Brazil: Presidential Elections

The real reason Lula will be elected...

The comparative performance of state-led development in Brazil, as we have seen, is clearly superior to the neoliberal version.

Neo-Dependency in Brasil

 

Re: The real reason Lula will be elected...

Yes, of course. Brazil's economy is doing so much better than Chile's (the only true neoliberal economy in S. America).

 

> the only true neoliberal economy in S. America.

So when Argentina is doing great it is your poster kid, and when it stumbles you never heard of it?

 

Yeah. Perhaps they can keep the interest rates lower than the 46.5% Lula got too. The Brazlian government just upped the lending rate to a whopping TWENTY-ONE PERCENT!!!!

Hey, if you are surfing from the China discussion threads, look what democracy has brought to Brazil!!! Sorry, I don't blame the Chinese for not wanting it right now.

 

Argentina as neoliberal poster child?

http://www.cato.org/research/articles/vasquez-argentina.html

Argentinean economist Pablo Guido explains that in the past 10 years, the gross domestic product grew by about 50 percent, while public spending grew by about 90 percent. In terms of spending as a share of the economy, the size of government grew by 28 percent, and now equals more than one third of the national output.

The increase in spending is matched by a heavy tax burden. The value added tax is 21 percent (about three times that of most sales taxes in the United States) and the combined payroll tax has until recent months averaged about 43 percent (compared to 15.3 percent in the United States) and remains high. Taking into account income and other taxes that Argentineans face helps explain the high level of tax evasion, not to mention the discouragement of growth.

Bureaucracy has also helped strangle the economy, especially in the provinces, which have seen virtually no reform. The government of San Juan province, for example, spends 85 percent of its $783 million budget on the wages of its 30,000 workers rather than on services. According to the Fundación Atlas, a think tank in Buenos Aires, the cost of bureaucracy is killing the provincial economies. Public spending equals 84 percent of Formosa province’s economy, 71 percent of Santiago del Estoro’s economy, and 69 percent of the economy of Chaco province.

Regulation continues to be a problem nationwide. To open a business in Argentina, for example, requires 12 bureaucratic procedures, 77 business days and $2,100 in fees. In Canada, by comparison, the same operation takes 2 days, 2 procedures and $280. Argentina’s extremely rigid labor laws, a legacy of the authoritarian Peronist era, also remain unreformed. The consequently high cost of labor is directly responsible for the country’s chronically high unemployment rates that have ranged from 14 to 18 percent in the 1990s.

http://www.businessweek.com/magazine/content/02_06/b3769031.htm

Some critics blame Argentina's problems on the speed and extent of its free-market reforms inspired by the so-called neo-liberalism, or Chicago-style economics, of the early 1990s. However, Argentina did extremely well after 1991: Even including the bad recent years, its real GDP prior to the devaluation grew by more than 4% per year. This beats Brazil's growth and that of most other Latin American countries.

Argentina, however, did not reform its economy as much as its neighbor Chile, which ranked 17th, vs. Argentina's 39th position, on the index of economic freedom compiled by The Wall Street Journal and the Heritage Foundation. Argentina has higher trade barriers, more rigid labor markets with stronger unions, and a larger government sector than Chile, which has not experienced a major financial or economic crisis.

 

Funny how some people miss the point entirely.

You're measuring neoliberal policies with...well...neoliberal policies. What the F does this have to do with a dependent country being better off? If you read the article I posted earlier you'd learn that structural adjustment has deleterious consequences on the poor (of which there are many in South America--contrary to what CATO says). What you fail to show, since it destroys your argument, is that income inequality has ballooned under "Chicago school" policies.

On point, the market should stay out of the business of choosing leaders.

 

Well, yeah, considering that spejic was implying that Argentina was some kind of neoliberal poster child. Unless high taxes and huge increases in government spending are neoliberal, then spejic's position makes little sense.

Absolutely nothing. It has everything to do with the contention that Argentina is a neoliberal poster child and the embodiment of neoliberal thought.

CATO says that there are no poor people in South America? Or is this just bombastic rhetoric on your part?

How does that destroy my argument? When have I ever argued that neoliberal economics reduces income inequality? I don't think I have EVER said that. That's counterintuitive, one only needs to look at Bill Gates to know that capitalism can produce huge inequality -- Bill Gates could never exist under a Marxist government.

Personally I don't see income inequality as necessarily a horrible thing. If I'm making $50,000, and my neighbor makes $2 million, that's still a better situation for me than if I'm making $15,000 and my neighbor is making $20,000.

Is Argentina not a democracy? Do the people not choose their leaders? Or is there a secret meeting of the interlocking elites where they all choose the next leader in a bizarre ritual?

 

&

I can't speak for spejic and I'd like to stay on topic about Brasil. However, I would assume he was taking on the liberalization policies imposed on Argentina from the late 80s to present.
In that case, this nice PDF file from the respectable OECD clearly links such adjusment policies and income inequality

Curious as to why you think my comments are "bombastic rhetoric"? I can claim your libertarian views are such, but I don't. My contention was that that CATO article played no mention whatsoever to poverty reduction which is an immensely important part of the puzzle to Latin America subscribing (or not) to structural adjustment.

These inequalities have been linked to crime, alcohol and drug abuse, teen pregnancy, depression and assorted mental health problems. Read The Market Experience for a more nuanced explanation.

Did I say this?

 

Why you're so anxious to talk about income inequality is beyond me. My position is simply that you can't point to Argentina as a poster child for neoliberal economics.

How else should I describe comments like "you'd learn that structural adjustment has deleterious consequences on the poor (of which there are many in South America--contrary to what CATO says)"?

If you can point towards where CATO denies the presence of poor people in South America then I take back what I said.

The CATO article doesn't mention it because that's not the topic.

I'm guessing that this has far more to do with poverty than merely income inequality.

No, it's just speculation on my part -- hence the question at the end of the sentence.

 

> [from Business Week article:]
> However, Argentina did extremely well after
> 1991: Even including the bad recent years, its
> real GDP prior to the devaluation grew by more
> than 4% per year. This beats Brazil's growth and
> that of most other Latin American countries.
>
> Argentina, however, did not reform its economy

This is not being consistent. If some neoliberal reforms are helpful why do their benefits go away after such a short time? If they only help for a year or two, then you cannot seperate them from other influences like the economic health of trading partners or cost of resources. The reforms that supposedly helped them in 1991 were not repealed since then. And they did what the IMF told them to do, so they did not have inflation or runaway government spending. Yes, the government was spending more, but your CATO article does not say what they were spending on - it was payment for the debt overhang, and the increasingly high interest rates they had to pay. Primary governemnt spending (salaries for employes, costs for programs and operations) was flat as a percent of GNP throughout the 1990's (see Table 1 at http://www.cepr.net/IMF/what_happened_to_argentina.htm)

 

Actually the reforms were placed under significant pressure. As debt grew the government became increasingly worried about its deficits, and, under advice from the IMF, increased taxes. Increasing taxes during an economic slowdown is a big no-no. The Argentines also began screwing around with the country's currency board, which was a huge part of the reform process, and put together a two-track board with a separate exchange rate for exports. They also talked about letting the peso float which had a deleterious effect on the investment climate.

Yes, they did what the IMF told them, that was part of the problem. The IMF should be abolished, they hand out bad advice like Halloween candy.

The point remains however that Argentina is far from the epitome of neoliberal economic thought. As a previous poster said, Chile is really the only South American country that you can point to in that regard, and even then I believe that they have a left-wing government last I checked.

 

> As debt grew the government became
> increasingly worried about its deficits, and, under
> advice from the IMF, increased taxes.

But it really had no choice in the matter, did it? It had to maintain government services and pay for the increasing interest rates on the debt, and it could not borrow money because a) no one was stupid enought to lend at less than loan shark rates and b) it wasn't part of the IMF's plan to have a big budget deficit.

> They also talked about letting the peso float
> which had a deleterious effect on the investment climate.

Again they had no choice. Argentina had a big trade deficit. A country cannot export green paper if it does not manufacture green paper (and they didn't because they were tied to the dollar). They were running out of green paper (ie money reserves) and had no ability to fight the money changers.

They did not respond to the crisis in a neoliberal way, but the point is that they got into trouble after instituting lots of neoliberal reforms. I can't say that those reforms caused the evental problems, but I can certainly say they did not help prevent them. Chile is doing great now, and I think a big part of it is that their trade ballance is, well, ballanced.

 

Well if you admit that they didn't respond in a neoliberal way, and note that it can't be stated that the reforms caused the problems, why did you imply that Argentina is some kind of neoliberal poster child.

 

Now matter how you look at it, Washington Consensus policies have proven poisonous to the Brazilian political economy. Democracy is troubling once again for the oligarchs.

Run Lula Run

 

> why did you imply that Argentina is some kind of
> neoliberal poster child

Because they originally instituted neoliberal reforms just like we told them to. The privitized industries, they switched to a more industrial, export driven economy, they promoted themselves to foriegn investors, they stabalized the money, they reformed the tax code by lowering business taxes, they privitized the pension system, and they reduced trade taxes and tariffs. They get a benefit for a few years and everyone cheers. Then they hit some rocky spots, and finally they fall apart.

The problem is that these reforms are not the main driving force of how a nation prospers, and they introduce contradictions and problems of their own. Stabalize the dollar to bring in foreign investment, and in a short time your products are too expensive compared to other nations that devalued their money. Try to become export driven, and watch your imports grow even faster as you need the materials and tools to make those exports. Grow export crops and watch the harvest per ton of (imported) fertilizer go way down because the land is not suitable for it. Make industries more efficient, but see skyrocketing unemployment from the layoffs from those inefficient industries and the destruction of the middle class.

Here is a speech by Managing Director of the IMF, Michel Camdessus, as an example of how people thought that Argentina was doing alright back in the mid 1990s:

http://www.imf.org/external/np/sec/mds/1996/mds9611.htm

 

This one is pretty simple: Pele for President

 

Score one for democracy, nil for world financiers and brasil's indigenous elite.

A strong mandate for freedom was won yesterday in Lula's +60% votes cast.

Frankly, I'm shocked the U.S. did not manipulate this election. I thought those days had passed but then the shenanigans with Chavez in Venezuela blackened all semblance of non-interference.

 

Perhaps the indigenous elite can get together with the interlocking elite and form the SuperMega elite, like in one of the Japanese robot cartoons.

 

I heard there were a few rumblings of discontent in Washington after Lula's landslide. The US wouldn't make life difficult for him as he is left wing would they ?.

 

I don't think so. They'd lose a lot of credibility in TWAT to create any kind of mischief. You never know with this regime though.

 

What does the acronym TWAT stand for ?.