Turbulent, polarized and contradictory. That’s how 2018 Brazilian general elections will be remembered in the history of the country. Brazilians vote in the runoff this weekend and the proposals of the two running candidates remain unclear.
With Brazil’s former president Lula (who is in jail) barred from running again, Fernando Haddad, former mayor of Sao Paulo, had to step in and represent the Workers Party PT, that was in control of Brazil for 14 years (except for the last two, after the impeachment of President Dilma). For the first time in 20 years, PT’s main rival PSDB didn’t go to the second round.
Who runs against them this year is the controversial PSL candidate, Jair Bolsonaro, that has been making the headlines for his polemic statements concerning racism, fascism, and homophobia for the last couple of years, and quickly gained popularity among the electorate.
Will the majority of Brazilians continue to vote for the leftist party or go for the unknown, electing a far-right candidate?
Researches point out that the election of Bolsonaro is the most likely scenario. But what do you need to know about both candidates? We talked to the economist Gilmar Lourenço to get some answers.
An election filled with doubts
According to Lourenço, the government programs that were registered in the first round of the elections have barely vanished in the second one. “Both candidates have guiding policies that are very confusing, contradictory and even too willful”, states. “Haddad passes the idea that there isn’t such a serious crisis going on in Brazil, while Bolsonaro can’t propose a project with solid grounds”.
The economist points out that, during the current landscape, it is rather hard for any political scientist or economist to measure the impact of the candidates based solely on their government plans, as some serious topics are not being addressed.
No one is talking on how they will push Brazil towards the fourth industrial revolution or on how they will fight income inequality. They are silent about the reforms needed if Brazil is to become a developed nation anytime soon.Gilmar Lourenço
Playing to the crowd
As in most cases, election promises are there for the breaking. However, in this never-seen-before election, this expression is particularly true. For the first time, an accurate evaluation of the new president’s real intentions will only be possible after he takes over and organizes his team list and transition plan.
Meanwhile, Brazilians need to decide their vote based on hardly feasible proposals which, according to Lourenço, have the main purpose is to fuel the crowd.
On one side there is Haddad trying to step-out from Lula’s shadow but still betting all his chips on social measures, stating that he will readjust the minimum wage for the inflation and increase in 20% the conditional cash transfer program Bolsa Família. “This move seeks to increase their reach over the poorest and most disadvantaged communities, which is a relevant part of their electorate”, says Lourenço.
The issue with the Workers Party candidate proposals is that they are technically challenging and unrealistic. “Haddad is almost saying that the inequality will be solved with the economic development itself. But if the candidate does adjust these two factors, the Brazilian welfare system will break, as there is no available budget for those measures”.
Bolsonaro situation isn’t any better. The candidate, that despite 27 years in Congress never had a significant representation, has made his name due to polemic statements. His main guiding policies revolve around a conservative speech designed to lure the population that yearns for the end of the corruption and the violence sweeping Brazil.
Among the far-right candidate’s proposals concerning the economy is eliminating the primary deficit by 2019 through a bold privatization and concessions program that would yield around BRL 3 trillion to the country. Another promise that stands out is sparing employees that gain less than 5 minimum wages per month from paying the National Social Security Institute (INSS) tax and charge a fixed rate of 20% to everyone that has an income above this amount.
According to Lourenço, there are two problems here. The first proposal is almost impossible to be executed, as it would take far more time to accomplish the expected results. The second one goes against the principle of progression in taxation, compromising logic and the tax collection.
“Bolsonaro’s campaign is filled with controversy as his Party members often make declarations that Bolsonaro needs to discredit publicly later”, says Lourenço. Example of that was when his vice-president, General Mourão, criticized the thirteenth salary and the holiday bonus of 1/3rd of a month’s salary. Bolsonaro had to go against his VP and defend the benefits. Not only that, but he also stated that he would apply them to the Bolsa Familia program as well.
History Repeats Itself
Even though 2018 elections reached a whole new level of unexpectedness, we can recognize a pattern. Both candidates are doing what the former president Dilma Rousseff and her election rival Aécio Neves did in the second round of 2014.
Back then, Dilma stated that there was no crisis going on and that Brazil would get back together. Unsurprisingly, the country entered in recession during her mandate. Aécio, just like Bolsonaro, was first against the Bolsa Familia and, as a strategic move, started supporting it in the second round.
The candidates should learn from these previous mistakes and avoid falling into the same trap. Lourenço also comments about the impact of unreachable and unsustainable proposals. “Believing that the public resource was infinite almost caused Brazil to break before, so this conception must end if want any real change”.
Not everything is lost
Despite the political turmoil, there’s still hope, no matter which candidates win. “Surprisingly, some of the measures adopted by President Temer (Dilma’s former VP, who took over when she was impeached) had a very good impact on Brazil’s economy.
Here are some valuable insights:
So, can we stay optimist? According to Lourenço, the answer is yes. Because:
- The economy is responding favorably
- Once the elections are over, the president will finally move their attention from the election frenzy and start rationalizing as a statesman rather than a candidate
We can't expect any change for a one year period as the winner will have to negotiate with both society and the Congress. If he gets to implement the needed reforms, Brazil will be on the right path to becoming a developed nationGilmar Lourenço
How about international businesses?
Brazil has a lot of room to grow and, while the politics are still turbulent in Brazil, international companies, especially retailers and digital goods sellers, don’t need to worry. Consumerism is still growing (just take a second look at the data above), and those sectors never stopped growing, even in Brazil most recent crisis back in 2015.