Editorial: The Last Flag Falls

03/28/2016 - 08h45

Given the economic disaster, it was just a question of time: last year, for the first time since 1992, there was a decline in income and an increase in inequality among Brazilians occurring simultaneously.

In addition to that, Brazil is now closing a period of 13 consecutive years of improvements in social equality.

The PT hasn't been able to display itself proudly as a defender of ethics in politics since the mensalão scandal and it will now have to start to bring down the last flag it had left.

It is not a secret that the overriding point which led to the fall in inequality in the past decade was the commanding increase in jobs created - which was helped by an unusual concurrence of both domestic and international positive factors.

Equality improved as the salaries at the bottom of the social pyramid grew more than those of the other strata. From 2003 to 2014, the income of the 10% poorest Brazilians rose 130% above inflation, while the salaries of those above increased by only 30%.

Other factors were also important. The increase in the number of individuals covered by Social Security, the continuous growth of the minimum wage and the cash transfer programs, such as Bolsa Família, helped to spread income in regions of lower economic dynamism and reduced extreme poverty.

Since 2015, all these vectors have come to a standstill or changed directions - and it is precisely in the labor market, the most relevant of all, that this deterioration appears for the first time.

In this period, 1.8 million formal jobs were wiped out. The unemployment rate, measured by the continuous Pnad (National Household Sample Survey), reached 9.5% in the quarter ending January 2016. There are now 9.6 million Brazilians unemployed.

Unlike what those who defend the PT would like people to believe, the government has only itself to blame. The diagnosis is clear: the management of economic policy – previously the driving force to improve social conditions – has lost its way and become an obstacle.

Imbalances have been accumulating since 2008. At first, they occurred due to the insistence on increasing expenditure and public credit and later because of the resistance to change directions while there was still time to do it.

The result was a collapse in public finances and the worst recession registered in recent decades, a tragedy that surpasses even the worst forecasts and the most daring warnings - which were abundant.

There is no way to look after the equality of opportunities, the access to public assets for all and the reduction of inequality with the government finances in such poor conditions.

There will be no sustainable advances in social equality without a healthy economy and growth. The G.D.P. will not expand without responsible policies which can reduce inflation and maintain balance in public finances.

Let us hope that the current situation will serve at least to certify that a populism-oriented economy is harmful especially to the poor.

Translated by THOMAS MUELLO

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