"Financial Times" Op-Ed Critical of Dilma's Economic Policies

An article in Estadão summarizes an op-ed in the Financial Times, entitled "Go-go to go-slow." 

The Financial Times commentary begins by reciting a list of encouraging recent developments in Brazil: 

1. Petrobras' $11 billion bond issue.

2. The $5.6 billion IPO of Banco do Brasil's insurance unit.

3. $1.4 billion paid by oil companies for exploration rights.

4. The appointment of Brazilian diplomat Roberto Azevêdo as head of the World Trade Organization.

5. Dilma's high popularity, which the Financial Times attributes to "full employment," and which the author believes will lead to her re-election.

So what's the problem? Well, according to the op-ed, it's all a façade. 

Specifically:

1. Brazil's economic growth for 2012 was about 1%, which puts it at the same level as the Eurozone. 

2. Inflation is "eroding consumer confidence."

3. There is a "sense of malaise" caused by a slowdown in investment.

The author largely blames Lula's consumer-driven economic model for these problems, the same model which he says has been continued by Dilma. He writes that this model has "exhausted itself." 

The op-ed is also critical of what it calls Dilma's heavy-handed centralized management style, which the author refers to as "bossy boots," apparently the British equivalent to the American phrase "bossy pants." (Are these phrases ever applied to men, or are they reserved only for women? I'm really curious, so if you know please leave a comment!).

While the author acknowledges that such centralized control is effective at controlling corruption, he also claims that it "slows process." (I think he may have meant to say that it "slows progress," but I don't want to put words in his mouth).

It was at this point that I started to read the op-ed more critically. It began to feel to me as if Dilma was being placed in a no-win situation. Corruption has been so entrenched in Brazilian politics for so long that it is almost always cited as one of the primary and most fundamental reasons for Brazil's failure to realize its full economic potential. This criticism comes from both Brazilians and outsiders, with Brazilians often more critical and cynical about their own government than many foreign commentators. Even Dilma's critics tend to agree that she has worked hard to root out and control corruption, while they may disagree about how effective her efforts have been.

So while the author of this op-ed openly acknowledges that Dilma's management style seeks to limit one of Brazil's biggest problems, he mentions it almost in passing, and fails to acknowledge the importance of this goal. 


He then goes on to write:

"Ms Rousseff has also consistently eschewed market-orientated reforms in favour of protectionism for preferred industries, and their lobbies: witness the coddled car sector. There is a lack of policy articulation, and follow through."

First of all, I don't like the word "orientated," since the word "oriented" is perfectly suitable and sounds better, but I'll let that pass as a stylistic choice. I do not believe that it's fair or accurate to state that Dilma's government has "consistently eschewed market-orientated reforms," and absent some supporting facts by the author, I am not willing to simply take his word for it. 

I do agree that Dilma's government has engaged in protectionism, for which it has been severely criticized by many foreign analysts.

The author supports his allegation that Dilma is guilty of "a lack of policy articulation, and follow through" by alluding to Brazil's under-developed infrastructure. It's widely acknowledged that Brazil's infrastructure is a huge problem which must be addressed, and the sooner the better, so I have no argument with that much. But the author contends that while there is interest from investors, "the regulatory framework is not properly in place that would allow the new infrastructure to be built." While he doesn't directly blame Dilma for this, the implication is clear. 

I'm in no position to know if the lack of a regulatory structure is really Dilma's fault. That is why it would have been very helpful if the author had provided even a passing reference to steps which Dilma could or should be taking right now in order to encourage infrastructure development. But no, there are no such specifics to be found. I find it hard to believe that even a "bossy boots" Brazilian President has the power to single-handedly enact the regulatory measures that the author favors.

The op-ed ends with these lines, which I found annoyingly vague: "Brazil has a great window of opportunity. Ms Rousseff and her government needs to make things happen while it remains open." The use of the singular verb "needs" for what I consider to be a plural subject (Ms Rousseff *and* her government) rankled right off the bat, but even more bothersome was the the notion that it's up to Dilma and her government to "make things happen." 

This contention, coupled with the author's apparent support of a strong regulatory system for infrastructure development, seemed inconsistent with his earlier complaints about Dilma's "bossy boots" management style, with its emphasis on a strong central government. 

If you want to criticize Dilma for being too heavy-handed, fine, but it's hardly logical to chastise her for that in one paragraph, only to come at her from the other direction later in the op-ed, implying that she hasn't been strong enough. I supposed the author may have meant to imply that Dilma was heavy-handedly inept and incompetent, but if that's what he meant, he should have said so. 

I was left with more unanswered questions than when I started reading, which certainly isn't a bad thing for an op-ed. They are supposed to make you think, and this one certainly did. But they're also supposed to provide at least some support for their conclusions, and on this front, I felt that the op-ed failed to deliver. 

Edit: I just read the only comment left so far (12:04 PM Eastern Standard Time, May 20, 2013) on the FT website, directly below the op-ed, and wanted to share it here exactly as it was posted:

"i'm amazed that such a lousy piece of journalism gets published at such respectable journal. while the editorial does bring up a few truths about brazil, it does little in terms of proposing an alternative or a solution, nor does it show any understanding of how things really work in brazil."

I think it's a bit harsh to call it "lousy journalism," but I was intrigued to see that the comment hit on some of the same issues that I raised in my critique. In fact, it made me feel quite moderate and calm in my criticisms. :)