It is a fact that Brazil has been through a liberating change since President Jair Bolsonaro won the election. He gave the world a short demonstration of his intentions to take the country out of the socialist hole we found ourselves in when, a few weeks after winning, he declared that the Brazilian government would no longer subsidize the Cuban regime via the exploitative More Doctors program.
Bolsonaro’s administration recently completed its first 100 days, and numerous liberalizing measures came about during this period. Gun rights for civilians are expanding; homeschooling is poised to be legally recognized; some job-killing regulations were terminated; talks about the privatization of giant state-run companies such as Petrobras and Correios have gained ground; pension reform got its first approval in Congress, and so on. It looks like we are on our way toward replicating the Chilean miracle.
Yet, if I were to pick up only one action taken by his economic team to best demonstrate to my foreign friends the pro-liberty momentum Brazil is experiencing right now, it would be the so-called declaration of economic freedom that was just signed. Conceived by the founder of Instituto Mises Brasil, Hélio Beltrão, in collaboration with members of the Ministry of Economy, the Executive Provisional Act is a set of rules designed to boost free enterprise and impose limits to government intervention over small businesses. It has a 120-day validation period before Congress votes on its permanent implementation.
17 Freedom Principles
Here are the 17 freedom principles that drive the document:
- Freedom against bureaucracy—to eliminate unnecessary certifications required by state agents;
- Freedom to work and produce—to prevent actions from unions or agencies that restrict the operation of small businesses or intervene in their policies;
- Freedom to set prices—to prevent bills from being manipulated so that monopolies are not created;
- Freedom against arbitrariness—to avoid state agents benefiting one entrepreneur at the expense of others;
- Freedom to be presumed in good faith—to guarantee that contracts and private agreements are respected when the interpretation of a law or right is not clear;
- Freedom to modernize—outdated regulations cannot rule modern businesses;
- Freedom to innovate—no license may be required while the company is still testing, developing, or implementing a product or service that is not of high risk;
- Freedom to agree—if two parties agree in contract, no judiciary action can be taken to alter it;
- Freedom not to go unanswered—every license or application will have to have a maximum time, which, when passed, will mean approval in silence;
- Freedom to go digital—all papers will be digitalized so companies will not have costs in stocking documents;
- Freedom to grow—to guarantee small companies access to the capital market;
- Freedom to endeavor—to protect business owners and entrepreneurs from being pre-judged as villains before a clear demonstration of their guilt;
- Freedom to write contracts with international standards—to limit the cases in which judiciary decisions can alter contracts;
- Freedom against abuse—to prevent state agents from issuing abusive remarks and regulations;
- Freedom against economic regulation—no economic regulation may be issued without a consistent analysis of its impact;
- Freedom of corporate regulation—commercial associations will be legalized;
- Freedom of contractual risks—the right of two parts to agree to the allocation of risks in contracts will be licit and respected.
Besides the economic outcomes expected from the implementation of the decree, it will also have a positive impact on our mindset. For many decades, Brazilians have systematically been taught countless economic fallacies which say capitalism generates poverty and that the state is the only entity able to stimulate the economy.
Regardless of the numerous examples of successful free-market societies over the world, there are still people here (many of them Economics bachelors, I regret to tell) who cannot see the correlation between economic freedom and well being. Overcoming our long-standing anti-capitalistic mentality will certainly be the greatest aspect of implementing the 17 rules of the economic freedom declaration.
Undoubtedly, this new economic freedom provisional act is already the result of a whole process of pro-liberty education and awareness that started a couple of years ago when Brazil was still governed by diehard Marxists. It is rewarding to see the power of ideas reverberating in measures that will lift millions of Brazilians out of poverty and unemployment.