It has been over a decade since HBS’ Business, Government and the International Economy (BGIE) case on Brazil took place. In the early 2000s the world applauded the first years of President Lula, the case protagonist and leader of Brazil’s Workers’ Party, who is currently serving a 12-year sentence due to corruption charges. What at first looked like economic reforms meant to make Brazil a more inclusive country had turned into unscrupulous populism. Corruption became institutionalized and reached all sides of the political spectrum. By the time the Workers’ Party left power (and after Lula’s successor, Dilma Rousseff, was impeached for manipulating government accounts) inflation was back to double digits, recession turned into a depression, criminality reached a record high, and poverty levels alarmed society. In response, on October 28th, 58 million Brazilians chose to turn right and elect congressman Jair Bolsonaro as president. The largest Latin American country is now a fertile ground to study the BGIE concepts of democracy, legitimacy, and role of state.
The international media has been treating Brazil’s democracy with skepticism. But here are a few quick facts: 1) since democratization in 1985, Brazil has impeached a right-wing president, impeached a left-wing president, and arrested the most popular politician in the country on corruption charges; 2) the military has remained neutral in political matters and has kept its oath to protect the Constitution; and 3) power has shifted from right, to center, to left, back to center and now to right again. More important than its result, this election showed that institutions remain strong and that Brazil’s young democracy is consolidated. President-elect Bolsonaro, an outspoken and politically incorrect former military officer, has received intense criticism from the press. Brazilian politics can be nasty, and no one side has a monopoly on controversial comments. Contrary to other politicians, Bolsonaro has apologized for many of his past controversies, reassuring the populace that, for example, sexual preference isn’t the State’s concern and that equal pay legislation needs to be enforced. In his victory speech, the president-elect once again assured respect to the constitution, which he has honored in every single one of his 27 years in Congress. Bizarre comparisons to 20th century fascists didn’t seem to affect people supporting Bolsonaro, mainly because his values of individual freedom and decentralization of power go against the ideals of authoritarianism. While the Workers’ Party manifesto claimed for a new Constitution and Venezuela-style mechanisms to overcome Congress, Brazilian people didn’t see Bolsonaro as a threat to democracy, but the only option to preserve it.
Jair Bolsonaro’s legitimacy comes mainly from his clean record, especially after many reports came out that he was clear from the bribes that many of his fellow congressmen accepted. His party broke records by electing people to Congress that reflect the nation’s diversity, ranging from a black former military man and a woman who led the legal procedure in favor of Dilma Rousseff’s impeachment, to an evangelical priest and an ex-gay porn star. His ability to gather a broad range of supporters comes from the three focuses that represent the pillars of his campaign: 1) economic growth based on liberal economic principles, 2) fight against corruption, and 3) investments in public security. These issues have been affecting all Brazilians, independently from race, social class, and education. My surroundings are full of sad examples that may illustrate this urge for change: while my family business must deal with default from clients who are going bankrupt, an Uber driver is having a hard time paying his home’s mortgage. Just like I had my car broken into twice in a period of eighteen months, the cleaning lady from the office I used to work at had her cellphone stolen on her way home. And just as I struggled to avoid authorities who used bizarre regulations to request bribes, the waiter from a bar I have been going to since college times is used to being extorted by corrupt police officers.
The recipe to break this vicious cycle starts with a shift of the role of the state. Bolsonaro’s first appointees indicate that he intends to keep his promise of building a technical team of ministers instead of distributing nominations based on political affiliation, which is the norm in Brazil. Paulo Guedes, the future Finance Minister and a Chicago-trained hedge fund manager, emphasizes the need to prioritize structural reforms to reshape the Brazilian State. Privatization of most of the 418 Cold War-inspired government-owned enterprises, lower income tax to less privileged families, transfer of economic power from the federal to state governments, and fiscal discipline, are some of the few actions that will help Brazil finally create sustainable growth and will improve the lives of the 25% of the country’s population who currently live below the poverty line. Decreasing the size of the government will not only create great room for the private sector to grow, but also remove opportunities for corruption. On this front, Bolsonaro’s government also seems promising. For the job of Minister of Justice, Bolsonaro has already got a “yes” from Sérgio Moro, the judge who has led the anti-corruption operation that has been cleaning up the political establishment.
The current issue with Brazil isn’t a matter of right against left or conservatives against progressives. The major issue has been to find a leader who has the legitimacy to make a change. Bolsonaro’s clean history makes Brazilians hope that he was the best choice to move us from being the eternal country of the future to the country of today.
Daniel Benzecry (MBA ‘19) is from Manaus, the capital of the Brazilian amazon rainforest. After graduating from Duke University he worked in finance in New York and in sustainable agribusiness in his home country. Further, Daniel volunteered as an economics lecturer at a Brazilian public university. During his summer, he joined McKinsey & Company’s Miami office. His passions are education, emerging markets and (real) football.