BRAZIL-Cleaning it up.

It’s the only way to start

As I suggested in my blog post of the 10^th that compared the situation facing the Temer administration with that of having to clean up the mess from a raucous party, the damage to Brazil has been substantial and cannot be dealt with in a wholesale fashion.

The administration is proceeding with caution and first assessing the damage before making any dramatic announcements of plans that would eventually not come to pass and further frustrate an already frustrated populace.

The reforms wrought by the Real Plan and that were the basis of the launching of the Brazilian Titanic have been reduced to rubble and the ship has been scuttled.

Cleaning up the remnants of the party will be painstakingly slow but deliberate (as far as I can tell at this early phase). It looks like the administration will start with cleaning the lawn of the beer cans, empty pizza boxes, and food scraps so as to make the place look orderly. 

That will be followed by the slow process of picking up the broken glass and trash strewn around the inside of the house. This will at least allow the clean-up party to move around the place to conduct an assessment of the structural damage caused by the party.

I’ll abandon the metaphor now since it has been pretty much exhausted. The partygoers are now on the street and claiming that “it wasn’t their fault” and that, too, is moot.

The principal question now is whether the “traditional kleptocrats” can accept that the model that sustained them for so many years is no longer valid. There can be no “nostalgia” for the “good old days” when they could confiscate society’s rents with impunity. 

If Brazil wants to be a “player” in the global economy it has to play by the rules – i.e. be competitive, have appropriate rules of governance, be efficient, and prosperous.

As I observed some time ago, the question of whether the country should have a parliamentary system of government or a presidential system would once again surface. It’s far too early to even consider the issue. Form tends to follow function in the real world, not the other way around. 

Changing the form of government without changing the function of a kleptocratic legislature will do nothing to avoid future economic crises. The only thing that might change is the modus operandi of kleptocrats. If corruption is allowed to flourish, it can do so under either system. 

I treated this in my discussion of the Castellamarese War. Following the change in the structure (i.e. model) of the US Mafia, the victors were still criminals. It was not until much later that the Mafia suffered sanctions for its illegal behaviors. In fact, it still exists but in a much reduced form due largely to the use of plea bargaining. The “stand-up guy” willing to do a long prison term for the “family” is simply not as common as he was in the 50s and 60s.

You don’t stomp out kleptocracy, you simply make it more expensive by applying sanctions when it is revealed. The temptation to try to get a “free lunch” is universal and ever-present. When the lunch is no longer “free”, kleptocrats will consider alternatives and that is as good as it gets or even needs to be.

There is nothing innately “special” about Brazil in that regard. It is currently an issue in the USA where the American middle class has been losing economic ground and it is a subject discussed by the IMF re  the impact of kleptocracy and corruption on a country’s economic welfare.

Brazil’s “problem” is simply that corruption became part-and-parcel of the economic and political model for many years for what appear to be historical reasons that I have discussed herein. 

As Freud observed, we are rarely what we imagine ourselves to be and we really are what we actually do. Brazil has only to do things differently to be something else to its citizens and to the rest of the world.