Saturday, July 2, 2016

Operação Lava Jato

Portuguese for “Operation Car Wash,” a misnomer (it may launder, but there is no cash wash) for a money “transferring system” scandal – using a gas-station-shopping-area complex (in Posto da Torre, pictured above) in the middle of Brazil’s capital city of Brasília as a front – to move cash skimmed from the nation’s state oil consortium into the greedy hands of politicians on the take.
Wracked by the impeachment of their President, corrupt contractors, with complicity from the “wink wink” government enablers cutting corners, whose Olympic venues are well-behind schedule and outbreaks of the dreaded Zika virus that threaten the economic viability of the Olympics themselves, Brazilians have had it “up to here” with the rather dramatic failings of their government.
Corruption fosters everything from the wanton release of pollutants into the environment, the greatest part of global climate change, to a rather paralyzing impact on economic development and income inequality. Legitimizing “corruption” – by allowing elites to use their wealth to influence political choices at the expense of most everyone else (e.g., Citizens United, tax loopholes and different tax rates for the rich, etc. here in the United States) – doesn’t make the process any less corrupt; the net result is the same as the form of corruption that operates under the table.
Transparency International summarizes: “Evidence indicates that corruption is likely to adversely affect long-term economic growth through its impact on investment, taxation, public expenditures and human development. Corruption is also likely to undermine the regulatory environment and the efficiency of state institutions as rent-seeking distorts incentives and decision-making processes.
“Not only does corruption affect economic development in terms of economic efficiency and growth, it also affects equitable distribution of resources across the population, increasing income inequalities, undermining the effectiveness of social welfare programmes and ultimately resulting in lower levels of human development. This, in turn, may undermine long-term sustainable development, economic growth and equality.” Every point of corruption on a ten point corruption scale (10 being most corrupt) generates a 4% reduction in national productivity according to Transparency International, a particularly hard slam to less affluent countries.
“Corruption is also perceived to increase the costs of investment. A survey carried out by Control Risks and Simmons & Simmons in 2006 reveals that  a quarter of its respondents claimed that corruption increased their costs of international investment by up to 5 per cent, and nearly 8 per cent of respondents claimed that it increased their costs by 50   per   cent   (Control   Risks   and   Simmons   & Simmons 2006).” Transparency International. Think of how deploying that “corruption capital” for the benefit of society in general – from healthcare to education – could change national success.
Back to this little microcosm of Brazilian corruption, a reflection of the much bigger picture. “Operação Lava Jato… has led to the arrest of more than 150 business tycoons and elected officials, plunging the Brazilian elite into a crisis that continues to unfold… [Hidden] behind the gas station’s row of storefronts was an illegal money transfer business run by its owner, Carlos Habib Chater, and an associate, Alberto Yousseff, officials discovered during a 2013 drug investigation that led the federal police to the operation.
“In the months that followed, Mr. Yousseff, encouraged by the promise of a plea deal, told prosecutors about his role as the moneyman who helped funnel billions of dollars skimmed from Brazil’s state oil company, and payoffs from construction companies, to some of the country’s most powerful politicians…
“Here at Posto da Torre, named for a nearby television tower that provides visitors with panoramic views of the capital, most customers seem unaware of the gas station’s notorious past. Few, though, have escaped the deprivations of an economic recession that has left 11 million Brazilians unemployed and millions of others struggling to survive.
“Soaring gas prices [in an era where oil has fallen in value], high taxes and rising inflation have pushed many working-class Brazilians to the brink of poverty. Petty corruption and an onerous bureaucracy frustrate the aspirations of young entrepreneurs… The birthplace of a national scandal, Posto da Torre is also a stage where the cruelties of Brazil’s economic crisis and political paralysis are on full display.” New York Times, June 10th.
The middle class exploded just a few years ago: “[The] Brazilian economy roared, buoyed by global demand for commodities like soybeans and iron ore that vaulted millions of the working poor into the ranks of the middle class. Slowing growth in China helped bring the good times to an abrupt end…” NY Times. Impeached President Dima Rousseff appears to have been elected on the body of massively falsified government economic performance statistics, the basis for her upcoming trial.
Most of the impacted Brazilians have once again slid back into their rather stark and negative view of their future. Typical is this expression of pessimism: “We could have more equality if the politicians wanted,” said [one struggling worker,] “I hope things get better, but I don’t have much hope. Even when good people get to power, the money corrodes them and they end up forgetting the Brazilian people.” NY Times. Corruption always puts money and power in the hands of those who need neither… and takes these elements away from those who need it most.
I’m Peter Dekom, and in case you wondered how two populist political candidates have shaken their political parties to their core, take a long careful look how our political system has given our power elite disproportionately more than they have ever had in our country’s entire history.

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