Mirror Mirror on the Wall

Mirror Mirror on the Wall

Why it matters that Brasil and the US are becoming more alike (fast).

I touted this idea four years ago  when we watched Obama’s second inauguration and noticed that Latin America was completely absent from any major initiative. Now, more than ever, the idea starts to gather gravity. Brazil and the US are becoming more alike, at an accelerated pace.

After suffering at length with the slow and gradual dismantling of democratic process in Brazil I suffered, a lot more suddenly, the sharp dismantling of democratic process in the north. The US is not really a democracy anymore, looking more like a corporate government, and Brazil just suffered a coup, supported by the Obama administration by the way.  Close friends asked me several times, which one is worse now, Brazil under Temer or US under Trump? Sorry to disappoint you all but I have no real answer. Both my countries are in deep trouble so it might be a good time to look at this convergence that has in fact been happening for decades. This text is the introduction to a series of ten short essays to be published along the year.

First let’s look at some numbers. After decades of convergence the US is now exactly as unequal as Brazil, i.e, both nations have the same Gini Coefficient.  The Gini coefficient is the most used measurement of income inequality but it shows quite some difference when calculated before of after taxes for instance. The US Census Bureau has determined the US Gini to be 0.488 in 2015, a significant change from four decades ago when it was around 0.36.

Meanwhile in Brazil, the second largest economy of the hemisphere, inequality diminished at a steady pace from 2004 to 2014. After hitting an outrageous 0.6 in the mid 1990s the Brazilian Gini retreated a bit to 0.585 in 2002 and after that has gone down at a steady pace, reaching the record low of 0.490 in 2014, being quite stable (minimal variation upwards in 2015) ever since.

Beyond the inevitable surprise of finding out that the US is as unequal as Brazil, the consequences of such are already transforming both societies. Both Bernie Sanders and Donald Tump based their campaigns on inequality last year and we know the result. The conversation on inequality will be a major issue in the US politics for years to come, we better find ways to deal with it without resorting to xenophobia and white nationalism now dominant in the Republican super-majority. That’s where looking at Brazil makes sense. What was the secret to diminishing the gap between rich and poor in Brazil? How much was it really effective? And perhaps more important, why the Brazilian political elite decided to throw away the baby of equality and keep the bath water of corruption?  Conservative readers will argue that Brazilian institutions are tackling corruption, which I agree, but I see no change at the level of the political leadership or mainstream media, much to the contrary. As a response I stick to my summary that Lula changed the ends of the Brazilian government but not the means; while the coup of 2016 was perpetrated to revert the ends back, not at all to drain the swamp of the means. Future essays will develop this thesis in detail.

Looking only a few years back there was much to celebrate in Brazil as economic growth and diminishing inequality came together for the first time in generations. The Lula government bragged that forty million people were raised out of poverty between 2004 and 2014, a number corroborated by the Brazilian banks association reporting that they absorbed over 40 million new clients during the same time. That was one entire California or the sum of Texas and Florida becoming consumers in a single decade.  Another upcoming post in the will analyze the so-called “new middle class”.

Unfortunately, none of this was enough to prevent the judicial-legislative coup of 2016. At some point last Fall, when I thought about this series, I struggled on how to discuss the Brazilian coup in parallel to what seemed, only weeks ago, as stronger US institutions. Ah the speed of current events….

On that note it is interesting to perceive the main stream media already comparing Trump with a Latin American caudillo.  The comparison seems too easy and too reductive. The Brazilian elite for instance is trying hard to create a narrative of strong institutions to maintain a veneer of democracy over their rule, following step by step the narrative created by the advanced capitalism that is collapsing before our own eyes. Or have we forgotten that only 16 years ago the US supreme court refused to recount votes on an election decided by hanging chads? Or that state legislations frequently redesign congressional districts guarantee future majorities of the ruling party. Or that only 5 years ago the same supreme court gave corporations the right to “invest” in elections as they see fit. Narratives matter and right now they are still apart in the case of US and Brazil, converging but not so fast. Take the case, once again, of corporate money influencing governmental decisions. A significant portion of what US institutions calls corruption abroad is labeled as lobbying at home, with the assumption that lobists are “regulated”. Brazilian conservative elites are trashing president Lula for selling Brazilian business abroad when this is the most common practice among leaders of wealthy nations.

And indeed narratives die hard.  Part of the Brazilian establishment still sees their country as one of widespread hunger when problems associated with obesity have a 5-time larger impact on public health budget. For newcomers, Brazil does have a universal health system which has been, until 2015, improving in quality and coverage. Those improvements pushed Brazilian life expectancy from 70 to 75 years in the last decade. In comparison life expectancy in the US grew only one year, from 77 to 78 in the same interval.  Coupled with higher life expectancies is lower fertility rates. Here Brazil have already surpassed the US, reaching the record low of 1.81 children per women in 2015 against 1.9 in the north. An older Brazil will soon have the troubles of Italy or Japan, with an aging workforce moving into retirement against shrinking cohorts of the young.

Income growth came tied with consumerism and two negative consequences that the US know very well: dangerous levels of debt and growing obesity, both to be analyzed in depth in future posts.  In addition, the Brazilian cities are chocking with traffic as a result of the US-inspired reliance on the automobile, a sign of status for this giant new middle-class. On yet another sad convergence the crime numbers that made Brazilian cities infamous in past decades are down on wealthier areas and steady or sometimes even worse in the impoverished periphery of every major city. The similarities with LA, NY and Chicago are not a coincidence. By the way, when calculated by metropolitan regions, the Gini Coefficient of those 3 cities are already at Brazilian levels, Washington DC much above.

In the US those sad numbers have finally entering the broad political discussion and it is unlikely that they will recede to the background as the world learns how to deal with growing protectionism and authoritarianism. The US society should be disturbed by becoming as unequal as Brazil.

More intriguing is to realize that Brazilians are also bothered by such convergence. The same left intelligentsia that brought inequality to the forefront in the 1990s and successfully reduced it in the 2000s have always portrayed the USA as the land of untamed capitalism and rampant consumerism. To see Brazil following on the same steps is quite uncomfortable.  To the Brazilian right, the US has always been the flagship of global trade and labor competition that has been their preferred path to prosperity. To see that paradigm abandoned by the Trump administration while embraced by the Brazilian supporters of the 2016 coup creates a cognitive dissonance that will take a while to be resolved.

In the 1960s Latin American scholars coined the “Dependency Theory” to explain the asymmetrical development of the region and the difficulty of breaking out of it at the dawn of what financial globalization. Fifty years later the Gini convergence will imply a paradigm shift that renders the old dependency theory quite useless. But there is nothing to fill this void, no sign of a “Convergence Theory” that might help us understand what the present means and what the future entails in both countries.