Brazilians have a self-deprecating sense of national pride. They sheepishly accept Brazil’s inability to join the club of rich and powerful nations with the oft-heard joke that “Brazil is the country of the future … and always will be!”
This national frustration is borne of long experience. Brazil had the world’s fastest-growing economy in the first half of the 20th century, but by the 1970s growth had stalled. As the population boomed, wages fell. Crumbling infrastructure, a protected domestic economy and burdensome regulations made it hard for Brazilian products to compete on the world market. Inferior schools and a weak job market left millions in poverty, and by 1980 Brazil was competing with Haiti for the title of most-unequal country in the world.
Brazil appeared poised to finally shed this reputation as a perennial underachiever in the 1990s, when its leaders implemented smart economic policies. It got its fiscal house in order, and by the 2000s the economy was booming. Wages went up, while inflation and inequality went down. The government expanded social-welfare programs, unemployment fell and millions entered the middle class. Brazil was also lucky, discovering massive oil deposits in its offshore waters. It also played the global public-relations game well, winning both the 2014 World Cup and the 2016 Olympics.
Sadly, Brazil seems to have again lost its momentum. Soccer fans will recall Brazil’s humiliating 7-1 loss to Germany in last year’s World Cup. Brazil has won more tournaments than any country and enjoyed home-field advantage. Yet Brazil’s embarrassing loss epitomized its changing fortunes: Its team was vastly overrated, just like its economy.
Brazil’s economy grew 7.6 percent in 2010, but only 0.1 percent last year. Early reports suggest negative growth for 2015. As the economy slowed in 2013, massive street protests erupted — as they did again early this year, after Brazil’s first female president, Dilma Rousseff, eked out a re-election victory last October. Since then, her approval rating has dropped below 10 percent, and she faces potential impeachment due to a massive corruption scandal.
Brazil’s economy stalled because of factors beyond its control and because it failed to implement needed reforms. China’s economic boom in the 2000s fueled demand for Brazilian iron, coffee, sugar, meat and soybean exports. Brazil has one of the largest economies in the world, but unlike China’s emphasis on industrial exports, Brazil remains dependent on primary commodity exports. For this reason, China’s recent economic slowdown has burst Brazil’s economic bubble.
China’s boom also allowed Brazil to sidestep difficult policy challenges. As millions of Brazilians entered the middle class, they demanded more public services. Left-leaning presidents expanded social spending on Brazil’s poorest, but they didn’t invest enough in programs that appeal to middle-class voters, such as primary and secondary education, health care, and public safety. Middle-class Brazilians have long complained that they pay “First World taxes” (about 36 percent of GDP goes to the government) but get “Third World services” in return. In the run-up to the World Cup, Brazilians grew increasingly aware of the gap between the rhetoric of Brazil’s rise vs. the reality of ineffective government, as many vented anger that their government spent billions on swanky new stadiums (most of which now sit idle) while slashing the rest of the budget.
Recent corruption scandals have exposed the rot within Brazil’s political system. Prosecutors allege that a cartel of construction firms inflated public-works contracts for years, taking billions in kickbacks and greasing politicians’ palms with campaign contributions. As the investigation proceeds, investments in the oil industry and other public-works programs — which drive employment and economic growth — have ground to a halt. The waves of scandal are now lapping at the president’s doorstep, and with the economy in the doldrums, Rousseff cannot rely on popular support to keep the tide of mud away.
Brazil’s governing party won election in 2003 partly by claiming it was more honest than others, but the scandal has even hard-core supporters feeling disillusioned. Corruption — not crime, unemployment, or inadequate hospitals or schools — is now the No. 1 reason that Brazilians rate the president poorly. Politicians promised Brazilians a bright future, but those same leaders are now accused of running the country into the ground — and of profiting while doing it.
David Samuels is distinguished McKnight university professor in the Department of Political Science at the University of Minnesota.