Brazil Got Stuck In The Social Democracy Trap, Says Bolsonaro's Economist

For Paulo Guedes, Brazilian social democracy increased public spending and caused low economic growth

São Paulo

The lights were off when the future Minister of Finance, Paulo Guedes, entered the great hall for a panel at the 4th National Convention of Movimento Brazil Livre (Free Brazil Movement, or MBL, a right-wing political group). At that moment, the organizers were showing a video with the group's triumphs during president Rousseff's impeachment.

Still, all the audience wanted was to hear what Guedes had to say. "Ay, Ay, Ay, sell Petrobras!" the crowd chanted, while he took the microphone and started his talk - a kind of economic history class mixed with biology tidbits here and there.

Future Minister of Finance Paulo Guedes (left) talks at a political convention along economist Carlos da Costa - Alexa Salomão/Folhapress

In an emerging democracy, he said, it's natural that the left would "stretch the blanket towards social needs, like health, education, and sanitation," he said. PMDB, the political party that ruled Brazil from the democracy reinstatement to the early 2000s, was the first version of that kind of leftist government, he said. But PMDB can't change the Brazilian "dirigiste state," and public spending spins out of control. Prices rise, and hyperinflation happens, including daily adjustments of investments.

"Brazil becomes a hostage of the social democracy trap, with low economic growth. It's hell for entrepreneurs and heaven for rentiers." Guedes goes on to make an analogy with wild red ants. According to him, in the red ants' social structure, a group goes toward food sources while another returns to the colony. The second group needs to divert from an obstacle and runs into the one going forward, making both groups walk in circles until they die.

"The red ants are like the Brazilian social democrats. One comes after the other, in a circle. The ants die, and the countries are lost for decades," he concludes. In this example, political party PSDB is an offshoot of the old PMDB, formed by politicians who wanted to be more ethical. In the same vein, PT won over PSDB for four successive elections, to be replaced by the old PMDB again.

"It's the circle I described. It was this dirigiste model that corrupted politics and damaged the economy, and we lost our way." According to him, the upcoming Bolsonaro administration would be a certain turning point in history.

Translated by NATASHA MADOV

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