favela night.JPGEconomy 

In Brazil the Future Can Work

By Jonathan Power

“Brazil has a great future, and always will,” said Charles de Gaulle, the president of France in the 1960s. In truth, it is not difficult to be cynical about Brazil. It is a large land of both great potential and many lost opportunities. Yet, whenever I visit it—as I have regularly over 40 years—I find the positive changes are immense.

In my time, I have seen growth rates year after year of 10 percent or more. I have seen the transformation of favelas—shanty towns—into solid working class housing. I have seen infant mortality rates plummet. (To capture the flavor of the lives of the poor, a must read is the new top prize-winning novel, Quarenta Dias, or Forty Days, written by Valeria Rezende, a nun.) And under Brazil’s last president and leader of the Workers’ Party, Luiz Inácio “Lula” da Silva, I have seen the almost unbelievable—capitalist economic progress and socialist social progress storming ahead hand in hand.

Right now Brazil is in the middle of the kind of economic crisis profligacy and bad economic management that a sudden loss of export markets for its commodities and inflation has brought a number of times before. However, this is perhaps the worst fall in economic progress since the 1930s. To compound Brazil’s problems is the Zika virus, which is spreading at a fast rate.

Under the presidency of Lula’s hand-picked successor, Dilma Rousseff, a former political prisoner under the military junta of the 1970s, the economy has gone to pot. At the same time, Brazil has been hit by a massive scandal—corruption in the state oil company, Petrobas. It clearly has involved some high-echelon Workers’ Party functionaries. Some are saying the president too is involved, but there is no hard evidence of this.

Despite everything, Rousseff has maintained Lula’s social programs. For example, her government has installed 670,000 water tanks across the country. But she may not be able to keep up these types of programs much longer.

The centerpiece of Lula’s social revolution was the Bolsa Familia. Started in 2003, it is a family support scheme that costs only 0.5 percent of the national income, but has helped lift 36 million Brazilians out of poverty. The World Bank reckons that Brazil has cut “chronic poverty” by three-quarters from 2004 to 2012, to just 1.6 percent of the population.

Lula’s genius was to avoid the top-heavy social programs of countries like India and Egypt, and instead use a market-friendly way to attack poverty. Rather than provide the poor with goods or services, Bolsa Familia simply handed out cash and let the families decide how to spend it. There was one special condition, however—they kept their children in school. Other countries with social programs and economists from aid agencies like the World Bank thought that this was dangerous and wrong-headed. The poor would spend the money on drinks and parties, they thought.

In fact, poor families spent the cash well, not least because the money went directly into the hands of mothers and not fathers. It was also a condition of the handout that mothers got their children vaccinated, that both mother and children went for regular medical checkups, and that pregnant women went for prenatal care and breast-fed their infants. No commercially-pushed baby food for them—a ploy that has led to countless child deaths in developing countries.

If a family was found disobeying these conditions, there would be penalties. First—a warning. Then if the falling short continued, benefits would be suspended. If the families continued to ignore the conditions, they would be thrown out of the program.

It wasn’t all easy sailing. The media reported misuse of the program by undeserving recipients. The monitoring was not well done. Lula responded by throwing out Workers’ Party people from their supervisory positions and bringing in highly trained technocrats to the top. In 2005, Bolsa Familia was centralized and streamlined under the new Ministry of Social Development and Fight Against Hunger. Thanks to increased monitoring and vigilance, half a million ineligible recipients were cut from the rolls.

Given the results, Bolsa Familia was cheap and the country applauded it, both on the left and the right. Today it reaches about 55 million Brazilians. By most people’s standards, the payments (which vary according to family size and income) are small. The average family receives about $65 a month. A large family can get $200.

“The miserable have become consumers,” Lula boasted. They have doubled their incomes, and have also improved their health and educated their children.

The country’s overall income gap between the poor and the well-to-do has been reduced by a third. Right now, as the rate of economic growth plunges, it has provided a cushion for the poor.

Over 60 countries have sent experts to study how Bolsa Familia functions. Brazil has seen the future, and it works.

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Jonathan Power is a former long-time foreign affairs columnist for The International Herald Tribune and author of Conundrums Of Humanity: The Big Foreign Policy Questions Of Our Day.

[Photo courtesy of chensiyuan]

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