Oct 10, 2013

Brazil on the Rise

Last night 11 members of the Barnes and Noble History Book Club met to discuss Brazil on the Rise: The Story of a Country Transformed by Larry Rohter. The discussion, as usual, was spirited and not slavishly constrained to the content of the book.

Brazil is a fascinating country, with a land area almost as large as that of the United States and a population just over 3/5th of ours; it has an extraordinarily complex society. Larry Rohter is a professional journalist and has produced a very readable book which lacks some of the quality of professional history, such as annotation of sources. The book deals with history from the colonization by Portugal to the 20th century in very broad strokes. It then goes into more detail on modern cultural, economic and political history, with some reflections on Brazil's future. With copyrights in 2010 and 2012, it is right up to date.

Brazil has enjoyed almost two decades of sound economic policies which led to economic growth; It has combined growth with pro-poor policies which led to a broader economic base. Health indicators were notably improved. The country is blessed with huge natural resources, including still to be exploited off-shore oil deposits. Still the country is challenged by a poor infrastructure a weak educational system.

Brazil has enjoyed a virtuous cycle in those decades. Controlled inflation and liberal policies encouraged foreign investment including the development of new factories.  New lands were brought into production and agricultural exports increased. As people were brought into the work force and incomes increased, there was a large increase in demand, which in turn created more jobs.

The economy was boosted by demand for Brazilian exports, notably from China. With the slowdown of the Chinese economy, the problems of the European economy (and threats to the U.S. economy) Brazilian exports are threatened. As the graph below shows, the Brazilian economy grew by less than one percent in 2012 and the recovery in 2013 is not expected to be robust.

Source: The Economist magazine, September 28, 2013
It was noted that the economic policies introduced by Cardoso ( known by his initials: FHC) before he became president and continued during his presidency were continued by Lula da Silva; foreign investors, who had been concerned by Lula's populist background, were reassured and foreign direct investment in Brazil remained high.

During long years of inflation Brazilians got used to spending money fast before it lost value. The high levels of consumer credit that helped fuel the economic expansion during the FHC and Lula presidencies left President Dilma (Roussoff) facing a heavily indebted society, adding to the difficulties of sustaining economic growth.

We noted the importance of the family subsidies introduced by Lula which paid poor families as long as they immunized their children and kept them in school. We also noted that rich and middle class children had long enjoyed private schools which were better than the public schools, giving them a huge advantage in qualifying for free public universities. It was suggested that there is a demand for educational services as people seek ways into higher status, more lucrative jobs. Life expectancy has improved, although it is still far lower than that of developed nations.

Brazil has uniquely generous pension policies, with mid level government employees able to retire after 15 years of service on full salary, indexed at the inflation rate or higher. Moreover, widows receive the full pension until their deaths. There was some jealousy among those of us with less generous plans. There is also apparently a common phenomenon of newly retired men marrying young wives who outlive their husbands by decades, drawing pensions all the while. The pension system will burden the economy unless it is significantly revised.

A relatively small triangle formed by Rio de Janeiro, Sao Paulo and Minas Gerais has accounted for most of Brazil's economy; the development of the new capital of Brasilia is a part of and symbolic of the effort to expand development into other regions of the country. Still, Brazil remains extremely diverse. The Amazon remains relatively undeveloped, the large area called the cerrado has recently become a major global producer of soy beans, with many large, modern farms. Other areas are still being developed for agriculture and have a frontier character.

The book's discussion of race in Brazil was of special interest to members of the group. First time visitors (from the USA) note the variety of skin colors, and the book informed us that 70 percent of Brazilians have at least some African heritage. Yet there is a color gradient in the country. The slave population was very large in the north east and European immigrants more dominant in the south east and there remains a heritage from that past. Moreover, the upper classes are whiter than the lower economic classes. There is even a significant group of people of Japanese descent in Brazil, The book clarifies that race is more complex in Brasil than the casual visitor is likely to recognize.

We touched on aspects of social history -- carnival and the samba, the cult of physical beauty, beach culture, and importantly, soccer and the upcoming World Cup.

There was some discussion of the differences between Sao Paulo, a huge metropolitan city, Rio with its gorgeous natural setting and historic character, and Brasilia, a model city showing its age. We discussed the favelas, huge slums in which the government and criminal gangs have been conducting a virtual war. The cities of Brazil are not only very different, one from another, but also within themselves.

As an aside, one member mentioned a project funded by USAID in which a Brazilian scientist demonstrated that a microorganism living in the above ground parts of sugar cane could fix nitrogen and make it available to the plant. As a result, some varieties of sugar cane grown with the symbiotic organism did not need nitrogen fertilizer. While legumes have been grown without nitrogen fertilizer, the result suggested that food grains such as corn (maize) might also. It was reported that one third of Brazil's sugar cane was grown using the results of this research. Since Brazil uses gasohol in its cars (which now are engineered to work on either gasoline of alcohol), the impacts include more affordable fuel and less emission of greenhouse gases.

We also discussed in several different contexts the great differences among Brazilians. Sao Paulo has universities of international stature and major scientific accomplishments, while one can still find tribal Indians in the Amazon living much as their ancestors had in previous centuries. Brazil has very large economic divides, with some very wealthy families and many very poor ones. It has been called two countries living in one land (Benindia) for the division between its modern, affluent elite and its poor living in third world conditions.

A new member asked if the group had developed a different picture of Brazil and Brazilians as a result of reading the book. It turned out that several of us had been to Brazil, a couple of us had careers in international development and had worked in Brazil, and others had traveled considerably. The club has been meeting for a dozen years, reading a history book a month. Perhaps we had begun reading Brazil on the Rise with a better understanding of people in developing nations than might be expected of a random group of Americans. That said, it seems clear from the discussion that the members of the group did learn about Brazil from the book and emerged from the experience with a different view of that complex society.

We wondered about Brazil's future. A phrase was quoted: "Brazil is the country of the future, and always will be." Brazil has been seen as one of the BRIC emerging economies on a global scene, but it has a long history of economic busts following economic booms. We were unsure whether the economic and social progress of recent decades could be maintained, or whether lurking problems would intervene.

While one member of the group said that she didn't like the book and did not finish reading it, several liked it very much.

Click here for a review of the book posted by one of our members.