Brazil Can Lead the 99 Percent to a Better Future

Jun 27, 2013 | Updated Aug 27, 2013

This post was co-written with Ann Helwege, Visiting Associate Professor of International Relations at Boston University and author of Latin America's Economy.

Protests in the streets of Brazil are showing the world that democracy and today's form of economic globalization are not compatible. The collapse of economic growth over the past year has left Brazilian workers struggling to pay their bills -- not just for bus fare but for housing, schools, health care and basic security -- as investors calmly shift assets to more profitable markets abroad.

Brazilians now lead the global 99 percent in rejecting a system that puts the burden of adjustment to market volatility on ordinary workers. Current economic rules-of-the-game harm people across their daily lives, from the quality of education to the cost of food, from diminishing safety nets to the precariousness of living in shantytowns. Protesters have shown the same to be true in Greece, Spain, Turkey, and the Occupy encampments in the U.S. As has happened elsewhere, police in Rio responded to protest by shutting down transit, closing streets and and turning off street lights to trap and terrify protesters. Pro-government media has sought to label protesters as vandals to no avail, as protesters use Facebook and other social media to present their case.

Brazil has played by the rules -- those of international financial institutions, investors, and governments -- and prospered, securing the World Cup and the Olympics and garnering international standing in economic and foreign policy debates. It is ironic, however, that two leftists, Luiz Inácio 'Lula' da Silva and Dilma Rousseff, have proudly presided over this conventional success story. Both aimed to end extreme poverty and hunger with cash transfers such as the Bolsa Familia and a 'universal' health care system called SUS. They succeeded commendably in targeting the very poor, but were too complacent about threats to the commodity boom that kept workers and those new to the middle class afloat. Slower growth in China, higher investment yields in the U.S., and an easing of oil prices have undermined Brazil's exports, weakened its currency, the real, and sharply increased consumer prices.

The disconnect between financial markets and ordinary lives has left Brazil's leaders surprised by what's happening in the street. Yet the rules they implemented to promote growth mainly protected investors, thereby limiting signs of panic in the financial media. While Brazilian banks are secure, policies of the past decade have allowed easier repossession and foreclosure rules to encourage subprime borrowing, temporary work contracts to increase labor market flexibility, mandatory individual unemployment savings accounts to divest employers of responsibility for layoffs, and de facto limits on the quality of service in public schools and hospitals to reduce fiscal deficits. Under these market-oriented policies, when the chips are down, all but the well-to-do are on their own.

Brazil's leaders could have done more. Lula could have marshaled his big victories in 2002 and 2006 -- the fact that he won office by the largest margins in the cleanest elections in the hemisphere -- to challenge prevailing economic norms. Dilma could have tapped the respect for her competence and character to convince elites that deeper reform is appropriate and essential. Both could have made it a priority to create less corrupt institutions, orient agricultural policies as much toward food security as agroexports, and improve industrial technology so that car production, now the 6th largest in the world, might actually compete in global markets.

Brazilians have seen economic crises before, but this time is different. They have a meaningful vote. And fortunately, Brazil is not deeply indebted to powerful foreign banks and bondholders. Brazilians can hold pepper-spraying policemen accountable for fueling violence. They can demand participation and transparency in budgeting for schools, transportation and health care. They can insist on tax reform that moves Brazil away from being one of the most unequal societies in the world.

Even when economies grow at record levels, the results of laissez-faire economics fall far short of what citizens need and consider just. The exigencies of growth today enrich the few, build monuments to sports and tourism, and, yes, expand middle classes. But the governments that promote this growth do not make the kinds of fundamental economic reform that would support the long term well-being of the middle class, construct credible education and health care systems, and avoid the credit and housing bubbles that Brazil is courting right now. Nor do today's governments offer economic supports and safety nets for struggling workers -- in the form of credible unemployment insurance -- or insure the basic provision of housing, sewage, and potable water in shantytowns. That is what protesters across the globe have been saying, and now Brazilians are showing that they have the will and ability to lead the fight.

Brazilians have much to be proud of. They have ended decades of brutal repression that made calling the police a graver danger than facing criminal thugs. They have been at the vanguard of creating policies to reduce hunger and keep young children in school. Recent governments have slowed the pace of deforestation in the Amazon and opened meaningful debates about race and class.

In her speech to the nation last week, President Rousseff took the unprecedented next step, for a national leader, of recognizing the legitimacy of protest marches in the streets that challenge her own government. She affirmed publicly that democracy is about more than just elections; it includes and in fact depends on the voice of citizens in protest demonstrations and social movements. Rouseff also sided with protestors in opposing a proposed constitutional amendment, PEC 37, that would have made criminal investigations the exclusive territory of the federal and civil police, silencing the independent Ministry of Public Affairs. Now that the proposal has been defeated, she needs to provide leadership in fighting organized crime, corruption, human rights violations, abuses by public agents, and diversion of public moneys.

If Rousseff and her government were to continue to take protesters' demands seriously and forge a new economic path that diminishes inequality and promotes well-being for all, Brazil could become the country that turns the global economy around and makes democracy meaningful and sustainable.