World Cup 2014: Brazil's century?

The only previous time that Brazil hosted the football World Cup, in 1950, it proved to be a national humiliation. On paper, Brazil had the best team in the world. The government of what was then the Federal District built the Maracanã stadium for the big occasion. Brazil duly reached the final, where it faced Uruguay. On Sunday, 16th July the Maracanã was packed to overflowing: the official attendance of 173,850 paying spectators was a world record for a sporting event, never mind the officials and other freeloaders who pushed the total close to 200,000. At the start of the second half, Brazil scored a goal. Then the unthinkable happened: in the space of 13 minutes, late in the game, Uruguay scored twice to win the tournament. Nelson Rodrigues, the playwright and journalist, summed up the outcome in characteristically hyperbolic terms: “Everywhere has its irremediable national catastrophe, something like a Hiroshima. Our catastrophe, our Hiroshima, was the defeat by Uruguay in 1950…” Eight years later, when Brazil’s squad set off for the 1958 World Cup in Sweden, it did so amid a climate of national pessimism about its prospects, which Rodrigues attributed to that fateful day in 1950, “a national humiliation that nothing, absolutely nothing, can cure.” He insisted that Brazil had the best players in the world. “Only one thing trips us up,” he concluded, a “mongrel complex . . . a problem of faith in ourselves.” His phrase complexo de vira-latas (mongrel complex) entered the language.So when Lula talked repeatedly of Brazil as a country that had recovered its self-esteem, and that the award of the Olympics to Rio meant that Brazil was recognised by the world as a “first-class country”, he was declaring that the complexo de vira-latas had at last been overcome. That rang true. Over the past 20 years Brazil has gone a long way towards meeting the challenges it faced when it emerged from dictatorship, those of creating a robust democracy, a stable and more dynamic economy and of reducing its yawning social inequalities. In the process Brazil has avoided some of the pitfalls to which its neighbours have succumbed. Liberal economic reform under the former President Cardoso [1995-2002] was the result of a broad political consensus and was negotiated democratically. It was not the work of a Pinochet, or a messianic strongman such as Argentina’s Carlos Menem or Peru’s Alberto Fujimori. That made it harder to achieve but harder to unpick. Lula’s social policies avoided the unsustainable redistributive populism of a Chávez, or even of Argentina’s Cristina Fernández. Brazil’s leaders have worked within the rules and institutions of democracy. They have set a welcome example to Latin America and the world that progressive social change, representative democracy and the market economy are compatible. Given his popularity at the time, Lula might have secured a constitutional change to allow him to run for a third time in 2010. It was to his credit that he did not seek to do so. Nevertheless, there were clear signs that the cycle of economic reform and social progress unleashed by the establishment of democracy and by the Real Plan [the financial scheme which helped tame Brazil's persistent hyperinflation] had run its course. As they celebrate the World Cup in 2014 and the Rio Olympics two years afterwards, the country’s leaders can no longer be as confident as they might have been a few years ago that these events will serve to showcase Brazil’s arrival on the world stage as a new global power. Rather, Brazil’s growing pains and frustrations are likely to be on display alongside its achievements and its rise. Felipe Scolari, the manager of the national team, is surely right when he says that the country will put on a good party, and that the vast majority of visiting fans will enjoy themselves. But it would be surprising if many of the visitors do not run into problems with public transport. And many Brazilians expect further protests in the period between the World Cup and the presidential election of October 2014. The election seemed likely to be a close contest. Dilma Rousseff and her Workers' Party (PT) were counting on popular satisfaction with full employment and the increase in wages over the past decade as well as popular gratitude towards Lula to secure her another term… Yet the protests of June 2013 suggested an alternative reading of the popular mood. After 12 years in office the PT looked tired and bereft of ideas… Brazil has amassed some formidable economic strengths. They include its farming, its oil, gas and ethanol industries, and a growing base of science and research. And the reforms of Cardoso and Lula’s first government, together with the income from the commodity boom, have endowed the country with stronger defences against economic turbulence in the wider world. Despite the recent weakening of the macroeconomic framework, international reserves stand at a record level (of US$376 billion in mid-November 2013, equal to almost two years’ worth of imports), the country is a net foreign creditor and public debt, though rising, is manageable. But none of this is a reason for complacency. Will the 21st century be “Brazil’s century”, as Lula famously proclaimed? That, of course, grants the country many decades in which to achieve its potential. Nevertheless, the starting point must be to recognize that Brazil once again has a problem of low economic growth. And faster growth is vital if the country is to continue the task of narrowing its still intolerable socio-economic inequalities and providing opportunities to all its citizens. The faster expansion of 1994–2010 owed much to the pay-off from stabilization, to the commodity boom induced by China’s industrialization, to the world liquidity glut and to the incorporation into the formal labour force of millions of under-occupied Brazilians. All of those motors are slowing, if not sputtering. In 2013 FIESP, the São Paulo industrialists’ lobby, published a blueprint for the next 15 years that set as a goal doubling the country’s income per head to US$22,000, and raising its health and education indicators to those of developed countries. It reckons this would require growth averaging 5.3 per cent a year and an increase in investment (private and public) from its current level of 18 per cent of GDP to 24 per cent. Raising Brazil’s game in this way is almost inconceivable without a new round of structural reform. From now on, faster growth will depend increasingly on improving the country’s dismal productivity. That requires greater efforts to improve education and infrastructure. But it also means more capital investment, and… this means reviewing the kind of state the country needs in the 21st century. Mario Covas [the former governor of São Paulo’s] speech in the Senate of 25 years ago has an uncanny relevance today: “Enough of spending without having the money. Enough of so many subsidies, so many tax breaks, so many unjustified privileges. Enough of jobs for the boys. Enough of notaries . . . Brazil doesn’t just need a fiscal shock. It needs, as well, a capitalist shock, a shock of free initiative subjected to risk and not only rewards.”

The positivists versus the citizens Brazil has an allergy to liberalism. Roberto Campos, one of the country’s more important liberal economists, wrote that “admitting to liberalism, explicitly, is as outlandish in a country with a dirigiste culture as having sex in public.” There were reasons for this—and they are why Brazil is different than the United States, with which it so often compares itself. Against this background, when liberalism did emerge in the 19th century it was quickly bastardized by positivism and patrimonialism. From the Portuguese crown, to the empire, to the long-serving former President Getúlio Vargas and to the dictatorship, Brazil has been made from “the top downwards”, as Getúlio himself proclaimed; its state has been colonized by insiders, by relatively privileged interest groups, be they private businessmen, labour unions or indeed, recently, some social movements. Cardoso was able to start to remake this corporate or “national developmentalist” state because he encountered it at a moment of historic weakness, and because Brazilians were so utterly fed up with inflation… Partly because it was broadly successful for so long in developing the economy, the “national developmentalist” state put down deep roots in Brazil’s collective consciousness. It is deeply imbued in the psyche of many political and business leaders. It is not wholly surprising that it is making a comeback, albeit in much diluted form, although given its lamentable record on education and health care, it is in some ways surprising that these ideas have returned under a party of the left. On a good day Brazil’s current policymakers seem to envisage the country as a tropical France (on a bad day, they are tempted by China). But as Zaki Laïdi, a professor of international relations at Sciences Po in Paris, has warned: “France has had a strong aversion to liberalism for more than two centuries, but has not succeeded in building an alternative model that would allow it to adapt to globalisation without rejecting its history.” This is not an argument that Brazil has to imitate the United States. Ever since Tiradentes yearned for a Jeffersonian republic in Minas Gerais, Brazilians have contrasted their country with its alter ego to the north. Many have lamented that Brazil produced extractivist bandeirantes, rather than toiling pioneers. But Brazil cannot change its history or, at least in the short term, its culture. Indeed, Eduardo Giannetti, a rare Brazilian liberal, argues that if his country did not become like the United States “it was essentially because it did not want to.” It was not prepared to sacrifice alegria and an easy-going approach to life for capital accumulation and future prosperity. He proposes that Brazil can offer the world a less materialistic set of values from the American way, exemplified in the country’s recent commitment to environmentalism… But Brazil still has too many poor people for it to renounce the pursuit of economic growth for a good while yet. Nor is the critique of the rebirth of national developmentalism an argument for a “neo-liberal” (ie neo-conservative) minimal state. Brazil is no Singapore: it is too big a country with too many social and regional inequalities for that to be an option. Rather, it is a call for Brazil to return to the social-democratic consensus that achieved so much success in 1994–2006, and that combined broadly liberal economics with a greater emphasis on social policy and the reduction of inequalities. Unless Brazil abandons its recent dalliance with a revival of the corporate state and returns to trying to create an effective regulatory one, it will not be able to meet the demands of its increasingly empowered citizens for more opportunities, better services and a better quality of life. It was unfortunate, but perhaps inevitable, that the debate within the opposition movement that raged in São Paulo in the late 1970s led to the foundation of two rival parties, the PT and then later the PSDB [the Brazilian Social Democracy Party]. In different ways, both have been modernising forces but they became the opposing poles of Brazilian politics, each obliged to ally with the archaic forces of pemedebismo and its like… The 2014 election may produce a change of political direction. But whether or not it does, the Brazilian people, who are gradually becoming better educated and in some ways more entrepreneurial, may take a hand in the direction of public policies. Three times in the past quarter of a century Brazilians have taken to the streets in large numbers in peaceful protests against the status quo. Though they failed to achieve the direct presidential election they demanded in 1984, they fairly quickly got democracy. In 1993 they saw Collor chased from office, though not punished, for his contempt for the rule of law. Will they get the better public services and greater political accountability they demanded in 2013? This will form the main thread of political debate in the country in the years leading up to the bicentenary of independence in 2022. For almost the first time in their history, Brazilians are now demanding to remake their country from the bottom up, as a country of equal citizens rather than patrimonial privilege. That has placed the corporate state on the defensive. It gives grounds to hope that the achievements of the past two decades will be built upon and extended in a new phase in the Brazilian story. Brazil by Michael Reid is published by Yale University Press and is available for £20. Buy it now Michael Reid discussed Brazil's emergence as a global power at a Prospect and Canning House event in the run-up to the World Cup on 5th June