PLS 131 – Brazil’s Politics

Politics of Brazil

I. Basic themes found in discussions of Brazilian politics

    a. Portuguese cultural identity, but mixed

    b. Early Monarchy replaced by history of unstable Republican governments

c.     Military role in politics

d.     Strong state role – from state corporatism to bureaucratic authoritarianism

e.      Geographic insertion at the heart of South America

f.       Abundant natural resources – unrealized potential

II. Identity crisis overcome

    a. Portugal claims Brazil

1.     Pedro Álvares Cabral claims Brazil for Portugal in April 1500, followed by Portuguese colonization

2.     Early economic development includes land grants to aristocrats, slavery

3.     Portugal benefits from sugar economy in Brazil, but incurs high cost in fending off other European powers

4.     Portuguese royal family escapes Napoleon early 1800s, moves to Brazil, returns to Portugal after Napoleon's defeat

5.     Dom Pedro (son of Portuguese king), faced with being only the appointed governor of Brazil (rather than King of something), declares independence 9-7-1822

6.     After struggle with Portugal, independence achieved 8-29-1825

7.     Dom Pedro abdicates as Emperor to son Dom Pedro II, 1831 - due to financial crisis; Pedro II becomes emperor in 1840

8.     Slavery of indigenous people abolished 1831, general end 1888

10.  Emperor – served as “moderating power” between parties and interests

a.      This period served to establish a “constitutional monarchy” with elections, alteration of parties in power, rule of law overseen by the Emperor

11.   Military coup, Republic declared in 1889 – decline of sugar/slaves - rise of coffee and urban/commercial class not dependent on slavery who did not like centralized rule and wanted federalism (a demand supported by the Republicans and opposed by Monarchists)–

12. 1891 1^st direct election for President

13.  Various revolts follow – federalist, populist – see Legitimacy issues below

b.     Modern Identity issues:

a.      Role of religion – secular/Catholic/some more recent Protestant (evangelical)

b.      Role of immigrants – assimilation based on shared values, variety of ethnic and national origins (Europeans, Asians, Africans, Indians)

c.     Role of class conflicts – strong populist tradition, more modern class structure emerging, overtakes rural oligarch/small-holder/farm worker cleavage, but large income inequalities (see figure 1 below) with 28% of the population living on less than $1 a day and significant percentages of urban residents living in favelas, overlapping with urban/rural and race distinctions continue to orient modern politics.

d.     Western hemisphere – dominant country within South America, but not yet defined place vis-à-vis North America, NAFTA – Free Trade Area of the Americas vs. Mercosur (created by Argentina, Brazil, Paraguay and Uruguay in March 1991 with the goal of creating a common market).

e.      Economic dependency - Strong presence of multi-national corporations competes/collaborates with local private sector, causes some nationalist resentment

III. Legitimacy Crisis – product of partial modernization, corporatist tendencies, military intervention, populism, federalism

a.     Legitimacy Crises expressed in great variety of regime types:

a.      8 constitutions
b.     Monarchy since 1822
c.     Empire
d.     Republics since 1889
                  i.      First republican constitution – United States of Brazil, strongly liberal and federal – modeled on US example

   1.     Role of federal government

1.     Repel invasions through control of military/foreign affairs, maintain Republican form of regime, establish order at request of states, assure execution of federal laws, foreign trade/customs, imposition of a variety of taxes, issuance of money, separation of church and state

2.     Bicameral legislature (House of Deputies, Federal Senate)

3.     Separation of powers (no member of legislature part of executive)

4.     President of the Republic elected with Vice President (but no electoral college), has commander in chief function, etc.

5.     Supreme Court

6.     Electorate – at least 21, male, excludes illiterates (that’s most people), those within religious establishments not able to observe a free vote

2.     State governments – various taxing abilities (except on interstate commerce),

1.     Rural society remains dominated by landed elites who manipulated votes, violated spirit of Republican liberal values

    a.     Patron-client relations – clientelism, partimonialism (informal “machine” like operation of political system)

2.     Dominated by decentralization and power of Sao Paulo and Minas Gerais

a.     European immigration and some urbanization challenges rural domination by 1920s

e.      1930 Revolution - Vargas takes power in midst of economic crisis, develops more centralized rule

                                                           i.      Undermines liberal concepts of civil society/state

                                                         ii.      State inspired industrialization – establishes public firms

                                                       iii.      State corporatism

1.     State sponsored associations for employers and employees (representational monopoly)

2.     State arbitrates conflicts

                                                       iv.      Estado Novo – new title for state corporatism

1.     Diminished role for representative, elected institutions

2.     Expanded welfare state

3.     Expanded professionalization, funding of military, public ownership of firms critical to national security

f.       1945-1964 Populist Republic

                                                           i.      New elections brought about new conflicts

1.     Those favoring clientelism and social control through a strong state (Social Democrats)

2.     Those favoring continued but leftist state corporatism  (Brazilian Labor Party)

3.     Those favoring liberal Republicanism and rejection of all corporatism except for economic development  (Democratic Union Party)

4.     Populist outcome

1.     PSD victory ensures social control in exchange for defined benefits to guarantee support (more welfare, labor favors)

2.     Kubitschek follows Vargas – Brazil enjoys strong economy until 1960, corruption decline thereafter

3.     Early 1960s, period of growing mobilization of social forces, ideological conflict, partisanship – inability to adjust political institutions

g.     1964-1985  Military government – bureaucratic authoritarianism – modernizing regime coupling military elites with technocrats in pursuit of order and economic development

1.     New party system erected by military (ARENA and MDB) reorders old party followers into new organizations

2.     Congress – easily circumvented by executive with strong power of using decrees

3.     Expansion of state sector leads to economic growth until 1973

4.     Economic troubles lead to abertura and growth of opposition MDB – regaining of liberal institutions/liberties

5.     1984 – new Presidential elections, 1987 Constituent Assembly redrafts constitution

h.     1988-present – Return to Democracy –

                                                           i.      1988 constitution which takes hold in 1988

1.     More decentralization

2.     More worker rights

3.     Independence of trade unions

4.     Retention of some public firms, exclusion of sectors from foreign investment and privatization

Article 170: “The economic order, founded on the appreciation of the value of human work and on free enterprise, is intended to ensure everyone a life with dignity, in accordance with the dictates of social justice, with due regard for the following principles

       I.            national sovereignty;

    II.            private property;

 III.            the social function of property;

IV.            free competition;

   V.            consumer protection;

VI.            environment protection;

VII.            reduction of regional and social differences;

VIII.            pursuit of full employment;

IX.            "preferential treatment for small enterprises organized under Brazilian laws and having their head-office and management in Brazil.”

                                                         ii.      1989 – First direct election of President – Fernando Collor de Mello

1.     Starts reverse of statism – privatization, economic deregulation, open to external world – a Latin “Thatcher?”

2.     But inflation problem not solved, President impeached in 1992

3.     Replaced by I. Franco who with Fernando Cardoso implements “Real Plan” which curbs inflation

4.     Cardoso then wins Presidency in 1994 and 1998

5.     Rising state debt led to financial crisis

6.     Lula da Silva – Left wing populist elected in 2002  (more later)

IV. Penetration Crisis - State building and economic development

        a. Industrialization

1.     Export vs. import-substitution economic development

a.      Export

                                                                             i.      First based on agricultural exports

1.     coffee, sugar, cotton, rubber

2.     Through the early 1920s – brought in $ for infrastructure development, spin off industries

3.     1930s – Depression causes decline in foreign markets – less foreign currency for purchase imports

a.      Import-substitution results

                                                                                                                                                     i.      Phases, early focuses on low tech industries, sectors received some state subsidies, tariff protection

b.     1950s – move to more complex industries through state planning
        

                              i.      National development bank

                                                                                                                                                   ii.      National public firms

1.     subsidized prices in private sector

2.     lower credit costs made private firms more internationally competitive

3.     Planned benefits to targeted sectors sounds like French indicative planning

c.     1960s and 1980s – Contradictions of ISI emerge

                                                                                                                                                     i.      Protectionism – creates noncompetitive firms dependent on artificial subsidies

                                                                                                                                                   ii.      Cost of imported inputs covered by overvalued currency, which undermines exports

                                                                                                                                                 iii.      Lack of foreign currency prompts govt. to overload the money supply resulting in inflation

                                                                                                                                                 iv.      1970s – growth in foreign debt; foreign capital becomes more important

                                                                                                                                                   v.      Military govt. tries to cope by emphasizing efficiencies in agriculture for export

                                                                                                                                                 vi.      Environmental problems – cost of growth emphasis, weak regulatory impulse

1.     Water and air pollution

2.     Toxins in ground

3.     Deforestation due to mining, cattle, timber, slash and burn agriculture

4.     Efforts to deal with these problems start under military, expanded after 1985

5.     However, results have not been impressive

                                                                                                                                               vii.      Fiscal problems

1.     Tax avoidance is chronic

2.     Regressive tax policies

3.     informal economy stays outside taxable transactions (up to ½ of GDP)

4.     Local governments badly affected by excessive spending and lack oversight by fed govt.

5.     Cardoso tried to reign in state govts. but led to serious intergovernmental conflict

6.     Inflation – chronic problem

1.     Cardoso tried anchoring currency to US dollar

2.     Improved tax collection

3.     more foreign investment

4.     more stimulus to exports

5.     but excessive spending by govt. causes currency to devalue and inflation fears to continue

2.     Current economic situation – Brazil’s “Third Way?”

                                                                             i.      Lula da Silva – elected in October 2002

1.     Places great emphasis on overcoming social problems – poverty, hunger, joblessness

2.     Committed to free trade, foreign investment

3.     Committed to previous contracts

4.     Committed to fighting inflation

5.     What will he do that is different than predescessors?

                                                                                                                                                     i.       

b.     Principal trading partners (1998): exports to US (17.8%), Argentina (13.2%), Netherlands (5.4%), Japan (4.3%), Germany (5.9%), UK (2.1%). [EU (27%)]

c.     Principal trading partners (1998): imports from US (22.2%), Argentina (13.2%), Germany (8.6%), Japan (5.3%), Italy (5.2%), [EU (26.7%)]

• GDP (1998): US$761 billion, the 9th largest in the world.

• GDP per sector (1996): industry 39.3%, agriculture 12%, financial services 7%, mining 1%

• Economic growth (1998): 0.2% (1993: 4.9%, 1994: 5.9%, 1995: 4.2%, 1996: 2.8%, 1997: 3.2%)

V. Distribution Crisis – Brazil’s welfare state

A. Ineffective welfare state

a.      High cost, but insufficient coverage

b.     Only 15% of workers are eligible for most social benefits, those in the informal sectors are excluded

c.     Many don’t contribute taxes to welfare system

d.     Many retirees reduce revenues

e.      Public sector workers are disproportionately benefited

f.       Federal govt. decentralizing social services to states resulting in disparate outcomes

     B. Lingering problems

1.     High unemployment

2.     Inequalities – highly skewed income distribution – Brazil at “60” vs. Latin America average of 50.

Figure 2: Income Tables (source: World Bank)

3.     Corruption – makes it hard to effectively administer services and programs

4.     Rural land tenure with high concentration of land ownership

5.     Rural to urban migration without adequate housing or employment

6.     Regional inequalities

7.     Very high cost of maintaining “universal” access to welfare benefits

1.     Reforms strongly resisted – element of continuing instability

C. Questions – has Brazil found its “Third Way?”

a.      Cardoso (first as Minister of Finance and then as President) had started with a “Thatcher” like series of reforms: free market reforms, privatization, reduced govt. spending (austerity), more efficient tax collection, a more stable currency.

b.     Lula da Silva (like Blair) promises to retain and deepen these initiatives, but also focus on improving the lot of the poor.