Fernando Alcoforado*
To avoid the economic and social debacle in Brazil that will result from the measures adopted by the federal government, state governments and municipal governments aiming to combat the coronavirus, an action plan with economic and social measures should be developed to be adopted immediately during the economic depression that it will occur during the spread of the coronavirus, as well as economic measures to reactivate the Brazilian economy and social measures after the economic depression with the end of the spread of the coronavirus. The action plan would include the measures described below:
1) Immediate economic measures to be adopted during the spread of the coronavirus in Brazil to combat the coronavirus and deal with the worsening financial situation of individuals and companies, unemployment and extreme poverty.
2) Economic measures to be taken to reactivate the Brazilian economy after the economic depression resulting from the fight against the spread of coronavirus in Brazil.
3) Complementary social measures to be adopted to combat unemployment and extreme poverty after the economic depression with the spread of the coronavirus in Brazil.
1.Immediate economic measures to be adopted during the spread of the coronavirus in Brazil to combat the coronavirus and deal with the worsening financial situation of individuals and companies, unemployment and extreme poverty
The immediate measures to be taken during the spread of the coronavirus in Brazil are as follows:
- Massive investment in expanding the health system with a view to fighting coronavirus;
- Suspension of payment of debts by individuals and companies;
- Provision of unemployment insurance for all the unemployed;
- Provision of universal basic income for the entire poor population.
This set of measures should be adopted immediately to combat the coronavirus with massive investments in health infrastructure (R$ 54 billion this year and in the following years to strengthen the health sector and not the ridiculous R$ 4.5 billion proposed by Minister Paulo Guedes to fight the coronavirus pandemic) and mitigate the effects of the economic depression resulting from the fight against coronavirus on the aggravated financial situation of indebted individuals (62 million inhabitants) and indebted companies (14.083 million), the worsening of mass unemployment with the granting of unemployment insurance to all the unemployed in the country without exception (11.9 million workers) and the worsening of the living conditions of all the poor with the granting of universal basic income (13 million of the poor). The source of funds to carry out these measures would be Brazil’s international reserves of US$ 352 billion. This resource would be better applied than the Central Bank does with the use of these reserves to lower the dollar value against the Brazilian currency (real).
After the economic depression during the spread of the coronavirus, the federal government’s effort should be focused on planning the national economy with a view to ensuring Brazil’s economic growth and development on a sustainable basis.
2.Economic measures to be adopted to reactivate the Brazilian economy after the economic depression resulting from the fight against the spread of coronavirus in Brazil
The economic measures to be adopted to overcome the economic depression resulting from combating the spread of the coronavirus are described below:
- Devaluation of the Real to make Brazilian exports more competitive;
- Development of a broad export program, especially in agribusiness and the mineral sector;
- Concession of low interest loans to companies;
- Stimulating agribusiness and industrial production by granting tax incentives;
- Construction of a large number of public works, with emphasis on the economic (energy, transport and communications) and social (education, health, housing and basic sanitation) infrastructure;
- Cutting unnecessary perks and government agencies and reducing the burden of paying interest and amortizing the public debt to be renegotiated with the public debt creditors so that the government has resources for investment in economic and social infrastructure.
This set of measures is a development strategy inspired by the one that was implemented in 1933 by the government of President Franklin Delano Roosevelt of the United States, which received the name “New Deal”. The situation in Brazil with the spread of the coronavirus will be of economic depression similar to that of the United States after the great depression that broke out with the crash of the New York Stock Exchange in 1929 that led to the bankruptcy of the economy and caused the generation of 12 million unemployed in the country.
The 1929 crisis called into question the liberal economic measures adopted by the government of President Herbert Hoover, which considered it possible to achieve economic and social balance without massive State intervention. What happened in the United States is happening in Brazil with the neoliberal policy of the Minister of Economy, Paulo Guedes, which leads to the inaction of the Brazilian State in overcoming the crisis that broke out in 2015 and which will be aggravated by the economic depression resulting from the measures adopted to combat the coronavirus.
The answer to the crisis was found in the United States and later in the other countries of Western capitalism with the expansion of State intervention with economic planning during the government of President Franklin Delano Roosevelt. The “New Deal” was influenced by the economic theory of John Maynard Keynes, a British economist who pointed to the need for state economic mediation to guarantee the well-being of the population, an action that liberalism would be unable to carry out. To face the economic and social crisis in the USA, Roosevelt used the work of a group of renowned economists inspired by Keynes to elaborate the “New Deal”, whose main objective was to create conditions for the fall of unemployment, through the articulation of state and private investments. The main measures were as follows:
- Devaluation of the dollar to make exports more competitive;
- Public loans to banks to avoid bankruptcies in the financial system;
- Creation of the social security system, with emphasis on unemployment insurance and the 1935 Security Law;
- Right to organize a union;
- Stimulation of agricultural production;
- Construction of a large number of public works, with emphasis on hydroelectric plants and highways.
At that time, in the United States, there was a great incentive to hire workers to achieve a situation of full employment of the economically active population and to social security actions to stimulate the population’s consumption, increase industrial production, agricultural and services activities at all levels. In addition, the intermediation of trade unions and civil society organizations in the negotiation of claims tried to avoid violent conflicts, guaranteeing social peace. This perspective of economic performance was aimed at increasing consumption, especially among workers and encouraging productive chain development in all economic sectors. The measures were successful, reinvigorating American capitalism again, to the point that studies claim that ten years after the implementation of the “New Deal”, the USA approached the economic levels in which they found themselves in 1929.
Therefore, there is an urgent need to make the Brazilian State take the reins of the national economy, abandoning the failed neoliberal economic model to reactivate the Brazilian economy and full employment, putting an end to the economic depression that will occur during the spread of the coronavirus following the example of President Roosevelt of the United States adopted in 1933 during the great economic depression resulting from the crash of the New York Stock Exchange in 1929.
This whole set of measures to reactivate the Brazilian economy after the economic depression resulting from the fight against the coronavirus must be complemented with measures to combat unemployment and extreme poverty to avoid the social debacle. Measures must be adopted to mitigate the effects of the economic downturn during and after the fight against the coronavirus in relation to the unemployed and the poor in general. It is necessary to combat the view of the right-wing parties and politicians who see unemployment and poverty as inevitable problems and which should not be the object of government intervention. The right-wing, contrary to state intervention in the economy and too convinced that the free market will automatically bring universal well-being, does nothing to solve the problem. The immediate trend is to worsen unemployment and extreme poverty in Brazil with the retraction of the economy with the fight against the coronavirus. Given this perspective, what would be the solution to alleviate unemployment and poverty in the current situation? The solution would consist in the adoption by the federal government, state governments and municipal governments of public policies aimed at the development of the social and solidarity economy to alleviate unemployment and the implementation of basic income or universal minimum income to alleviate poverty. Without the adoption of these measures, Brazil will inevitably be driven to economic ruin and political and social upheaval with the restrictions imposed by the fight against the coronavirus. The complementary measures to combat unemployment and extreme poverty would be as follows:
3.Complementary social measures to be adopted to combat unemployment and extreme poverty after the economic depression with the spread of the coronavirus in Brazil
- Development of the social and solidarity economy to combat unemployment;
- Concession of basic or universal income to populations of extreme poverty.
Regarding the Social and Solidarity Economy, it is important to note that it is one of the solutions to mitigate 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. 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, be it 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 companies in bankruptcy, 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.
The Social and Solidarity Economy is a possible alternative to generate employment for workers who are mostly excluded from the formal labor market and consumption. The Social and Solidarity Economy emerged in various parts of the world with practices of economic and social relations that are promoting the survival and improving the quality of life of millions of people. These practices are based on solidary collaborative relationships, inspired by cultural values that place the human being as the subject and purpose of economic activity, rather than the private accumulation of wealth in general and capital in particular. It can be said that the adoption of the Social and Solidarity Economy is, without a doubt, the solution that would allow to face the mass unemployment that is growing in a dizzying way in Brazil.
In turn, the policy of basic income or universal minimum income for the population is one of the solutions to alleviate poverty. The cash transfer program, Bolsa Família, is an example of the application of the basic income policy. Giving free money to everyone, that is, a universal minimum income program would make it possible to alleviate or eliminate poverty. Among the reasons 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. The adoption of the basic income policy or universal minimum income for the poor population is one of the solutions to alleviate poverty, since it would allow the poor to start having money to meet their basic needs in terms of food, health, housing, etc. It is important to note that poverty is the condition of those who are poor, that is, of those who do not have the basic conditions to guarantee their survival with quality of life and dignity. By having a basic income, the poor population will be able to meet their basic needs.
It is important to note that the adoption of an action plan with these characteristics may prevent the social upheaval that may result from measures restricting economic activity to combat the coronavirus and lead Brazil to a civil war that has never occurred in its history. unpredictable consequences. É essencial que exista uma união nacional na luta contra o coronavírus e o esforço para reativar a economia e combater o desemprego e a pobreza extrema. O governo do Brasil em todos os níveis tem o dever de perseguir esse objetivo, porque a vida das pessoas e o futuro econômico do país estão em risco.
* 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).
Site Title 