A Gringo’s look into the problems facing Brazil

One of the hardest things for me to grasp about Brazil was the problems that the country faces. Ever since I started working at Billabong, I would hear a lot about how the economy was going downhill and the government wasn’t doing too great. I was starting to learn Portuguese at the time so my conversations with people didn’t venture off from the casual “What brands do you like? You are looking for some shorts for your son. How old is he?” so I didn’t really get to ask or speak about the problems facing the country. As my Portuguese got better, I started becoming more aware firsthand of many issues occurring back in Brazil. It was weird because my first year working at Billabong was pretty much day after day of selling decently expensive goods to an enormous amount of Brazilians. For me it was people just whining about the government, something everyone does regardless of nationality. I didn’t think much of it. It is very difficult to sympathize with someone who is telling you about how bad his government is and how horrible the economic situation is back home when that someone just dropped over a thousand dollars on board shorts and t-shirts without thinking twice, something I haven’t had the pleasure of doing in a better economy than what said someone lives in.

tourist shopping bags

tell me more about your economic woes

As time progressed I did see a marked difference in the amount of Brazilian tourists we received and the amount of money they would spend. With each oncoming year we would get less and less tourists and the exchange Brazilians that would work at the store would talk more about the economic toll it was costing them to do an exchange. It was becoming a visible phenomenon for an area that highly depends on tourist traffic. The ones that did come from Brazil had either saved up a lot of money or had so much money that the increasing exchange rate didn’t really do much to stop the allure of seeing Mickey Mouse and buying still relatively cheap goods.

(Disclaimer: I’m not an economist. I’m not the most well versed person when it comes to Brazil. I’m just shooting off opinions and writing about my observations. I might get some things wrong and I might upset some people. If so, I will gladly listen to the feedback.)

IMG_1413

the lack of degree should be enough reason to take my word with a pinch of salt

So a little condensed history of Brazil to bring anyone unfamiliar with the situation up to speed. Like any good Latin American country, Brazil had a 21 year military dictatorship. The military dictatorship was backed by the United States as it was very right leaning and pro-capitalist; the United States trying to prevent any Soviet influence from taking over the country. Dictatorships come in many shapes and sizes and Brazil’s wasn’t the best, granted the word dictatorship never carries a positive connotation. The military regime cracked down on political opponents like a good military dictatorship does. Human rights were launched straight out the window and cases of censorship, torture, and kidnapping became all too common. If there was any good about the dictatorship, it was the economic growth that occurred during the military dictatorship. The Brazilian Golden Age was a weird time where the country was doing economically great with a growth rate reaching up to 10% and the national football team winning a World Cup in 1970 but at the same time the current President Dilma Rousseff was being tortured by the military government.

brazil propaganda

nothing quite says comforting like the government telling you to “love it or leave it”

This all came down in the 80’s as the economic growth died down and the debt the government had incurred during the golden age started to set in. The next 20 years were a series of off and on attempts to normalize a country that had become used to a dictatorship with a decent economic record but a horrible social record. The New Brazilian Real created in 1994 somewhat helped stabilize the economy. This on and off cycle continued until Luiz Inacio Lula da Silva , also known as Lula, came to power in the early 2000’s. Lula brought in a good era of growth and stability for the Brazilian economy and many social programs that helped decrease the enormous levels of poverty. His success was enough to get him reelected. Lula’s administration was also riddled with cases of corruption but overall he had one of the best approval ratings of any President. His successor Dilma Rousseff has not been so fortunate. Her first term was marked with a declining economy, as seen throughout the rest of the World and less than impressive results in terms of policy. She was reelected for a second term which has been less than optimal.

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contrary to popular belief, it doesn’t actually say “for a Dilma”

Her current approval rating is around 10% and isn’t rising anytime soon with current protests going on aiming to impeach her for ties with various corruption scandals with Petrobras, Brazil’s largest energy company, along with many of her political party the Worker’s Party including former president Lula.

Traveling around Brazil brought me in contact with the country and I got a firsthand account of what goes on in Brazil. I got to travel a lot, talk to a plethora of people, listen in on a variety of opinions from all sorts of walks of life, as well as just experiencing firsthand how the country shakes. One of the main things I did notice was the disenchantment of the people. No one is too happy with the current status of Brazil. The distinction is to be able to separate the common Brazilian moaning about the current state of affairs to the actual problems that the people are facing. What am I talking about? Brazilians live in a weird paradox where they love to hate their country but still actually love their country. It doesn’t make sense but once you talk to a Brazilian, you can start to see it. They will wear a Brazilian National Football Team shirt and talk about how it has the most World Cup Wins, yet the team being in disarray and a national embarrassment but somehow managing to win the next World Cup. Same thing translates to the actual country. The country is doing horrible, the politicians are lying scumbags and as corrupt as possible, but the country itself is beautiful and the people are amazing, yet they are also idiots and elected the current president, but the country will turn around an impeach her and elect a better leader.

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not sure if he is talking about soccer of politics

Once you dig past that layer of confusion, you get to hear the actual complaints: Corruption in many facets of life, the exchange rate being horrible, the price of many goods rising at exorbitant rates, wages stagnating. These were common points of contention regardless of socio economic status and region. Some differences I did notice were based on what party you most affiliated with. Those who aligned with the Worker’s Party or any more left leaning party did agree that corruption was a huge issue but those of the Brazilian Social Democracy Party were also corrupt while trying to maintain an aura of transparency and that they cared more about helping higher class people and caring less about lower socio-economic classes. They also claim that the BSDP tends to overlook many issues like racism, economic and social privilege, and tend to pander to more conservative rightist ideologies that can be deemed detrimental to many key civil and human rights. Those from the BSDP or right leaning parties claim that the Worker’s Party is too corrupt and takes advantage of its role as majority and leading party in government to get many benefits from private enterprises. They also think that the Worker’s Party panders to the poor by giving them handouts which in turn guarantees them votes. They are too busy helping the poor with money from taxes from the middle and higher classes and not busy enough focusing on elements that will improve the economy. Granted there are many more arguments but I can say these are the most common ones.

Are the problems even there though? I would say so. That is the cool thing about being an outsider. I get a fresh unbiased view of things. It was my first time in Brazil so while I may have expectations, I don’t view things through the lenses of someone that endures the problems that Brazil has to offer. The biggest thing I noticed was the exchange rate. For me it was incredible! I was getting 4 Reals for one dollar.

brazilian real

the face you make when you are only worth 1/4 of your former self

 

I couldn’t have chosen a better time to travel in Brazil and get a bang for my buck. Now on the contrary, Brazilians weren’t clamoring to buy dollars. The rate is horrible for them. What hurts more is that the rate was ridiculously better less than two years ago. This is what probably pisses Brazilians off the most. They saw a huge downturn and are conscious of the downfall of the value of the Real. It isn’t a generation away but rather two summer vacations ago. Now scale this up and you have a huge problem for the economy. Imports become very expensive because of the devaluation of the Real and while this should help with exports, it doesn’t necessarily help with foreign investment which the country became quite accustomed to during Lula’s administration. By traveling around and seeing different prices of different goods around the southern part of Brazil, I can understand the complaints about prices and wages. Gasoline for example is around 3-4 Reals a liter. Doing the math that comes out to about 3-4 dollars a gallon. Way more expensive than here in the United States. Food costs are moderately low but anything material tends to be way more expensive. Now adding to this a minimum wage of 880 Reals a month, I can understand the stress placed on families that must survive on the equivalent of 220 dollars a month.

iphone 6 price brazil

the equivalent of $1000 dollars or 5 months of Brazilian minimum wage work

Many of these high prices are because of high taxes. I was told that almost all products in Brazil will pay a bunch of taxes before reaching their final destination. You don’t actually see it when you pay for it but a small google search of what taxes are applicable to what products in Brazil explains why so many Brazilians are so eager to shop elsewhere from Uruguay to Paraguay and even the United States. Like any other tax paying populace, this is where everyone starts getting angered. What priority is being placed on that tax money, considering Brazilians to contribute a decent amount of their hard earned money to the government? Well that is the reason for all the protest, anger, and resentment that most Brazilians have. While the government has put out some programs to help eradicate hunger and poverty like Fome Zero (zero hunger) and Bolsa Familia (Family allowance) they haven’t been as transparent with all of the tax income. It also doesn’t help that Brazil ranks pretty low on transparency on a global scale. Corruption is in most if not all levels of government from local city officials paying too much for certain projects and not receiving the quality that was paid for to heads of state governments giving very nice contracts to private companies that likewise don’t do as well of a job. This is especially noticeable during a time of much construction considering the past 4 years has seen many projects for the 2014 World Cup and the 2016 Olympics in Rio.

fifa corrupt

not that FIFA has ever been known for being in shady dealings

Lastly it all comes down to what is currently going on with the indictment of Lula for being involved with Brazil’s biggest corruption scandal involving the government, Petrobras, and 15 billion Reals (3.75 billion dollars). And the final cherry on the cake being Dilma Rousseff being on the board of directors of Petrobras when the scandal was in full swing.

So what are some solutions? Well you are asking the wrong person! I’m not really sure what an exact solution would be. I can however give an opinion. What I can say is that the biggest problem Brazil is facing is corruption. Not really hard to figure that one out. It really weakens the country. The huge loss in credibility and actual money is probably what is keeping the country the way it is. And it sucks because Brazil is a pretty awesome country with a huge amount of potential. But I’m not sure if Brazil is ready for that. There were demonstrations recently with a huge outpouring of Brazilians hitting the streets asking for Dilma’s impeachment. I can understand the anger and agree with protests in such occasions. But the disheartening thing is watching a good majority of those same protesters push for a new government with many key people from the opposing party who are also involved in corruption scandals.

brazil-protester-military-intervention

and if you want utterly disheartening, you should listen to people talk about bringing back a military government

Seems slightly ironic and hypocritical to want to drive someone out of office for her involvement in such a shady corruption case to then place someone in the same position, albeit of a party one favors, whom also has the same corruption issues. If that is the case, then you aren’t trying to actual solve one of the big problems. You are only trying to advance your ideological agenda for your own cause. That might just be another big problem. The notion that ideology will help the country. Brazil needs pragmatism and people willing to look past their own party lines for solutions rather than scapegoats.

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