In turn, the basic income policy or universal minimum income for the population is one of the solutions to alleviate poverty. This idea is not new. Friedrich August von Hayek, Austrian economist and philosopher, later naturalized British, considered one of the greatest representatives of the Austrian School of economic thought, was the proponent of this idea when he published between 1973 and 1979 his work Law, Legislation and Liberty (Routledge, 1988). The neoliberal income transfer program of the Lula and Dilma Rousseff governments in Brazil, Bolsa Família, is an example of the application of Hayek’s basic income policy.
The book Utopia for Realists by Rutger Bregman (London, New York: Bloomsbury Paperbacks, 2017) shows that giving free money to everyone, that is, a universal minimum income program would make it possible to alleviate or eliminate poverty. Among the reasons he points out for this idea to become reality, lies in the fact that distributing money reduces crime, improves the health of the population and allows everyone to invest in themselves. More than that, a universal minimum income program builds social peace and alleviates political violence that would feed on social inequalities, mass unemployment and extreme poverty to become a social revolution.
Bregman defends the utopia of money for everyone and not just for the poor. In the book, Bregman cites a number of successful examples of how homeless people, Indians and populations in vulnerable regions developed when they started to receive money without being asked for anything in return. For him, it will be better with less bureaucracy and the establishment of requirements. The basic income program should be universal when it is expanded to the rich and the middle class, so that it becomes a right of all citizens, not a favor, says Bregman.
The basic income policy for the poor population would bring numerous advantages not only related to the decrease in crime, improvement of the population’s health and improvement of the poor people’s housing conditions, but also the increase in the consumption of goods and services by the poor population. The government, the provider of basic income for the poor, would benefit from lower spending on police repression and the prison structure as a result of reduced crime and homelessness and increased tax collection resulting from increased consumption by the poor population. There will be no social peace in Brazil if the policies of social and solidarity economy and basic income are not adopted for the poor population.
It is not necessary to demonstrate that the measures proposed here can only be adopted by a government in Brazil diametrically opposed to that of Jair Bolsonaro.
* 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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