“The Bolsonaro government’s social and economic policies will have a huge negative impact on Brazil’s future. We are actually already seeing this, based on what’s happening right now.”
With Brazil’s far right President Jair Bolsonaro transformed in the international media into a kind of cartoonish super-villain, it is easy to focus on him as an individual while ignoring the powerful economic interests behind his government and how they are transforming Brazil. Showing this was the object of the recent documentary I co-produced for Redfish with Michael Fox, entitled, “Dismantling Brazil: Bolsonaro’s Neoliberal Agenda”. During filming we interviewed one of the most prominent economists in Brazil, Dr. Esther Dweck, in order to dig deeper on the effects of Bolsonaro’s neoliberalism on the labor market and socioeconomic conjuncture in Brazil and what she thinks will be its effects in the future. The following is a transcript of the interview, edited for readability.
By Brian Mier
Can you explain some key differences in economic policy between Bolsonaro and the PT governments?
The main difference is the way they handle the constitution, which was created as a social constitution. The Workers Party governments pushed through a lot of policies in order to improve our social system and to have a better welfare state in Brazil. The change started with Michel Temer and the “Bridge To the Future” economic project. Bridge to the Future represents a dismantling of the constitution. Temer started doing this with a constitutional amendment to cap federal expenditures, but in some ways, actually, Bolsonaro and Paulo Guedes are doing even more. Bolsonaro pushed pension reform through last year and his coalition submitted a bill for a constitutional amendment that, if passed, would subordinate social rights and provisions to macroeconomic decisions.
What is the connection between Bolsonaro and neoliberalism?
Historically speaking, neoliberalism started in Chile with the authoritarian government of Augusto Pinochet. It started in Latin America, and neoliberal projects are usually associated with authoritarianism. Because we have this huge inequality in Latin America, the only way to push through Laissez-faire policies that worsen social conditions is through authoritarian governments. When governments try to implement neoliberal policies it increases social movement protests. They need to have a very strong governmental push back against these social movements in order to pass the bills that would worsen the social conditions. When you look at Brazil, there were some neoliberal policies pushed through in the 1990s but they were unable to dismantle the constitution. What we see now with Temer and Bolsonaro is actually the opposite of that. They have used more authoritarian governments to start dismantling the social provisions in the constitution and Bolsonaro is now pushing this through with force.
How has the banking sector benefited by Bolsonaro’s government?
One of the interesting things that’s happening in Brazil right now that interest rate is very low and usually we associate that with some kind of losses to banks but this is not happening, because of course there are other ways to gain money. We are seeing is this huge speculative bubble in Brazil which has been increasing since last year because of the policies that have been made by the Bolsonaro’s government. When you look at some banks, especially BTG Pactual, which is one of the banks connected to our finance minister, Paulo Guedes – they’re actually expanding during the crisis. There was a reporter in Brazil who was doing investigative reporting on BTG transactions and all of his articles were censored by the Brazilian judiciary. But it’s not just BTG, many institutions are benefiting from regulatory measures that were implemented during the beginning of the crisis. For example the government reduced the banks’ mandatory reserve levels and by that alone they made a lot of money because according to Brazilian law they are unable to collect interest on their reserves.
How are privatizations effecting the economy?
The move towards privatization in Brazil actually started in the 90s when the first neoliberal policies were implemented in Brazil. And at that time many of our public companies were sold off. But now when you look at the Temer and Bolsonaro governments, they have reinitialized these privatization policies. There are very few sectors that are still able to privatize, but they’re very strategic sectors: public banks, oil and energy. After the 2016 Coup, Michel Temer started the idea of selling off some of Petrobras state Petroleum subsidiaries by bypassing the traditional way of doing it through approval in Congress and public auctions. This was challenged and went up to the Supreme Court, but the Court ended up authorizing it.
Now Bolsonaro is trying to privatize one of the most important public banks, Caixa Economica, which performed a special role during Dilma Rousseff’s government by competing with private banks in order to reduce their spreads – and actually it was a very successful idea. In some ways, it was able to prove that public banks can successfully compete with the private ones.
Nowadays when you look at Bolsonaro’s ideas of privatization, they have this huge list of companies which includes those on a sub national level. Congress recently passed a bill allowing privatization of water and sanitation and this could have a huge impact on the sub national level because when you look at Brazil and its huge inequality you see that the problems related to water and sanitation usually effect the poorest people. Can you imagine a private company actually resolving the problem of the lack of sanitation and even water supply to the poorest parts of Brazil? So this is our main concern with this idea that the privatization in this strategic sector would somehow improve the public services in water and sewage.
How has the Bolsonaro government treated labor unions?
We actually have to look at two points regarding Bolsonaro’s authoritarian government’s relationship with organized labor. One is the way that it is dismantling the trade unions by weakening bargaining power, by cutting funds and by using police force to stop demonstrations. The second point is that it is pushing forwards changes in legislation to flexibilize the Brazilian labor market, for example by creating a new category of hiring called “intermittent.”
What effects will Bolsonaro’s policies have on Brazil in the future?
The Bolsonaro government’s social and economic policies will have a huge negative impact on Brazil’s future. We are actually already seeing this, based on what’s happening right now. We had this very stagnant economy even before the crisis. Now we’re in a major recession, and the idea that are they are pushing for the next few years is to maintain austerity policies.
One of the main areas that is being affected by these austerity policies is public education in Brazil at the elementary, high school and university levels. This does not just represent an economic policy – it is a social policy that is being conducted to damage the democratization process. The social and racial quotas established during the PT governments for public universities helped create a new intellectual elite which does not come from traditional economic elites. This is causing a lot of changes because a lot of people from the poorest areas in Brazil have been getting degrees and helping rethink what our country should be like in the future. So one quick way to hinder this process is to cut funding for universities.
The fact of the matter is that all these austerity policies will increase inequality in a stagnant economy and the government will not be able to recover from it.
See the full documentary here