Tag Archives: brazil

Considering the Diversion of Public Monies in Brazil -A Cool US$35 Billion for Starters

31 Mar

US$35 billion of public monies stolen. A colossal affront to the cities and country they work for? Yes. Preventable? Not yet.

The most significant news item on the diversion of public monies I have seen in some time appeared in yesterday’s Globo as the lead opinion piece: “The Indicators Show Billions Stolen.” The article cites grim figures: of 131 municipalities audited by the Comptroller General, 90 percent showed irregularities; and it is estimated that municipal officials and their accomplices steal 30% of federal and state transfers– US$ 35 billion dollars (R$60 billion) a year. As the author notes, this sum could tidily pay for Brazil’s primary schooling goals, or a presidential term’s worth of Bolsa familia conditional cash transfers –2.5 percent of Brazil’s annual GDP, which goes to its 44 million poorest (11 million families).

Minor in raw numbers, the second news item is equally disturbing. In the poor state of Amazonas, a Federal Police operation on ‘over-billing,’ found that the State University of Amazonas paid US$380,000 (R$615,000) for a website that should have cost US$3000. The contracting official and contractor would have split the excess funds.

In most advanced democracies, citizens, journalists, public advocates or competing firms tend to be the first to note over-billing or billing to nonexistent companies. But note how in both of these articles government entities did the auditing? Without a complete transparency infrastructure — the sort that can only be laid out by a comprehensive Freedom of Information Law — citizens will be unable to help government account for the $30 billion diverted by municipal governments and their co-conspirators. It’s also costly to have government officials do all the sleuthing.

Seeing as Brazilians labor under one of the heaviest tax burdens in the world, it’s about time to start ‘following the money’ and adopting the tools to do so. As the father of billionaire Eike Batista stated at an event I recently attended at the Rio de Janeiro Industrial Association (FIRJAN), the country cannot, should not, and need not go on “with the taxes of Switzerland and the services of Angola.” The country’s freedom of information law awaits passage in the Senate.

The Threat of Media Reform as Effective Media Control

9 Jan

Your party will win the next election and you want to make sure the media keeps providing you with reliably un-critical if not favorable coverage– here is your media strategy: you promise to change the regulatory status quo of the media before the election, and you renege on the proposed reform following your victory. The media behaves with deference for fear of reform, and treats you favorably once entreaties by media lobbyists to “delay” reform are met.

On December 20th 2010 President Lula asked the party’s National Executive Committee to dedicate itself to three efforts: media and communication reform, political reform (writ large, apparently), and youth programs. Before and during her election campaign, President-elect Dilma Rousseff echoed Lula’s long-held promise to reform the media, especially the electronic media.

The influence of the country’s most popular television station, Globo, is legendary: it is third largest in the world by audience numbers, only surpassed by NBC and CBS in the much larger U.S. market. Globo is a media juggernaut, exerting incalculable influence over the country’s politics and political culture. It controls large holdings in radio, newsprint, and broadband, among other interests.

On January 6th 2011, Rousseff and her Secretary of Social Communication, Paulo Bernardo, reneged on their party’s promise to introduce reform. Instead, they will “open it up for public discussion” (front page and page 15 of Jornal Globo– e.g.).

Media reform–or the threat thereof–hangs like a damocles sword over the media in any country. The promise of media reform is an age-old political trick designed to cow the media into relative submission. The promise of media reform is perhaps the most effective means of ensuring favorable or moderately un-critical coverage.

There are normative and economic lines of reasoning for media’s aversion to reform. First, reform can potentially restrict the liberty of expression. For example, “ethics” councils might be established, presiding over what content is and is not permissible. Reform also changes the economic equilibrium. Under the old rules, media firms learn to “optimize the utility” of regulation. Introducing new rules imposes transaction costs. Reform may, for example, limit ownership in certain sectors, or rules prohibit one-firm from owning radio, television and print interests within one geographic region.

The promise of media reform can explain why media owners may back-off certain delicate topics. It certainly provides one explanation for why the news media has been so reluctant to cover access to public information reform.

Bursting Bubble-Thinking About Brazil

22 Nov

000…Brazil is a country of the future.
—-…Brazil will always remain a country of the future if average educational achievement stays at seven years of formal schooling per capita. Higher education enrolls only 2% of the population, but consumes a quarter of the total education budget (see Hunter and Sugiyama 2009).

000…Brazil is economically stable.
—-…Brazil is still mainly a commodity exporter, and in the long run commodities will always be the most volatile type of export.

000…Brazilian policies will remain consistent because of the current continuity in political party leadership.
—-…Political continuity, especially when paired with legislative dominance in Congress, tends to eviscerate checks and balances, diminishes accountability and increases discretion, which often result in institutional abuses and corruption.

000…Brazil’s newfound oil wealth will speed the country’s progress.
—…Developing Countries and oil don’t have the best “progress” record. Read a book called “The Paradox of Plenty” or just take a look at a few “developing” oil states, such as Nigeria, Venezuela, Mexico, Iraq, and Russia, among others.

000…President Lula da Silva is responsible for Brazil’s recent progress.
—…Lula maintained the continuity of most of President Fernando Henrique Cardoso‘s (1995-2003) policies with regards to economic management and even many social programs, such as the conditional-cash-transfer program now called Bolsa Familia.

Government Decides to Keep Archives Closed: Opacity to Prevail Under Dilma?

5 Nov

The Brazilian government has decided to keep its historical archives on the military dictatorship (1964-1985) closed, according to a report published today by ABRAJI. The move breaks with previous promises and effectively renders a conference I paid $100R to attend– International Seminary on Access to Information and Human rights –irrelevant. A boycott of the seminary (see banner photo) is now underway, with prominent NGOs Artigo 19 , Transparencia Brasil, and ABRAJI (Brazilian Association for Investigative Reporting) refusing to participate. The maneuver also signals that long delayed transparency reforms promised under Lula, such as the access to public information law currently awaiting sanction in the Senate, may be also be resisted under President Dilma Rouseff.

Brazil currently has no regulated means of accessing public information (e.g. documents) held in the trust of government. Access to public information regulation, otherwise known as a freedom of information laws, normally establish this crucial right. While such laws are found in more than 85 countries (more than half of these passed within the last five years),  Brazil continues to resist.

A bill was introduced after repeated promises in 2009, grinded slowly through committees in the Lower House in 2009-10, was passed in April of 2010, and has since languished in the Senate. Military opposition to the measure is the clearest sign of resistance. Yet the low legislative priority accorded to the law is clearly indicative of government intransigence. President Lula da Silva has the majority in place to speed enactment. But the Lula administration has not given the bill the “urgency” it needs to gain quick passage.

The decision to uphold opacity over openness is a step backwards for Brazil, and deserves greater attention from citizens, the media, and the international community.

Large, Insular Countries

3 Nov

It’s a peculiar thing about countries with large populations that they often tend to be insular, uninformed about what goes on in other parts of the world, and mildly paranoid, if not xenophobic. The U.S. provides a leading example: the intermittent periods of “isolationism” provide a testament to insularity. Proverbially clueless about the world outside their borders, Americans have also gained fame for their paranoia and xenophobia. But the prominence of these characteristics is tempered by the country’s historic openness, large educated classes, and sophisticated urban centers. Other large countries provide more striking examples of xenophobia and paranoia, such as Japan, Russia, and to a growing extent, China.

Large populations render countries more self-contained economically and culturally, which tends to make them more insular, if not more xenophobic. A small country, by contrast, is constantly looking out at the world to see how it will be or can be influenced by the larger, more powerful countries. They tend to be more cosmopolitan and more open to outside influences.

One convention I can get used to

With some micro-cosmic exceptions, Brazil tends to fall into the purview of a large insular country. What might be associated with a country´s insularity? One of the principal features might be “conventionality.” More open countries tend to evince less rigid conventions, which is to say they go about the same ritual in different ways. Brazil remains plainly conventional, which makes sense: it’s a traditional country—the largest Catholic country in the world— and on average Brazilians have low levels of education. Moreover, Brazil has no clear unconventional role-model, unlike other Latin American countries who emulate worldly Spain or Latino USA. Brazil clings to its own conventions. I´ll follow up on this line of thinking and my ultimate thesis, next post.

The Brazilian Validation of my Ph.D.

25 Sep

I’m still months away from being validated. But at least 95% of the paper work is in. It was easy, really:
-Sent Diploma and full academic transcript to Brazilian consulate in Houston (closest consulate to graduating institution). $10 verification.
-Had documents sent to Brazil. $93
-Had said documents verified by a notary: $11
-Documents translated by an “official” translator: $217
-Paid fee to the “validating” Federal University (UFRJ) in my case: $41
-Handed-in documents to UFRJ!
-Realized that they also want a verified copy of my Undergraduate degree (how do you get a Ph.D. without an undergrad degree?).
-My wonderful mother rips my McGill B.A. out of a beautiful frame and sends it Fedex to Brazil. $175
-Notary public certification of McGill degree: $4
-Explanation of all of my Ph.D. courses in English: time cost- 5 hours.

I hope this helps some people who will have to go through the same process. I still have to go hand in these two last items.

The most dreaded part of this process was visiting the cartorio (notary) repeatedly. Cartorio’s are an archaic, costly, and unfair Brazilian institution, which –unbelievably– are allotted on a concessionary basis to private citizens. Owners of Cartorios make fabulous profits off of sticking government stamps on your paperwork. The government undoubtedly makes off like a bandit as well. I am amazed how these feudal institutions –a universal tax on Brazilians– have survived, especially given what Brazilians think of them.

A tired older lady in the cartorio lineup the other day told me in no uncertain language how depressed these places made her feel. Lineups are perennial, and the listless enthusiasm of cartorio staff is undoutedly reminiscent of 1979 East Germany.

Cartorio certified: now a real letter to be taken seriously.

Cartorio certified: now a real letter to be taken seriously.

You have to obtain certification for just about everything. I sent a letter to the Federal Police because of a missing document they said they had sent me. As a precautionary measure, I certified the letter (above). I am seriously considering taking a picture of my wife and me into a cartorio and having it certified. The first step to true validation…right?

Moralistic Blockaders versus Subversive Altruists

23 Sep

Carol and I have been watching political candidates advertise their wares on TV. The Brazilian election is just around the corner and as I mentioned before, it’s not looking promising. Things are good economically, so there’s little incentive for reform.

I am reluctant to venture the opinion that someone “looks” corrupt – as the adage goes: looks often deceive – but it’s hard not to infer from the slick manner and silky words of some candidates that they’re in the game for more than just helping their country get ahead. Don’t get me wrong, the U.S. , Canada and other more advanced countries also have slippery characters in politics.

Latin American countries, however, understandably tend to attract a good deal more populist charlatans; for one, when your median citizen has five years of schooling it’s easier to sell them on building or giving away things than how you’re going to use the trade surplus to lower the national debt and thereby decrease income taxes (that much of the lower classes don’t pay).

The central dilemma is how to attract good, capable people into less than good, frequently corrupt politics. Most people in Brazil are as upstanding as anywhere else, but the challenge is getting these people to become politicians, which they view to be irredeemably corrupt. These are the moralistic blockaders, who choose to avoid entering a sector, industry, or profession because they do not share its value system.

The paradox is that the blockade mentality perpetuates the problematic nature of some occupations: politicians remain corrupt, real-estate developers often privilege profit over good construction, and natural resource extractors have earned a reputation for a quick- exit approach, spoiling the environment. These occupations would surely do better for the world and themselves if self-identified altruists got involved in them, and indeed sometimes they do. Subversive altruists better the bad, while blockaders berate the bad with criticism. Subversive altruists are the real heroes, are they not?

Subversive altruists often tend to be spoilers. I think of people who went into politics and, partly through high-minded leadership, brought down corrupt and inefficient systems. Two come to mind immediately: Gorbachev in the USSR, President Ernesto Zedillo in Mexico (1995-2001). We’ll save the biographies for another time…The most salient challenge is making sure that altruists themselves do not become subverted by these unsavory occupations, à la power corrupts…

Economic Progress, Political Complacence, and the Tenuous Citizen-Government Connection

1 Sep

Most gringos don’t realize that Brazil and Latin America’s experience with democracy is relatively recent. Brazil has come a long way since it returned from dictatorship to democracy in the late 1980s. It only drafted its current constitution in 1988, just over twenty years ago. Today, politics is less polarized, the military has less influence, consumers have greater choice thanks to fewer barriers to imports, and most crucially, inflation is no longer the unslayable dragon it was in the late 1980s and early 1990s. “It’s the economy, stupid.” The economy is infinitely improved, which has made Brazilians disconcertingly satisfied with things. Economic and political gains are relative.

Current successes have buoyed Brazil, but they have also created complacency. Despite what many middle to upper class Brazilians trick themselves into thinking, Brazil remains a corrupt third world country with one of the world’s highest levels of inequality, regional disparities in wealth, and violence.

Complacence threatens to slow if not reverse progress that has been made. The country will have ample opportunities to set itself back. World-class sporting events are economic disasters for countries, if you haven’t figured that one out yet (see my buddy Chris Gaffney’s superb blog on the subject). Thus the World Cup and Olympics of 2014, 2016, need monitoring by concerned citizens. The “curse of oil”–the discovery of the giant Tupi oil fields–also provides a classic opportunity for corruption that Brazilians should be currently preempting. But the sense of ownership that Brazilians have over their government is still so tenuous that the result is often indifference and apathy. As I said, democracy is a recent phenomenon and participation, beyond the obligation to vote, is not well understood.

Everyone happy?

One particular example I like to use are taxes. If Brazilians were to pay all their taxes, they would have one of the highest tax burdens in the world. Brazil raises more taxes as a percentage of GDP than Canada! The question of where this money comes from and goes is one issue, another is whether Brazilians realize they’re paying these taxes. If they did, how would their expectations of government performance change?

When you buy a chocolate bar in Canada, the U.S., or other places, you can expect to pay anywhere from 5 to 16 percent on top of the listed price. When the attendant rings up my taxes on that chocolate bar, in that instant the knowledge of government’s hand in my purchase registers. I expect commensurate good government in return. When a Brazilian buys something, the taxes are already included in the price, so there is no conscious appreciation of what government is taking and what it owes the consumer-citizen. The same goes with import taxes, of which there are many in Brazil. The majority of Brazilians only have a vague notion that they pay very large premiums to the government on all electronic equipment.

There are many other examples of these sorts of tax-by-stealth tactics, which result in failed opportunities for citizens to make the government-owes-me-I-own-government connection. A pity, but only one of the many causes of citizen complacence, a theme I hope to explore in upcoming posts.

The Beach and the end of Inequality

30 Aug

Well, perhaps not the end of inequality, but the beach certainly is something of an equalizer. Although the beach has its classes and groups, it is the closest Brazilians come to indiscriminate association.

Greg and Carolina share a kiss at sunset

Where brown met white and sun dipped into the sea...

Perhaps you have a few class indicators, like a pair of sunglasses or a fancy bathing suit, but except for some very informal segmentation it’s often difficult to tell rich from poor, poor from rich. Conversations and activities among strangers intermingle.

Carolina and I observed one little fat white kid playing with a frisky group of black kids, evidently from different class sets. Even though the black kids called the little white one “gordinho,” (little fatty) he served as a half effective obstacle in front of the imaginary goal. His dramatic dives in the shallow water made the gang laugh. He was even invited by one of the kids’ mothers to grab a sandwich and a cup of coke. Unfortunately, he submerged the sandwich in a pool of seawater (but took a bite before it was summarily confiscated).

If you have not been to a busy Rio beach, it is an experience not to be missed. Not only for the diversity of people, but for what they’re selling on the beach, to walk close to the water and witness the heaving mass of multitone bodies gathered where land meets sea.

Brazil: Culturally Self-Possessed.

19 Aug

I admire Brazil most for its self-possession. Its culture is uniquely distinct and, as I will write about next entry, it even follows political and economic policy that is out-of-step with the dictates of first-world orthodoxy. For the most part, the country’s self-possession is accidental– it’s the sole Portuguese-speaking country in the Americas, and its large population and young median age allows its large market and wealth of human resources allows it to be more self-contained than other countries.

One of the reasons Brazil is unique is that it does not have a role model to emulate, as do other countries in the region. The rest of Latin America is Spanish-speaking and looks for cultural references in the hispanic U.S., especially Florida, Texas, New York and California. Brazilians don’t look to the U.S. to the same extent. Proportionately few Brazilians live there and it’s relatively farther away than 80% of other Latin American countries. Spanish-speaking countries also look to Spain, a not insignificant country with a vibrant culture and sizable economy. Portugal…well, it’s no cultural or economic powerhouse.

Thus Brazil is to some extent an island onto itself, self-generative, relying on its own wherewithal for its culture. It is little wonder that when most people think of Brazil they picture a culture of great vitality. It’s a country of self-creation.

Brazil: Carrying its own