Brazil's Election Campaign Is Remarkably Substance-Free

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(Bloomberg View) -- Like most of his 4,000 fellow Brazilian labor judges, Epilogo Medeiros is feeling better now. Just a few months ago, the senior Rio de Janeiro magistrate would see 40 new grievances hit his courtroom in Niteroi, a town across Rio bay, every day. And that was a drop in the 4-million-case torrent that flooded Brazil’s 1,572 labor courts last year.

Then, last November, Brazil’s congress stepped up, bucked the unions and overhauled the country’s byzantine, 75-year-old labor code inspired by Benito Mussolini. Medeiros’s caseload plunged to a merciful 10 a day. He won back his weekends and now sees far fewer of the drive-by lawyers who knew the indulgent old corporatist laws could turn a Hail Mary claim into a sure payoff. “The quality of cases has improved, and opportunists have been discouraged,” Medeiros told me.

The new law, which promised swifter justice, more and better jobs, and a more civilized workplace, is still a work in progress. That’s more than can be said for the many other big fixes – on social security, taxes, political representation -- that Brazilians badly need to tame the bureaucracy, attract investors again, and revive growth in Latin America’s biggest economy. The International Monetary Fund says reining in runaway pensions alone could save Brazil 9 percent of gross domestic product over 10 years.

The stumper is why, even with public anger seething over failing government and national elections looming in October, so few of Brazil’s hyperventilating political class are talking about reforms, never mind campaigning for them.

Brazilians seem eager to see the back of President Michel Temer, yet his caretaker government sponsored a raft of important initiatives and pressganged the waffly political establishment into backing them -- including labor reform, a government spending cap, and prying open the oil industry to fetch more global investment. Unfortunately Temer’s taint has trumped his political talents, and political survival, sadly, has blunted his enthusiasm for reform.

“I’ve never seen a moment like this when the state of the economy and the campaign discourse were so completely decoupled,” Fernando Schuler, a professor of politics at the Sao Paulo university Insper, said in an interview.

Schuler traces the disconnect to the 2016 impeachment of President Dilma Rousseff for budget fraud, a defining upheaval that broke the country into shouting factions and continues to contaminate public debate. The corruption conviction and jailing earlier this month of Rousseff’s mentor, legendary former president Luiz Inacio Lula da Silva, of the Workers’ Party, has only raised the clatter.

A decade of political scandals, capped by the historic Carwash graft and contract fraud investigation, has kidnapped national attention and heaped scorn on public officials and their arcane policy-speak.

Polls conducted after Lula’s arrest showed a splintered field of presidential hopefuls with outright reformists trailing badly. By Schuler’s calculation, they are garnering no more than 15 percent of voter preferences. The campaign’s headline reformer, Sao Paulo governor Geraldo Alckmin, polled just 7 percent.

Eurasia Group’s Christopher Garman is slightly more sanguine, labeling the three frontrunners -- right-wing retired army captain Jair Bolsonaro, soft-left environmentalist Marina Silva, and former supreme court chief justice and populist newcomer Joaquim Barbosa -- as “quasi-reformists,” with a combined probability of winning the election of 45 percent.

Quasi-reformists, Garman explained, include candidates who may have floated talk about reforms, but with scant enthusiasm and sketchy detail. “These candidates may well deliver some sort of reform, but the quality of those reforms is in doubt,” Garman told me.

Complicating their mission is the hard-line cant of the front-runners who flaunt their anti-politician credentials. While outsiderism plays well to dispirited voters, it’s poor form in a legislature with three dozen parties and bottomless appetites for pork and cabinet posts. “The lead candidates are trying to capitalize on the environment of deep distrust in officials and institutions,” said Garman. “If you have credibility, that script might work, but you’ll have a harder time getting your agenda through congress.”

The dilemma underscores a stubborn paradox facing Brazilian politics and, more broadly, voters across Latin America. “To bring in reforms you need a convergence of views and the ability to galvanize consensus,” Brazilian political scientist Bolivar Lamounier, of Augurium Consulting, told me. “But with the country so radically polarized, what we have instead is paralysis.”

Prospects for renovation look even dimmer when you throw in the problem of bankrolling candidates in a wan economic recovery, and when donors are constrained by tougher anti-graft rules designed to firewall public office against political pirates and influence peddlers.

For all the clamor for new faces in public office, better-heeled parties are likely to concentrate their campaign honey pot and vote-getting machinery in big districts and in favor of incumbents. “Brazil’s legislature is famous for its low renewal rate, and the probability is that we see even less turnover in the 2018 election,” Garman said.

Austerity doesn’t necessarily doom reforms. With the primary budget deficit locked in through 2021 and gross public debt ballooning to 96 percent of GDP in five years, according to the IMF, even closet reformers will arguably have to swallow severe adjustment.

And since every perk and patronage job counts more in times of resource scarcity, Garman reckons that even a weak government will wield enough clout to push a reformist agenda.

So will that clout be enough to reboot Brazil? “We’ve heard the argument before, when the left took office and was touted to overcome populism in times of crisis,” said Schuler. “But what reforms did Lula and the Workers’ Party enact in 14 years in power?”

That might sound harsh for a government that presided over a rising middle class, falling poverty and a commodities-fueled economic surge. Yet those gains now look overstated: Economists at Rio’s Catholic University have found that from 2003 to 2012 -- the Lula years and part of Rousseff’s first mandate -- Brazil clocked another “lost decade.”

Compared with emerging market peers, they concluded, Brazil “grew and invested less” drew “less foreign investment,” added “less value to manufacturing goods” and underperformed in labor productivity, poverty reduction and education, “despite higher spending.”

“Only conviction leads to reform,” said Schuler. So far, that distinguishing characteristic has been conspicuous by its absence on the campaign trail.

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

Mac Margolis writes about Latin America for Bloomberg View. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”

For more columns from Bloomberg View, visit http://www.bloomberg.com/view.

©2018 Bloomberg L.P.

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