Populist Policies Let Brazil’s Tomorrow Slip Away
By Eduardo Porter

Not too long ago, Brazilians might have been counted as the most optimistic people in the world. From 2008 to 2013, as the United States and Europe grappled with the aftermath of a crisis wrought by blind trust in unfettered finance, Brazil’s income per person grew 12 percent after inflation. Wages soared. The poverty rate plummeted. Even income inequality narrowed.

Brazil remained only a high-middle-income country, in the technospeak of the International Monetary Fund. But for the first time in forever, the eternal “country of tomorrow,” as Brazilians often ruefully described their nation, saw itself instead as a rampant member of the emerging cohort of BRICS (Brazil, Russia, India, China and South Africa) — maybe even closer than China to making the jump into the ranks of the world’s richest nations.

And then it didn’t happen.

Between 2015 and 2017, the Brazilian economy is expected to shrink 8 percent, in the I.M.F.’s estimation. That is deeper than the contraction of the early 1980s, which began what in Brazil and much of Latin America is still known as the “lost decade.”

Unemployment hit 11 percent in the first quarter. Brazilians are so angry that they are about to impeach their president. The development of Brazil into an advanced economy — once tantalizingly within sight — again seems more like an elusive mirage.

What gives?

Mistaken hopes inspired by high commodity prices are common in Latin America. With China insatiably buying Brazilian iron and soybeans, it was hard for policy makers not to feel invincible as rock-bottom interest rates in the United States pushed a wave of money into Brazilian bonds.

“Lula thought he was an economic genius,” said José A. Scheinkman, a noted Brazilian economist now at Columbia University, about Brazil’s previous president, Luiz Inácio Lula da Silva, who stepped down in January 2011.

The commodity boom, however, did not a new economic paradigm make. The hubristic belief that it had led to critical policy mistakes.

“The boom delayed other policies that were costly to implement: judicial reforms, tax reforms, education reforms, labor market reforms, opening up to foreign trade,” said Alejandro Werner, who heads the Western Hemisphere department at the I.M.F.

When Dilma Rousseff succeeded Mr. da Silva as president, she doubled down on the populist alternative. Markets are overrated, she concluded. The kind of politically painful but economically beneficial reforms the I.M.F. likes are pointless. Better to develop the economy by the hand of the state.

Brazil’s economy has long been notably closed to the world. Its average applied tariff of 10 percent, according to the World Trade Organization, is the highest among the BRICS. But that did not stop the Brazilian government from further increasing subsidies and protection for favored sectors, like the auto industry. The three federal development banks did so much subsidized lending that by last year they accounted for well over half of all lending in Brazil.

There is nothing inherently wrong with government action to spur the economy. Yet the Brazilian government did not know when to stop. Often, interventions smacked more of political opportunism than ideological resolve. Increases in the minimum wage — a critical benchmark used to index wages, pensions and a host of prices — were extremely popular. So were caps on regulated prices for gasoline and electricity, which kept the inflation rate from rising way past its official target.

“It was a classical mistake of political economy,” said Rubens Ricúpero, a Brazilian economist and diplomat who was minister of finance in the mid-1990s. “They wanted to stay in power.”

Monica de Bolle, a Brazilian economist at the Peterson Institute for International Economics, dates the populist shift to 2006, when President da Silva was hit with a vote-buying scandal known as “mensalão.”

“After that he became much more populist,” she said. “He needed support not to be ousted from office.”

The case for populism only intensified as Mr. da Silva fought to ensure the election of his anointed heir, Ms. Rousseff, and as she battled to ensure her own re-election in 2014, after the commodity boom had lost much of its steam. Ultimately, the strategy opened the way for her impeachment when it was discovered that the state-owned banks were in effect surreptitiously funding the government, hiding a growing budget deficit.

Even without the scandals and mistakes, Brazil would be facing rocky times. China’s cooling appetite for Brazil’s commodities and the gradual tightening of monetary policy in the United States were bound to slow the economy. But what turned the downturn into a crisis was bad policy making. When the foreign outlook dimmed, Brazil’s economy was strangled by fast-rising public debt fed by billions in loans gone bad to former national champions.

Revelations of rampant corruption were hardly surprising, given the cozy relationship between corporate Brazil and a government dispensing contracts, subsidies, preferred loans and other protections.

What is the rest of the world to learn from Brazil’s troubles?

“Lula walked back slowly to the old closed economic model,” said Armínio Fraga, who headed the central bank in the 1990s, during Brazil’s fairly brief flirtation with opening up its economy. “It worked while commodities and financial conditions were doing well but became unsustainable when that was over.”

Brazil was not alone. Until the 1980s, governments all over Latin America flirted with similar policies of state control. More recently, Venezuela and Argentina spent much of the last 10 years increasing the government’s hold on the economy.

One important lesson is that the choices faced by governments in Latin America and developing nations around the world do not necessarily pit free markets against policies to combat poverty and foster social inclusion. Brazil’s anti-poverty strategy started in the 1990s, well before its turn toward state control. And most of Brazil’s enormous subsidies over the last few years went to large corporations, not the poor.

“Businessmen all supported the interventions with the exchange rate and interest rates, the subsidized credit and the interventions in prices of electricity and gasoline,” said Marcos Lisboa, who heads Insper, an educational and research institute in São Paulo. “They didn’t support opening the country to trade.”

Nor do Brazil’s misfortunes amount to a wholesale indictment of the Latin American left. Mr. Ricúpero, the former finance minister, notes that Bolivia and Ecuador, run by left-leaning governments, exhibited more cautious economic management and avoided Brazil’s fate.

“Not every government with a social inclination will necessarily do the same as Brazil,” he said.

Brazil’s downfall offers a more complicated lesson: Development is hard. And if Brazil’s rise and fall offer lessons about government’s inherent limitations, the Great American Meltdown of 2008 similarly offers a cautionary tale about allowing markets to run wild.

Avoiding turning inward is the biggest challenge. As Latin America has proved time and again, it is a recipe for low productivity growth. Relying on commodities has failed time and again, too. But even the successful export-led models — Taiwan and South Korea most prominently — no longer seem so useful in a world where much manufacturing will soon be done by robots.

But there are other common-sense recommendations to come out of such experiences: Invest in human capital, manage commodity bonanzas with caution, recognize that openness to foreign competition is necessary to develop.

As President Obama might put it, don’t do stupid stuff. Easy, feel-good recipes — especially those found wanting in the past — will probably fail if you try them again. That goes for the United States, too. America’s very own populist, Donald Trump — offering walls and tariff barriers to his aggrieved supporters — could learn something from the Brazilian experience. He probably won’t.

這8年...讓巴西從金磚變破瓦

紐約時報3日分析巴西過去八年來的變化，指出巴西人眼看著國家從自信滿滿的「明日之國」，淪落到貪腐盛行、失率業飆高的窘境，前後兩任總統政策選擇錯誤是主因，尤其是他們為避免失去總統大位而推出的多項民粹政策。

從2008年到2013年，巴西人均國民所得在扣除通貨膨脹後，年成長還有12%。當時民眾普遍薪資上升、貧窮率下降，巴西人不只自豪於金磚五國之一，甚至自覺比中國大陸更接近富裕國家之林。但從2015年到2017年，根據國際貨幣基金（IMF）預測，巴西經濟將衰退8%，今年第一季失業率11%，總統羅賽芙面臨彈劾，巴西躋身已開發國家之林的想望，如今似乎像是鏡花水月。

紐時引述經濟學家的觀察說，在2011年1月卸任的巴西前總統魯拉，自以為是經濟學天才，他在大宗商品榮景時期未能推動司法、稅務、教育、勞工等改革，也未開放外貿，反而推動一系列提高最低薪資、零饑餓等社會政策。到了現任總統羅賽芙上台後，加碼實施民粹政策，還說IMF那些有利經濟但政治上推動不易的建議都不重要，最好由國家來主導發展經濟。

巴西的經濟一向封閉，世貿組織估計，巴西的關稅平均是10%，高居金磚國之首，但政府仍對汽車業等提高補助和保護。巴西三家聯邦發展銀行的補助性貸款去年已占全國所有貸款的一半以上。

政府選擇刺激經濟的方法並沒有錯，但巴西政府不知何時收手，結果經常是讓政策變質。例如，提高最低薪資及限制油電價格等，都深受民眾歡迎，但這些政策也讓通貨膨脹遠遠高出官方設定的目標。

紐時說，其他國家可從巴西經驗學到的最重要教訓，就是國家政策避免內向；在機器人搶了製造業多數工作的當下，即使是像台灣和南韓這種以出口導向為主的發展模式都似乎不再靈光，如今有用的應該是：投資人力資本，審慎管理天然資源，認清要經濟發展就必須開放外國競爭。

原文參照：
http://www.nytimes.com/2016/05/04/business/economy/populist-policies-let-brazils-tomorrow-slip-away.html

2016-05-04 聯合晚報 記者馮克芸