Last post I briefly questioned why the Vinegar Revolt came to be. Protests still continue, and at one point last week over 80 major Brazilian urban centers coordinated massive marches – in Rio, close to half a million people turned out. These are the largest protests in Brazilian history and they signal a tectonic shift in Brazil’s political culture. It is an unbelievable time to be living in Brazil.
Yesterday my buddy Chris Gaffney, a professor at the Universidade Federal Fluminense in Rio de Janeiro and author of the blog Hunting White Elephants, helped me complete a piece for Al Jazeera that should be coming out within the next few days. I guess many thinkers have been ruminating over the Vinegar Revolt and all at once seemed to fling their ideas into the public realm.
Our Piece – Taxation without Representation or Social Returns
My piece with Chris focuses on a crisis of “taxation without representation or social returns”. This is the baseline argument; the ignition for the protests is a direct result of the financial burden placed on average Brazilians — increasing bus fares, hugely wasteful spending on mega-events such as the 2014 World Cup and the 2016 Olympics, inflation’s corrosive effect on purchasing power… pick your grievance.
The financial burden is real. Brazil’s taxes have increased from around 25 percent of GDP at the beginning of the 1990s, to the current height of 36 percent – the highest in the hemisphere. While the middle class has been growing enormously and now represents approximately 63 percent of the population, so too have taxes, debts, and most recently, inflation. Family debt just broke a new record – 44.3 percent of Brazilian families are now in the red. If you had to pay for private education, private health, private security, and the most expensive cars in the world, you’d be in debt too.
This rate of indebtednes may not seem bad for free-spending Americans, but developed countries such as the US or Canada pay low interest rates and don’t have their salaries eaten up by 7 percent inflation. In Brazil, the benchmark interest rate is 8 percent, and usurious loans and credit cards can double, triple or even quadruple these rates. My credit card (with perfect credit), as I once divulged, charges close to 160% interest per year.
So that, in part, is the argument. Apparently, it’s not very original. David Samuels, a stellar Brazilianist scholar from the University of Minnesota wrote this piece that in many ways echoed our own, but was better written and had better numbers (!). Samuels, however, paid little attention to the question of representation, a theme which is also central to our piece. In the article, we stress how parties lack national programs and apart from parties that represent specific interests, e.g. evangelicals, they simply lack ties to the electorate.
As for the PT, successive governments have catered to the lower classes (true need meets easy votes), and have mostly forgotten about the middle classes. I also highlighted the private-regarding nature of parties, who binge at the trough of government largess,blackmailing governments for more positions and pork while weakening meritorious presidential initiatives. The rise of Brazil’s party-aucracy has paralleled the rise in taxes over the last twenty or so years: the number of cabinet ministers has increased from 24 during President Fernando Henrique Cardoso’s second term to the current 37 portfolio positions… you have to pay parties for their support, but the pricetag is higher than anyone can estimate.
Octavio Amorim Neto and the Role of the Opposition
Samuels’ piece was forwarded to me by my friend and colleague at the FGV Rio, Octavio Amorim Neto. I had called him yesterday morning to see what he thought of the Vinegar Revolt. Octavio added a second important explanation: the political opposition in Brazil. Octavio argues that the current opposition is incapable of acting as, well… the opposition. Aecio Neves, the PSDB presidential candidate, is simply too cordial and lacks the skills needed to play the part of a fierce opposition critic. Unions, NGOs, and other advocates have become disconnected from political parties. Without an opposition to represent the voices of the middle class, people took to the streets.
My own reaction is to look to the media. If opposition voices are not being heard, perhaps it’s not the opposition at all, but instead the media’s unwillingness to give the opposition a loudspeaker. Content analyses I performed on countries in Latin America during my dissertation showed that media outlets tended to support presidential initiatives rather than trying to influence the legislative agenda when presidents possessed decisive legislative control. In other words, they would defer to presidents, and provide only modest coverage of critics… Call it a working hypothesis.
The key themes above, under-representation and high taxation are good enough reason for revolt. But when you add to the mix incredible public sector corruption and private-public cronyism, to not revolt becomes perplexing. Experts estimate that corruption in Brazil sucks anywhere from 2 to 5 percent of GDP from the country. Based on no evidence, I would peg the number closer to ten percent. The problem with corruption is not the robbery itself — which is bad, of course – but the externalities. If everyone up the chain is feeding the corruption monster, what incentives are there to innovate, economize, perform… pursue a national or local program? Hence poor governance becomes pervasive – inefficiency and incompetence.
Political scientists have noted citizens’ accomodative and passive approach to corruption in Brazil. No more. The giant has awaken – a democratic citizenry. Viva the awakening!
The big promise now is political reform (hasn’t it always been?). In my view, the central objective should be to reduce the number of parties and alter the electoral system. The current system promotes neither an esprit de corps nor programs that priviledge the National Interest.
There are a lot of moving parts here, so I’ll concentrate on just one argument – the problem of delegation. Multiple parties create fragmented coalition politics and acute delegation dilemmas: Dilma has included 7 parties in her cabinet, and as her first year faxina or housecleaning showed, there is good reason for distrust. She delegates very little. Consequently, Brazil gets mono-thematic governments: during Lula, it was Bolsa Familia, during Dilma, it’s a few transparency measures with a little infrastructure poured into the mix. Without delegating, you can only tackle a few priorities at a time. This seems to be exactly what is happening — Brazil is decades behind on infrastructure, education… well, quite a few things.
There will be more to post on these subjects…
This is what people are calling the protests that are causing general upheaval in Brazil.
The question is, why would a country at near full employment, whose average per capita income has nearly double over the last ten years, take to the streets in protest? The answers are curiously unsatisfying. From bus fares, to egregious public spending on the 2014 World Cup and the 2016 Olympics, to poor public services and corruption, the reasons for protests seem at once limitless and incoherent. What exactly is driving these protests? I’ll try to answer this question in the days ahead.
Check out my buddy Chris Gaffney’s blog http://www.geostadia.com/
Check out this video:
Just a very brief update on Brazil‘s new Freedom of Information law (12.527), which took effect on May 16, 2012.
- During its first six and a half months of operation (2012-13), the federal government registered some 51,400 requests.
- The government claims to have answered approximately 95% of these requests.
- 4 of Brazil’s 27 states accounted for approximately 60% of all requests. (São Paulo, Rio de Janeiro, Minas Gerais, and the Federal District).
- As of January 2013, 15 states had not yet regulated the FOI law, and it is clear that numerous states and cities have not yet implemented the law. The period between legislative approval and activation was just six months.
- FOI audits using a sample of limited requests have produced results that cast doubt of government compliance figures. A team that included FOIAnet member Fabiano Angélico, for example, sent 30 requests to Brazil‘s Federal Public Prosecutor (Ministério Público). Of these, 17 were ignored, and in the case of the 13 remaining requests, authorities admitted to not yet having implemented the law.
- Several FOI audits are underway or planned this year, including one by Article 19 Brazil and one by three departments within the FGV University in Rio de Janeiro.
A PROMINENT CURRENT EXAMPLE OF THE LAW’S USE
In an article published on February 12, 2013 in the Estado de São Paulo newspaper, jounrnalist Fábio Fabrini used Brazil’s FOI law to audit the handling of fines levied by Brazil‘s regulatory agencies (energy, aviation, telecommunications, shipping, health insurance, and cinema). From 2008 to 2011, R$21 billion ($US 11 billion) in fines were levied, but thus far only 6 % of those fines have been collected. Regulators blame an inefficient legal system that provides multiple opportunities for appeal, whereas other entities blame the poor enforcement attributions of Brazilian regulators.
Analysis of delays of implementing freedom of information law in Brazil, commissioned by Folha de São Paulo – English translation is below pic.
When in November 2011 Brazil approved the right to access public information, it joined the ranks of more than 90 countries that respect the fundamental democratic rights of their citizens. All levels and branches of the Union were required to adopt regulation within six months, by May 16th 2012. Many entities, however, did not comply. By international standards, this delay is reprehensible but comprehensible; six months is half of what most countries give themselves to implement this important and demanding law. In Brazil, the law is unusually far-reaching; it is not only constitutional, but it also applies to government owned businesses and other entities that receive public money.
All of this still does not excuse non-compliant behavior, however, much less with respect to a law that finally makes good on a right guaranteed by articles 5 and 37 of the 1988 constitution. When the CGU told citizens that the law “has stuck” in August 2012, they must have never foreseen that eight months after the deadline for implementation, seven states and even The Department of Foreign Affairs (Itamaraty) still stand in contempt of the law, the union, and its citizens.
This behavior is particularly inappropriate for subnational governments, which play a fundamental role in satisfying the most urgent everyday needs of citizens, including education, health, security, and sanitation. In the world’s most advanced democracies, subnational governments perform better on access to information audits than do central governments. They are more accountable. Judging by the CONACIT’s latest report, the inverse holds true in Brazil. If the right to information is to have real value for citizens, this situation must change. To implement the law, states and municipalities must enact regulation to apply the law 12.527, appoint information officers to coordinate and respond to requests, inform all employees of appropriate procedures, put into place information management systems, and comply with both the country’s archive (8159/91) and privacy laws (Lei 9507/97). Only then will we be able to pull the law off of paper and put it into effect.