Brazil Facing More Than the Pandemic: Distribution and Exclusion in Economic Policy

• Author: Ladislau Dowbor,Bruno Barbosa Cezar
• DOI: http://doi.org/10.1177/0094582X221115357
• Published date: 01 September 2022
• Date: 01 September 2022
• Subject Matter: Articles

https://doi.org/10.1177/0094582X221115357

LATIN AMERICAN PERSPECTIVES, Issue 246, Vol. 49 No. 5, September 2022, 14–33

DOI: 10.1177/0094582X221115357

© 2022 Latin American Perspectives

14

Brazil Facing More Than the Pandemic

Distribution and Exclusion in Economic Policy

by

Ladislau Dowbor and Bruno Barbosa Cezar

The Brazilian economy followed an expansive and socially inclusive model from 2003

to 2013. As of 2014, a drastic reversion of policies took place with the introduction of the

so-called austerity model. Comparing the two models, one more equalitarian and the other

more wealth-concentrating, is useful for clarifying how key economic variables change.

The evolution of key economic and social data covering the two decades of our millennium

shows how a dynamic distribution process was broken down. The main conclusion con-

cerns the power of financialization in the overall transformation of our society.

A economia brasileira adotou um modelo de desenvolvimento dinâmico e inclusivo

entre 2003 e 2013. A partir de 2014, a política distributiva foi travada, com uma inversão

radical no quadro do modelo de austeridade. Ao comparar os dois modelos, o mais iguali-

tário e o concentrador de riqueza, fica clara a transformação das principais variáveis

econômicas. A evolução dos dados econômicos e sociais mostra como a dinâmica de distri-

buição foi travada. A principal conclusão se refere ao poder da financeirização no conjunto

da transformação da nossa sociedade.

Keywords: Economic model, Financialization, Public budget, Inequality, Austerity

From 2003, the country has become recognized for its success in reducing poverty and

inequality and its ability to create jobs.

—World Bank Group, 2016

What happened to Brazil? BBC News explores the crisis years of 2013–2018 in Brazil

and looks at how the dreams of a better future disappeared.

—BBC News, 2019

During the past two decades, the economic, social, and political transforma-

tions taking place in Brazil have been subject to ideological arguments that

have obscured the understanding of the matter. The line of reasoning, repeated

time and again by the media and in political speeches, is centered on the idea

that the undeniable success of the development model in effect between 2003

Ladislau Dowbor is a full professor in the graduate programs in economics and administration at

the Universidade Pontificia Católica de São Paulo, a consultant for several UN agencies, and the

author of numerous books and technical studies. Bruno Barbosa Cezar has a Master’s in admin-

istration from the same university.

1115357LAPXXX10.1177/0094582X221115357Latin American PerspectivesDowbor and Cezar/Distribution and Exclusion in Economic Policy

research-article2022

Dowbor and Cezar/DISTRIBUTION AND EXCLUSION IN ECONOMIC POLICY 15

and 2013 was the result of favorable conditions in the international commodity

market. The period is said to have seen an irresponsible transfer of resources to

the poor masses of the country that literally “ruined the public accounts.” The

first argument hardly stands, since Brazil’s exports make up approximately 10

percent of the gross domestic product (GDP), and the domestic market is

responsible for 90 percent of the economic dynamics. The “nothing but blue

skies” argument is essentially used for political purposes, aiming to obscure the

efficacy of the distributive policies.

This article aims to clarify the second argument, according to which “the

good housewife spends only what she has,” that “helping the poor” is dema-

gogic populism and that, at any rate, the distributive model is limited because

“mass consumption has lost its capacity to drive economic growth.” Starting in

2014–2015, there was a drastic shift from the distributive phase to an austerity

model that promised to balance the public budget and promote development.

Considering this major reversion, systematizing the main indicators for each

phase seems particularly instructive: these are two clearly contrasting models.

Periodization—how long the distributive model lasts and when to consider

the model reversed—is important. Luiz Inácio Lula da Silva was president

from 2003 to 2010 and Dilma Rousseff from 2011 to 2014. She was reelected at

the end of 2014 and should have governed until 2018. Although formally pres-

ident until May 2016, when she was officially ousted, her second term never

took off. Already in 2013, huge protests were largely taken over and maneu-

vered by the oligarchies; in 2014 the country faced political paralysis, with

Operation Car Wash dominating the entire debate; Globo and other commer-

cial media contributed to a hysterical antigovernment campaign. In economic

terms, some of the country’s largest companies, such as Petrobrás and

Odebrecht, were brought to a standstill by the Operation, resulting in a pro-

found impact on the economy. Furthermore, the atmosphere was one of elec-

toral war. Dilma was in government but not in power.

With the paralyzing political offensive against the government from 2014 on,

even before the formal ousting of Dilma, the distributive model was reversed.

It was rightly said at the time regarding the 2014 elections, “If Dilma wins, she

won’t govern.” In 2015 Dilma had to put a banker, Joaquim Levy, at the helm

of the economy. With this scenario, it seems reasonable to adopt the World

Bank’s periodization, which refers to the period from 2003 to 2013 as the

“golden decade” of the Brazilian economy. A significant convergence of factors

points to the adoption of this more realistic periodization, from 2003 to 2013 for

the distributive model and from 2014 to 2019 for the concentrationist model.

The year 2020, with the impact of the COVID-19 pandemic and in a different

conjuncture, will only be superficially covered despite the first quarter’s con-

firming our arguments.

The distributive phase came to an end in 2013. As the process of the coup

developed, undermining the government until 2016, when Dilma was formally

removed, it became politically important to attribute the 2015–2016 recession

to the distributive policy itself. The forces behind the coup thus presented

themselves as the saviors, standing against the model that “ruined the public

accounts.” The truth is that the second Dilma administration took place during

a reversion of economic policy, and the catastrophic years of 2015 and 2016,