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Thursday, May 4, 2017

Can Brazil Save Latin America?

"Liberty in Brazil is just beginning its rise."

If the last Friday in April was a work day for you in São Paulo, Brazil, you might not have made it into the office. Public sector unions crippled train, metro, and bus lines, and blocked major roads in that teeming metropolis of 12 million people. The scene was replicated on the same day in cities across the country, aggravating the already poor quality of many “public” services.

It was an exasperating metaphor for the troubles facing Brazil’s increasingly paralyzed economy. But good news may be on the way.

Brazil is now only the 140th most-free country in the world, between Burundi and Pakistan. But good news may be on the way.The unions are trying to stop reforms to Brazil’s pension and labor laws, so generous to workers that they threaten to bankrupt the Treasury and many private firms. Current pension obligations consume almost half the government’s budget. The economy contracted every quarter for the past two years. Budget deficits, taxes, public debt, price inflation, and unemployment are all high and rising.

In the 1990s, Brazil’s economy appeared to be one of the most promising in the southern hemisphere. The fifth largest country in the world in both area and population, and blessed with abundant natural resources, Brazil seemed to have put its earlier inflations, economic crises and political turmoil behind it. Then the socialists hijacked the future.

Fifteen years ago, when Luiz Inácio Lula da Silva (nicknamed “Lula”) was elected President, Brazil embraced the socialism of the Worker’s Party. Not the full-dose variety Venezuelans got with rampant expropriations and Castro-inspired goon squads, but socialism-lite: mountains of new regulations and massive increases in government spending for everything from “infrastructure” to civil service salaries to welfare programs to those ridiculous pensions that allow many government employees to retire at full salary in their mid-50s. In this Prager University video, Brazilian journalist Felipe Moura Brasil describes “How Socialism Ruined My Country”:

Whether it’s Venezuela or Brazil or any of the other Latin countries sucked into the socialist vortex in recent years, the result isn’t pretty. I’m reminded of Oliver Hardy’s famous line, “Here’s another nice mess you’ve gotten me into!” (Indeed, this brief collage of Laurel & Hardy video clips may serve to remind Brazilians of what they’ve put up with at the hands of meddlesome, incompetent bureaucracy and pretentious central planners. In any event, Brazilians need a good laugh right about now.)

After four years of Lula, according to the Index of Economic Freedom, Brazil fell from “moderately free” to “mostly unfree.” Out of 190 countries, it’s now ranked #140 in economic freedom, stuck right between Burundi (#139) and Pakistan (#141). As a place to be enterprising, Brazil can be downright inhospitable; the World Bank says it’s easier to do business in 122 other countries of the world than in Brazil.

Liberty Is Beginning Its Rise

In early April, three of us from FEE (Jason Riddle, Jeffrey Tucker, and me) flew to Porto Alegre in the far south of Brazil to lecture at events associated with the Instituto de Estudos Empresariais (Institute of Entrepreneurial Studies, or IEE). Its annual Liberty Forum draws thousands of Brazilians, mostly students, to network and hear presentations on business and free markets. Jeffrey wrote about it in this April 17 article, “The Brazilian Liberty Movement is a Model for the World.”

(By the way, after the US, Brazil is the #1 country on the planet for translations, repostings and reprintings of FEE materials, followed by Poland. On FEE’s Facebook page, Brazilian fans outnumber those from every other country but the US. On my personal Facebook page, fans from Brazil rank fourth, behind those of the US, Venezuela and Poland.)

The buzz at this year’s Liberty Forum in Porto Alegre was a series of burgeoning political scandals that worsen each week, with new revelations and indictments at the highest levels of the Brazilian government. In 2016, Lula’s hand-picked presidential successor, Dilma Rousseff, was impeached and removed from office, largely for falsifying budget data and covering up corruption at the state-owned oil company. The current president, Michael Temer, is under investigation for bribery, as are many members of his administration, the National Congress and their business and political cronies. All told, the various probes into official malfeasance and favor-granting have uncovered the most widespread corruption in Brazilian political history, and it may yet have a long way to go.

The Brazilian public’s growing disgust with socialism and socialists is only magnified by the disruptive tactics of the unions. And it presents a fantasic educational opportunity for lovers of liberty.The corruption engulfing the Brazilian political system is the predictable consequence of the monstrous size and scope of government. Brazilians are beginning to realize that socialism isn’t just abstract happy talk about doing good things for people; in practice, it concentrates power and money as it lines the pockets of the political class and shafts everybody else.

As humorist P. J. O’Rourke explained it, “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” The answer is not to be found in simply changing the faces in government; it’s to be found in drastically reducing the number of faces in government, and scaling back the power they have over others. As I’ve written elsewhere, Big Government and Good Government are utterly incompatible.

The growing disgust on the part of the Brazilian public with socialism and socialists is only magnified by the disruptive tactics of the unions. And it presents a fantastic educational opportunity for lovers of liberty. Matheus Pacini, who has translated and distributed many articles from FEE in Brazil, says “the liberty movement is growing strong here, with several pro-free market think tanks proposing ways to solve the country’s most pressing problems. It´s an ongoing effort that will be decisive in shaping Brazil´s future.”

Júlio Lamb is president of IEE, the group that drew thousands to the conference attended by my FEE colleagues and me in April. “Brazil has never experienced such a rich environment for classical liberal ideas,” he said in an e-mail to me this week. “Those ideas are spreading in society through young people in schools and universities and think tanks all over the country. Today, Brazil has more than 200 classically-liberal think tanks and organizations, compared to less than ten a few years ago. They are arguing for the changes that Brazil needs, and gaining traction. It was because of their convincing work that the impeachment of (former President) Rousseff was possible, and why in the last elections so many politicians changed their views in the right direction.”

“Liberty in Brazil,” Lamb confidently declares, “is just beginning its rise.”

Adriano Gianturco agrees. A FEE seminar alum, he is now a professor of political science at Brazil’s Instituto Brasileiro de Mercado de Capitais (IBMEC) in Belo Horizonte. He and co-author Luciana Lopes Nominato Braga wrote about this promising development earlier this year in an article intriguingly titled “Why Brazilians are Demanding Menos Marx, Mais Mises” (“Less Marx, More Mises”).

Working to Make Another Brazil

Next year’s elections present the best near-term political opportunity for big changes in Brazil. In October 2018, the country will elect a new President and legislature (known as the National Congress and divided between two chambers, the Chamber of Deputies and the Federal Senate). To be decided are all 513 seats in the lower house and 2/3 of the 81-seat upper house.

The Workers Party has all but collapsed and a scramble is underway among more than 30 political parties to pick up the pieces.

Marcel Van Hattem is a liberty-minded state representative in the legislative assembly of Rio Grande do Sul, the state in southern Brazil where Porto Alegre is located. He’s planning a run for a seat in the National Congress next year. His Facebook page boasts nearly 300,000 fans and his website brims with articles and videos that offer cogent analysis and viable, market-based solutions to Brazil’s socialist crisis. He cites Thomas Jefferson and Milton Friedman as if it’s second nature. He’s incredibly well-spoken and I think he’ll win. When I saw him last month, I joked that I should get his autograph now while I can still afford it.

“I do not want to live in another country. I want to live in another Brazil.”“After millions decided to take to the streets in Brazil, calling for the end of a socialist, corrupt and incompetent government,” Van Hattem told me, “we were finally able to impeach the former president Dilma Rousseff in 2016. Later on, in October 2016, her party, the Workers Party, suffered its all-time greatest defeat in the local elections for mayors and councilmen, falling from third place to tenth among all political parties in Brazil.”

“With the 2018 elections coming up, we have a good opportunity to elect federal and state representatives, senators, governors and, who knows, even a President of the country with ideas more open to a free-market, to democracy and prosperity.”

Van Hattem frequently asserts, “I do not want to live in another country. I want to live in another Brazil, and I am sure that voters will make this come true.”

I am no expert on Brazil. I’ve been there only four times since the mid-1980s for a grand total of about three weeks. I’m not sure how much work is being done right now to recruit viable, articulate candidates like Van Hattem who will carry the torch for liberty and free markets in the 2018 elections. But I do know that if Brazil saves itself by tossing out the socialists and replacing them with the likes of Van Hattem, it may also save South America. What happens in Brazil doesn’t stay in Brazil. The implications of change there are huge for the continent.

Great earthquakes in the political, economic and social lives of people are possible when an extraordinary alignment of ideas, events and personalities occur. Think back to the collapse of the Soviet Union nearly three decades ago. Communism had become a cruel joke as an idea and an obvious failure as a system. Then Hungary opened its border with Austria and thousands fled, followed a few months later by elections in Poland and then the fall of the Berlin Wall. The prominent names of the day who pushed back against communism included Reagan, Thatcher and John Paul II, as well as leading dissidents from Havel to Walesa and millions of other courageous individuals. Powerful ideas, events and personalities aligned and then “POOF!” It was all gone.

Can a similar alignment birth a great transformation in Brazil? The coming months will reveal the answer. I am more than a little hopeful for our Brazilian friends.

This article is available in Portuguese from Marcel van Hattem and Atlantos.

  • Lawrence W. Reed is FEE's President Emeritus, having previously served for nearly 11 years as FEE’s president (2008-2019). He is also FEE's Humphreys Family Senior Fellow and Ron Manners Global Ambassador for Liberty. His Facebook page is here and his personal website is