What is it that the foreign press doesn’t get about Brazil’s Bolsonaro?

If Jair Bolsonaro wins the election in Brazil this coming Sunday (October 28) one of the obstacles he will face is the severe skepticism of the international press. Important publications around the world have been nearly unanimous in their repudiation of the candidate, branding him as an uncouth, right-wing radical with authoritarian tendencies.

Typical of the onslaught against Bolsonaro was the article published by the Editorial Board of the New York Times this week. According to the NYT, Bolsonaro is an “offensive, crude and thuggish populist” who holds “gross and repulsive views” and ”is nostalgic for the generals and torturers” of the past…His election is a “frightening prospect.” The NYT also published an article by the well-known Brazilian musician, Caetano Veloso, warning that “dark times” are coming to Brazil. In a similar vein, The Economist Magazine recently wrote that Bolsonaro is a “dangerous politician… with an admiration for dictatorships,” and a “menace to Brazil and Latin America.”

There is a large disconnect between this furious criticism expressed by the foreign press (generally echoed by the progressive Brazilian media) and the reaction of the Brazilian stock market, which has rallied strongly in recent weeks as the polls have shown Bolsonaro surging ahead, and the large crowds expressing their enthusiastic support for him this past weekend in rallies held in major cities around Brazil. Part of this chasm can be explained by the high esteem which the international press still holds for former President Lula, despite his incarceration. For example, The Economist describes Lula “as a president who brought “prosperity to many poor Brazilians.” Lula’s hand-picked heir-apparent, Fernando Haddad, is said to be a “temperate moderate.”

So, what is going on with the Brazilian electorate?

The basic divergence can be explained by the almost exclusive focus of the foreign press on public persona. Lula is remembered as an endearing and charismatic crusader for the poor, and Haddad is seen as a boring moderate with good intentions. On the other hand, Bolsonaro is taken to task for a history or rude and politically incorrect statements on socially sensitive issues. Bolsonaro’s loose lip has resulted in comparisons with President Trump. However, the stock market and Bolsonaro’s supporters in Brazil, have been willing to overlook the candidate’s faux pas. They have preferred to focus on the almost diametrically opposed views that the two candidates have on society and the economy.

Brazil is a country that for the past four decades has favored a large and very interventionist government, with a dominant role for the state in economic planning and investment. After a brief period of economic liberalism in the late 1960s and early 1970s, which led to Brazil’s so-called “economic miracle,” the country changed direction. First under the military regime (until 1985) and then under a succession of elected presidents, entrepreneurial activity was squashed by a very interventionist and bureaucratic state. This reached its apogee during the Lula years, and was made even worse by a rapacious takeover of the state bureaucracy and state-run companies by corrupt politicians.  The result of this is that for the past four decades Brazil has become a major economic laggard, growing its per capita GDP at nearly half the OECD average. With its extremely protectionist policies, Brazil entirely missed out on the globalization boom of the past three decades. The country also provides a particularly hostile environment for business. For example, it ranks 125th in the World Bank’s 2018 “Ease of Doing Business” rankings, the worst of any significant emerging market.

The economic policies presented by the two candidates could not be more different. Simply put, Haddad offers a continuation of the failed policies of the past without any explanation for why they would now work, while Bolsonaro hopes to bring about a complete break. The differences in the economic agendas proposed by the two campaigns are at opposite sides of the ideological spectrum. A  cursory glance at the two candidates’ official websites makes this abundantly clear.

Haddad’s Plan (Link )

Haddad proposes a carbon copy of the policies followed during the Lula/Rousseff years. He offers:

  • A “developmentalist” agenda grounded in the state as the motor of the economy, through the actions of state companies and state banks. Privatizations are unacceptable. Foreign investments in the “pre-salt’ off-shore oil fields are to be unwound.
  • A trade and foreign policy focused on south-to-south initiatives, with a focus on regional integration and Africa.
  • Centralized power in the federal government, with a strongly activist role in social policy.
  • Repeal of the recently approved labor flexibilization law and a change in the mandate of the Central Bank to include employment targets.
  • The government will promote plebiscites and referendums to engage citizens in democracy.

Bolsonaro’s Plan (Link)

Bolsonaro offers a plan to unleash private entrepreneurial activity.

  • Private initiative is the principal motor to overcome poverty and develop the country. “We need free citizens, an efficient government with limited responsibilities, decentralized power, greater autonomy for municipalities and the engagement of civil society.” It is expected that Bolsonaro will announce a massive privatization effort.
  • Free Markets: Limited government and deregulation so that individuals and firms can act freely.
  • Decentralization: Private initiative come first. Activities best conducted by the public sector should be the responsibility of the municipality, the states and the federal government, in that order.
  • Social services provided by the state for the most needy, and reliance on private initiative to complement the role of the state.
  • A trade and foreign policy based on interaction with the most successful economies in the world, which can invest and provide technology for Brazilian development.
  • Representative democracy with the separation of powers is the best option for Brazil.

Anyone can agree or disagree with each one of the principles forwarded either by Haddad or Bolsonaro, but it is impossible to argue that the policy differences between the candidates are not profound. Haddad believes in state-driven development while Bolsonaro wants to unleash the “animal spirits” of Brazil’s entrepreneurs. For the first time in its democratic history, Brazilians are being offered the choice of taking the path of economic liberalism. In Brazil, as elsewhere, there is huge rejection of the political class and appetite for change, and this is driving the electorate to Bolsonaro.

Brazil’s task is not easy. The country has dug a deep fiscal hole for itself through bad policies, reckless spending and the world’s highest interest rates. But, we should all root for Bolsonaro to get this great nation back on the right track.

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