Archive | February, 2011

Happy but Dangerous

24 Feb

Brazilians are famous for being friendly, happy people. They are so happy, in fact, they ranked 9th of 144 countries on the 2009 Happiness Index. So how does one of the happiest countries in the world also rank as one of the most murderous? Globo just reported that official are going to try to “disarm” the population, a response to news of the country’s 50,113 recorded murders in 2008.

In Canada, about 550 people are murdered a year in a country of 35 million people, roughly one-sixth Brazil’s population. In proportionate terms, that’s still about 46,800 fewer murders than in Brazil. In Russia, about 15,000 people are murdered per year, and its population is about three-quarters the size of Brazil’s. So in comparative terms, Brazil’s murder rate is high. But then again, the Americas have some of the highest murder rates in the world, with Honduras, Venezuela, and Jamaica with exceptionally high numbers.

Disarming the population is at best a curative solution, as opposed to a more preventative one such as addressing education, employment, or other more systemic root causes. But it is nonetheless one solution. Is it possible that a little less happiness might make everyone a bit more sensitized to critical social issues such as murder?

Correction

23 Feb

A correction on my last post must be made. The Committee to Protect Journalists apparently did not reveal all the facts when they disseminated news on Brazilian officials censoring news on Google. They mis-communicated Brazilian requests to remove material as requests to remove news– which is not the case. As a result of the CPJ’s mistake, reports in major newspapers also got it wrong, and so did yours truly. As I reported in a past blog post, virtually half of Brazil’s interventions on Google were for the social networking site, Orkut, for reasons of privacy or defamation. This is still something to write about, because governments in other parts of the world rarely lead these sorts of “honor” and “image” interventions. Yet the mistake must by duly noted. My bad.

The Right to Information in Brazil– Censorship, Fines for Sharing Wi-Fi

21 Feb

Following up on several other related posts, two recent news items give us reason to wonder about freedom of information in Brazil. First, Brazil’s telecommunications regulator, ANATEL, confiscated the computer equipment of three young people and fined them $3000R (about $2000US) for sharing an internet signal among their three dwellings in an effort to save money. Second, news has surfaced that in the first half of last year, Brazil asked Google to remove more news articles from the internet than any other country in the world, a total of 398, of which 177 requests involved a Judicial order [postscript: this was misinformed news-- based on false reports by the Committee to Protect Journalists, please see correction, next post.]. Brazil’s efforts to censure information were more intense than Libya’s, which came in second.

Censorship is an old story in Brazil. But the news about ANATEL is especially jarring. ANATEL alleges that the operator of the standard D-Link modem was acting as a “provider”, and is therefore operating without a license and criminally liable. If this argument were taken to its logical conclusion, a family member providing other paying family members with wi-fi should be fined. The incident clearly indicates who ANATEL is working for, and it sure isn’t your average citizen.  It is telling that the Jornal Globo, representing the interests of the country’s largest media conglomerate and its largest internet provider (NET), wrote nothing about the incident.

We would prefer not to be consistently negative about the way the Brazilian State approaches information, but it’s an important issue. Especially important, I might point out, because Brazil remains one of the few countries in Latin America still resisting the enactment of a freedom of information law– a measure that permits citizens to ask and receive information on a) how regulation is followed and b) taxpayer money is spent. This law still awaits passage in the Senate.

Fining three friends for sharing Wi-Fi indicates that Brazilian officials are just not “getting” the internet, which is about advancing knowledge, communication, and will help Brazil and Brazilians get ahead in the modern world. ANATEL’s hard-headed attitude toward citizens–particularly the middle and lower classes– reflects the state’s contradictory attitude towards its citizens. One of the most critical is the fact that Brazilian consumers pay about double what they would for a laptop in the U.S. or Canada, due to steep government imposed import taxes.

Now, imposing onerous taxes on the single most important learning tool– a computer– is a sure way to retard Brazil’s chief public policy goal, the quest to improve education. The upper-middle to elite classes in Brazil might find these taxes annoying, but they buy most all their gadgets at half price in the U.S. or other countries that respect their citizens rights to technology. For Brazil’s middle to lower classes who cannot afford to travel abroad or lacks friends who can bring them goodies from the U.S., it’s just plain unfair. Would these sorts of policies be different if the upper classes had to pay full price?

São Paulo Traffic: Collective Pathology or Poor Policy?

10 Feb

Just a quick note to express my utter amazement at traffic here in São Paulo. I’ve been here for a week and a half now, attending a workshop at the University of São Paulo (USP) and I have had enormous difficulties getting to and from the USP. For the eight kilometers I need to traverse, I take two buses at approximately $2US each (3R), and I don’t believe I’ve done the trip in under an hour and a quarter. When it started to rain one day, I jumped in a taxi. But the meter had run to 12 R (about 7 US) and we had only moved forward about 250 meters. I got out and walked.

"You are a slave to the traffic"

"You are a slave to the traffic"

I have spent a lot of time in Mexico City, which does not even come close to SP’s traffic woes. If it were not for allegedly bad governance and a constant increase of cars (approximately 500  a day), I would be inclined to view the City’s traffic as a collective pathology. How do people stand it?

New York, London, Sao Paulo– these cities are world class, economic powerhouses, national hubs. The difference is political will; Sao Paulo’s city and state governments have lacked the political courage to address the growing constipation of the city’s streets. These are public spaces, for people and pedestrians, but here cars are king. Unlike NY or London, there are few if any parking meters to discourage driving and raise funds for the city. Similarly, there are no tolls to get in and out of the city center– one possible solution to the logjam of SP’s traffic. And public transport is woefully inadequate for a city of this status. What to do?

The Price of Consumer Debt

9 Feb

Credit is a difficult issue in Latin America. Credit card APR interest regularly runs at 30-50 percent, upwards of five times what it is in North America. Bank loans are not a lot cheaper. Yet more than ever  Brazilian consumers are borrowing and financial institutions are encouraging them to do so.

When I recently opened up an account at Itaú, Brazil’s biggest private sector bank, I was surprised to see that the checking account automatically included a 500R line of credit on the account (equal to about one month’s minimum wage), with an interest rate of 138 percent per annum. So if I have no money in my account and start dipping into this line of credit, I will be paying close to 12 percent interest per month on my debt. These sorts of interest rates can only be qualified as usurious.

The combination of Brazil’s lofty real interest rates (among the highest in the world), the priciness of imports (due to tariffs), economic optimism among Brazilians, rising inflation, the global surge in the price of food stuffs, and the increasing availability of credit, it is no wonder that the Folha de São Paulo recently reported that debtor defaults were up by 25 percent in January, 2011– the highest level since 2002. What are the consequences? The poor and uneducated get hit hardest, and higher defaults inevitably raise the cost of capital (and debts) even further. Is it time for greater regulatory control?

Dilma to the Legislature– A Few Promises

3 Feb

PROMISES

1.  The PAC2 stands for the Program for Growth Acceleration 2, and it’s not a midnight TV infomercial. It’s government’s gimmicky excuse to spend lots of money, $955 billion Reales over the next four years, or close to $600 billion U.S. The Program is for national development—highways, hydro-electricity projects, school and hospital building—the stuff you would expect a government to spend its money on anyways. We just hope there is transparency in what is spent. Anecdotal evidence tells us no: the PAC website makes no mention of the Program’s commitment to transparency, and there is more than one article and blog on the Program’s lack of transparency.

2. $________ . A minimum floor for teacher salaries.  In Korea teachers are considered nation builders. But teacher’s in Brazil must find it difficult to build nations when they earn under $600 US a month, especially when working conditions are dreadful. You get what you pay for; students typically don’t stick around: in 2006 the average Brazilian spent just over 7 years in formal schooling.  The minimum floor would be set around $1000R (~$600).

3. Tax Reform…no details given, but a goal that has eluded previous presidents.

4. International Disaster Prevention System…a response to the recent mudslides and the yearly disasters caused by erosion, rain, and bad building locations.

A FEW THINGS SAID

-Dilma called Brazil’s new oil finds the country’s ”passport to the future”. That’s what Nigeria, Venezuela and Libya said when they found oil.  Let’s hope so.

-28 million people stepped over the poverty line in the past 8 years. Huge advance.

Dilma to the Legislature- Wages will go up

3 Feb

President Dilma Rousseff addressed Brazil’s National Legislature on its opening yesterday. The next few posts will address a few concrete policies to expect in the coming years, as well as a few aspects of the speech that are worth further consideration:

MINIMUM WAGE

The minimum wage was $510 Reales per month in 2010 and the proposal—an executive decree issued by Lula and awaiting approval in Congress—is to raise it to $545 per month. Unions are demanding $580 and employers are silently pushing for the minimum. Given that inflation in 2010 ran at about 6 percent by official figures, the increase appears to be justified on the grounds of the rise in prices alone.

What is important to remember in Brazil is that very few people make minimum wage. Most make multiples of minimum wages, two or three minimum wages. It is also important to remember that if people have a formal sector job (about half) employers have to pay for transport and one meal. Labor rules are draconian for business owners; not only in terms of contributions, taxes, bonuses (workers in the formal sector receive a thirteenth monthly salary), but also in terms of hiring and firing. The market for labor is so rigid that it often costs more to fire than to keep an employee on the payroll and minimize their pay and responsibilities.

The Heritage Foundation’s Economic Freedom Index is a questionable instrument, but solely in terms of rankings, it is telling that Brazil falls in the nether-regions of Mali and Azerbaijan, at 113th overall. The labor market has much to do with this.

From a basic political perspective, the minimum wage is perhaps Brazil’s  biggest political question of the moment, and always a tough issue to mediate. The two largest “factor” groups are represented: labor means votes and popularity (which often translates into legislative support), the other is capital, cooperation among the business community, and the reaction of the media, which tends to side with business and can also affect the president’s legislative fortunes in the legislature.