Brazil: a Hot Economy?

In 2007, Brazil discovered a massive 8 billion barrel+ stash of off-shore oil off its coastline. That feat was replicated in 2010 with another, even larger, off-shore discovery (see the map above for off-shore oil and gas finds). Brazil, a nation that had battled inflationary spikes that looked like basketball scores for the decades, was suddenly asset rich. A western district, Mato Grosso, has also grown to become a viable competitor to U.S. agribusiness, and although the logistics of moving foodstuffs to market still poses serious issues, the region is poised for an even greater growth spurt.

Flex those economic muscles! Brazil is so rich that it has developed a foreign policy very independent from the pressure from that big regional power to the north, the United States.  Just to make sure American policy-makers didn’t miss this newfound strength, Brazil brokered a nuclear fuel exchange between Turkey and Iran in 2010. With a cozy relationship with Iran, Brazil makes sure the United States understands that the U.S. isn’t the only big kid on the block. With just under 200 million people, Brazil is a very big player in the Western Hemisphere. Sure it’s got a lot of growing to do; the lower classes, uneducated and mired in the legendary favelas (slums) of the big cities, have a long way to go, but there is a path.

Things are so wonderful in Brazil that they have gone after soccer’s holiest of grails, the World Cup (in 2014, to be played in various cities in Brazil, with finals in Rio) as well the summer Olympics (in 2016)… rapidly building infrastructure, stadia, hotels, cleaning up some slums and upgrading public transportation in one of most beautiful venues in the world: Rio de Janeiro. Not to be outdone, São Paulo’s mayor, Fernando Haddad, went off to Europe to lobby for the 2020 World’s Fair. Damn, Brazilians must be bursting with pride and cheering at their massively powerful new economy! They must be celebrating in the streets as only Brazilians know how to celebrate!

Not exactly. All across Brazil, but particularly in the big cities like Rio and São Paulo, violent protests seem to spiral out of control. It all started over little things, like an unpopular increase in the local bus fare, but the bigger frustration that lives in the hearts of too many Brazilians rapidly bubbled to the surface. While they may be sources of national pride, the new stadia and other infrastructure projects are viewed by many as massively wasteful suck-holes of government funding, rife with Brazilian-style corruption and inefficiencies, when life in Brazil hasn’t really improved much for the masses since the big oil discoveries. Projects are powerfully over-budget and seemingly behind schedule, draining increasing cash from what many believe are more necessary expenditures on basic services.

The nation’s schools are a disgrace, claim many, and the hospitals available to most people are dirty and substandard. Public services in general have fallen way short of rosy pledges made just a few years ago, and instead of lifting Brazil onto the international stage (a la the Beijing Olympics), these global sporting events have instead made the mass of lower class Brazilians see themselves left out of the growth equation… again. Corruption is seen everywhere, but daily life for most continued to be a harsh struggle.

What makes this even more interesting is that the party running the nation is the leftist Worker’s Party so associated with Brazil’s middle and lower classes. The decision to fight for these big events rests with this populist, socialist party. So what if São Paulo’s mayor found him hunkered down in his apartment as stone-throwing protestors outside let him know precisely what they felt about his foray to Paris to get the World’s Fair?

“After rising to prominence on the backs of huge protests to usher in democratic leadership, the governing Workers Party now finds itself perplexed by the revolt in its midst, watching with dismay as political corruption, bad public services and the government’s focus on lifting Brazil’s international stature through events like the 2014 World Cup and the 2016 Olympics inspire outrage. 

“On [June 19^th], tens of thousands protested outside the newly built stadium where Brazil faced off against Mexico in the Confederations Cup, as the police tried to disperse them with tear gas, rubber bullets and pepper spray. In what would normally be a moment of unbridled national pride, demonstrators held up placards demanding schools and hospitals at the ‘FIFA [the body that administers the World Cup] standard,’ challenging the money Brazil is spending on the World Cup instead of on health care or the poorly financed public schools.

“With support for the protests escalating — a new poll by Datafolha found that 77 percent of São Paulo residents approved of them this week, compared with 55 percent the week before — Mayor Haddad and Geraldo Alckmin, the governor from an opposition party, vowed on [on the evening of June 19^th], announcing that they would cancel the bus and subway fare increases after all. Other cities, including Rio de Janeiro, pledged to do the same.” New York Times, June 19^th.

But Brazil did not settle down. Riots spread to more cities. “The first death from more than a week of protests was reported overnight… An 18-year-old man was killed in the city of Ribeirao Preto in São Paulo state when a motorist drove through a barricade where he was protesting, police say. The driver is said to have fled the scene afterwards.

“President Dilma Rousseff announced on [June 20^th] that she was cancelling a visit to Japan… an indication of the seriousness of the situation…  In Rio de Janeiro riot police fired tear gas and rubber bullets at groups of masked young men trying to approach the City Hall late on [June 20^th]. At least 29 people were reported to be injured in the clashes.” BBC.co.uk, June 20^th. All this against a BRIC nation – a leading growth economy? Against a people’s party?

For our own domestic policy-makers, the failure to address the seemingly endless downward spiral of average American buying power, the crushing escalation of tuition increases for higher education, the contraction of well-paying and secure job opportunities, pure and permanent unemployment, exorbitant medical costs and the waste that masquerades as the federal budget are burning the souls of too many Americans. Are we really that much different from Brazil… just a little farther down the line?

I’m Peter Dekom, and social systems are highly Maslovian in their hierarchy of needs; you shouldn’t be looking at luxuries when your basics are in desperate need of repair.