Brazilian economic analyst Carlos Góes offers context on the protests that have grabbed global headlines and imagination
By now, you probably know that last Monday (June 17) 250,000+ people marched on the streets of Brazil. Three days later (June 20), an estimated 1.25 million people went to the streets in 100 cities. The protests are happening all over the country and the Brazilian communities abroad have organized events in as many as 40 different cities. But you probably know that too.
What you may not know, however, is how this country, the muse of Wall Street for the last few years, the so called last country into the global recession and the first one out, could get mired in protests. The recent Arab Spring-styled protests often object to backwards governments entrenched in power. Brazil has been hyped as the country of the future—so why all the fuss?
With this article I try to help the foreign reader to understand three things: the context behind the demonstrations, how they became so big, and what the demonstrators want.
A Little Context
During the early 1990s, Brazil reached economic stability after a cumbersome process by adopting three policy approaches: primary budget surpluses, floating exchange rates, and inflation targeting. This was a big deal, indeed, and it helped to bring annual inflation rates from astonishing 3,000 percent in the early 1990s to single digits after 1995.
A combination of economic stability, a boom in commodity prices, favorable demographic change and a market-oriented social policy helped reduce the poverty rate from 43 percent to 21 percent of the population between 1993 and 2009.
In the mid-to-late 2000s, Brazil was on the top of the world. Lula, an extremely talented and charismatic leader despite his lack of a high school diploma, was the president. The ability of a left-leanding politician to achieve the presidency without military intervention constituted a hallmark in Brazil’s nascent democracy.
The economy was booming. Even The Economist devoted a cover report to Brazil’s “take off.” The world’s love affair with the South American giant flourished: Within quick succession, Brazil was selected to host FIFA’s 2014 World Cup and the 2016 Summer Olympic Games. Then the financial crisis hit.
At first, Brazil appeared to whether the storm. Fiscal stimulus had some positive effects in the short run, and helped control unemployment rates. But as usual, once you give politicians discretionary power, they are hesitant to give it back.
The Brazilian Central Bank lowered interest rates in response to the US Federal Reserve’s quantitative easing that led footloose capital to seek higher returns in Brazil. With this explicit effort to intervene in foreign exchange markets, it was no longer so clear that Brazil was holding onto the policy rules, which had assured its stability in the past.
In the face of ever-decreasing unemployment, fiscal and monetary stimuli led to higher inflation. Rents, food, and transportation costs have been going up at a faster pace than usual in the last 2 years.
From Simmer to Boil
The recent protests first started due to a R$ 0.20 ($ 0.10) increase in the bus fares in São Paulo, the largest city in Brazil. At first, they were rather small demonstrations (~ 2,000 – 5,000 persons). Some of the demonstrators resorted to violence and vandalism. But the police reacted in a completely disproportionate way. They attacked journalists. They shot tear gas canisters into private buildings. Rubber bullets hit elderly by-standers.
One of the reporters who was covering the event was arrested for carrying a bottle of vinegar – a tear gas antidote. The police alleged he was in possession of a “suspicious substance.” After that, outrage spread like wildfire. Empowered by social media, the Brazilian youth started to denounce police brutality.
Hashtags like #VdeVinagre (#VforVinegar), #OGiganteAcordou (#TheGiantHasWokenUp), and #RevoltaDaSalada (#SaladUprising) started to trend on different social media platforms. Six hundred thousand people RSVPed to one single event on Facebook, in São Paulo. One hundred thousand showed up.
As the movement has grown, it has lost cohesiveness
Presently, there is no longer an organized leadership. Gatherings emerge somewhat spontaneously through social media. The demands orbit around very broad topics, such as the punishment of corrupt politicians, complaints about inflation, and lavish wasteful spending.
The broadened complaints brought boarded citizen participation. It went mainstream – despite a mainstream media’s initial condemnation of the protests. No longer was the fringy socialist on the streets by himself. Now he was accompanied by people who had never before demonstrated . The facebook loving playstation owning middle class youngsters hit the streets, too. And this makes the whole thing different.
In 1992, the last time a popular uprising of such magnitude happened in Brazil, the President at the time Fernando Collor was impeached. Now, there is a similar outrage against politicians and political parties in general. The politicians who are on the spot are spread all over the political spectrum – from the social democrats who have held control of the State of São Paulo for 20 years to President Rousseff’s Workers’ Party. The crowds have harassed those who went to the streets with political parties flags. People seem to be infuriated with the whole political system.
The biggest frustration is about the poor quality of public services, government inefficiency, and corruption.
An old joke claims that Brazilians pay Swedish taxes and get African public services in return. The average Brazilian works almost 5 full months just to pay his taxes. Meanwhile, interstate highways are crumbling, public schools have standards that are subpar at best, violence is still a problem in several major cities, and the universal healthcare system is so problematic that people literally die waiting to be taken care of in emergency rooms.
Small enterprises struggle against the regulatory nightmare (it takes a small business an average 2,600 work-hours just to fill out tax paperwork) while big corporations get subsidized loans from government-owned banks. Now people are demanding one of the following: either to have the tax burden lowered or to get more of a bang for their buck.
Finally, the mega events – the 2014 World Cup and the 2016 Olympics – add the final sparkle to the revolts. Politicians promised the events would leave a good legacy for the country. By “legacy” they meant improvements in infrastructure, better urban planning for the host cities, and larger investment inflows.
They also vowed that not a single penny of public money would finance stadiums. After all, football arenas are the complete opposite of a collective good. One can clearly define those who benefit from the stadiums and then make spectators pay for the services they’re benefiting from.
But politicians have delivering on just half of their promises: the ones they made to FIFA and the International Olympic Committee. The infrastructure projects are falling behind schedule. For instance, the Rio-São Paulo high-speed rail won’t be ready for the World Cup. More glaring, by the beginning of the tournament, the government will have spent R$7 billion (US$ 3.5 billion) on building football stadiums.
The question of white elephant stadiums is not a new one: See this report from South Africa
Meanwhile, 13,000 households are being forcefully relocated to free up space for the Olympic sites in Rio. Such a quagmire helps to explain why the city had the biggest demonstrations so far, with protests with as many as 300,000 people.
So what does it all mean
Of course, the ultimate consequences of the uprising remain unknown. What is clear is that political leaders still don’t get it. They can’t conceive the possibility of a grassroots political movement that emerged spontaneously with no central leadership.
Their reaction was to halt the plans to increase bus fares in São Paulo, which is the way they have always dealt with interest groups with specific demands. But the demands are now diffuse. And the announcement didn’t stop new protests.
My take is that this new kind of politics is decentralized, spontaneous, dynamic, quickly changing, and quite intense—but also rather ephemeral. As Zygmunt Bauman would’ve put it, this is an example of liquid (as opposed to solid, static) politics.
I highly doubt that the protests themselves will achieve any important change in the short-term. However, there might be a historical change in the making, which is a rather important one: politicians will now think twice before passing some policy, since now they fear a truly popular and democratic reaction.
If politicians start fearing their constituents, such a fear will improve the prospects for greater government accountability, thus changing Brazil for the better.
Carlos Góes, originally from Brasília, Brazil, lives in Washington, D.C., where he works in the multilateral sector.
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It seems pretty clear that the issues in Brazil can be boiled down to one thing: a growing frustration over declining purchasing power. In other words, people are upset that their growing monetary income is not sufficiently keeping up with price level increases (aka inflation). It also seems evident that the Brazililan government’s fiscal/monetary policies (which were originally geared towards improving FDI flows and eliminating unemployment) are playing a role in causing inflation to rise faster than the rate of income gains for most consumers – and essentially fueling this problem.
So now it has turned into a blame game with fingers pointed towards the government. But what are the people accusing the government of exactly? Is it that they disagree with the government’s initial decision to implement these interventionist fiscal/monetary policies? Or do they believe in this approach, but think the government is being undisciplined, corrupt and inefficient in the implementation of these policies and allocation of resources. From your article it seems like it’s the latter and that the government is becoming more concerned with Brazil’s public/spotlight emergence into the global arena, and ignoring its responsibilities in providing general services to consumers, which in turn, negatively impacts their purchasing power. So if that’s the case I think these demonstrations are a good reality check for the Brazilian government and is a sign of a strong democracy.
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“At first, Brazil appeared to whether the storm” – should not this be: “At first, Brazil appeared to [weather] the storm.”?
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