Brazil’s Business Class Reconsiders Bet on Bolsonaro

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This time five years ago, a giant inflatable duck towered over the streets and public squares of Brazil’s biggest cities. Bulbous and yellow, the outsize bathtub toy and its accompanying slogan “No more paying for the duck” — roughly, No more holding the bag — became the symbol and tagline for a business community fed up with government ineptitude, public malfeasance and rent-seeking politicians (some of whom, admittedly, were in the executives’ pockets). It was an uncharacteristically political statement by a tight-lipped class that had had enough of politics as usual. Six months and a tsunami of street protests later, President Dilma Rousseff was gone, impeached for creative accounting, clearing the way for snarling outsider Jair Bolsonaro.

Will the rubber duck return? It’s complicated.

Yes, Bolsonaro is stumbling, the national mood has gone ugly and the country’s owning classes are once again taking sides over misgovernment and its attendant tragedies. Last weekend, 500 of them signed an Open Letter calling for drastic action to stop the Covid-19 pandemic amid a virulent second wave that has battered the economy and pushed the public health system to collapse. On March 23, Brazil recorded 3,158 deaths from SARS-CoV-2, nearly a third of global pandemic fatalities over the previous 24 hours. While the yellow duck has yet to return, public alarm has already been turned up to eleven. Hence the 16-city symphony of pot-banging that accompanied Bolsonaro’s nationwide broadcast on Tuesday.

Don’t look to the boardroom to lead a Brazilian thermidor. In a land where capitalism stirs ambivalence or worse, executive high-rollers know they risk blowback by speaking up. Yet however belatedly, it’s better they do so than not. “Democracy is strengthened when all sectors of society have a political voice,” said political scientist Felipe Nunes, who runs the polling company Quaest. “For too long, the business class has had a secondary role, merely financing politics, often from the shadows. They need to lay out their agenda in plain view.”

The nation’s executives, after all, were part of the patchwork of discontents who put Bolsonaro into office in 2019. Few were enamored with the barker on the stump: Bellicose and impulsive, Bolsonaro was a risk. But most saw no other way to jettison years of top-down economics and the corruption and cronyism it engendered. So with the University of Chicago-trained economic czar Paulo Guedes riding shotgun, they put their faith in capitalist disruption. They got quixotic populism and turmoil instead.

Brazil’s economy is projected to grow 3.6% this year, slower than its hemispheric peers. Inflation is back, driven by ballooning public debt. Even a second dose of emergency cash for the most vulnerable will mean little more than palliative care unless the outbreak is contained. And yet the agonizingly slow vaccine rollout — Brazil ranks number 60 in doses per 100 inhabitants — threatens to worsen what may be the world’s steepest pandemic death curve and its devastating knock-on effects for jobs, sales, schools and health care.

“I don’t know if we’re at an inflection point, but I sense that support from the business classes has been disappearing for a while — because of economic risks, the hit to the quality of democracy, the sanitary and environmental risks,” former Brazilian Central Bank president Arminio Fraga, one of the signatories of the Open Letter, told me.

Bolsonaro’s ham-fisted management — cycling through four health ministers in a year, appealing to the Supreme Court against state and local lockdowns, swapping a respected CEO at state oil giant Petrobras for a military man with no experience in oil and gas — has played poorly on Avenida Brigadeiro Faria Lima, Sao Paulo’s glimmering financial strip. “I know of no one in my circle of acquaintances who still identifies as a Bolsonarista,” said former finance minister Mailson da Nobrega, a partner at the Sao Paulo consultancy Tendencias who also signed the Open Letter. “Everyone is disappointed.” Yet not all white collars chafe alike.

Sergio Lazzarini, a scholar of corporate culture at the Sao Paulo business school Insper, parses Bolsonaro’s private sector support into three broad groups: the loyalist diehards, the quietly discomfited and the liberal contrarians who are increasingly aghast at the palace provocateur. What keeps many executives in line, Lazzarini argues, is the flypaper of official temptations (tax breaks, soft loans, subsidies) that Brazilian crony capitalism dangles before favored clients. The cohort to watch is the middle group, for whom the perils of entanglement are beginning to outweigh the perks. “Brazil’s business class has long followed a strategy of strategic adaptation,” Lazzarini said. “They don’t take the lead but tend their own interests and shift with the wind.”

The shift may be underway.   Public whiplash over the deepening health emergency has driven angry governors and even reliably malleable lawmakers to sharply criticize Bolsonaro, who sounded almost contrite while speaking to reporters on Wednesday. Yet more than aversion to Bolsonaro is in play. That the executive elite is straining just as the country’s leading leftist political icon, Luiz Inacio Lula da Silva, has been reborn as a public figure is no coincidence. Lula’s renaissance owes to the jurisprudential acrobatics at the country’s highest court: In early March, a Supreme Court justice vacated the corruption convictions against the Workers’ Party leader (on grounds he was tried by the wrong court), so clearing him to run for office. Then, on March 23, a panel of five high court justices tossed out the headline corruption and money laundering conviction on Lula’s rap sheet on grounds that his trial was tainted by an impartial lower court judge, effectively exploding the core of Brazil’s storied seven-year Carwash political corruption probe.

More than a slap to the fumbler-in-chief, the j’accuse by the business class was a caveat about the dangers of Brazil returning to a paralyzing zero sum game between two rival brands of populism. “The message from the executives was that if nothing is done to stop the mess at hand, Brazil risks returning to a polarizing deadlock and handing the country on a platter to the Workers’ Party,” said Paulo Bilyk, chief executive of Rio Bravo, an asset manager.

The vibe from the corner offices is hard to miss: A country in thrall to choleric politics is bad for business, bad for civility and ultimately bad for Brazil. If the moguls had their way, neither Bolsonaro nor Lula would prevail. “They want a third way,” said Nunes. “But in a society driven by WhatsApp and Twitter, it’s hard to imagine a thriving political center.” Brazilians apparently agree. None of the headline political centrists clocks more than single digits in preferences for next year’s presidential race. Just when the country’s business class has found its voice, the suits may be left talking to themselves.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mac Margolis is a Bloomberg Opinion columnist covering Latin and South America. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”

©2021 Bloomberg L.P.

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