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Can Free Markets Revive Brazil? · Trumponomics

0:04
Speaker 1: Hello, and welcome to Stephanomics, the podcast which brings the
0:07
Speaker 1: global economy to you. Now you've probably heard a few
0:15
Speaker 1: things about Brazil's new president, Jaa Bosonaro, and he's a
0:19
Speaker 1: controversial right wing populist who once said he could never
0:22
Speaker 1: love a gay son. He's also a big fan of
0:25
Speaker 1: Donald Trump's. They swapped football jerseys when Bosonaro came to
0:28
Speaker 1: the White House in March. But I'd be interested to
0:31
Speaker 1: know whether they talked about economics on that visit, because
0:34
Speaker 1: when it comes to trade and the economy, the Brazilian
0:37
Speaker 1: president couldn't be more different. And Bosonaro admits he's no expert,
0:42
Speaker 1: but he's handed the task of turning around Brazil's anemic
0:45
Speaker 1: economy to Paolo Gidis, an alumnus of the free market
0:50
Speaker 1: University of Chicago. Now, Chicago style reforms were all the
0:54
Speaker 1: rage after the so called Chicago Boys helped transform Chile's
0:58
Speaker 1: economy in the seventies and eighties, but they've fallen out
1:02
Speaker 1: of favor in the last few years with all the
1:04
Speaker 1: questioning of neoliberal economic policies we've seen in the wake
1:07
Speaker 1: of the global financial crisis. Looking at Brazil, thinking about
1:12
Speaker 1: it's decades of boom and bust. A bit of shock
1:15
Speaker 1: treatment doesn't sound such a crazy idea. I'll ask Larry's
1:20
Speaker 1: Summers what he thinks of getting his plans in a
1:21
Speaker 1: few minutes. But first, Brazil economy reporter Bruce Douglas has
1:26
Speaker 1: been taking a closer look. There's an awful lot of
1:46
Speaker 1: coffee in Brazil, as Frank Sinatra once noted, and beef
1:50
Speaker 1: and soybeans and all other kinds of agricultural goods and
1:53
Speaker 1: petrochemical products. But decades of protectionism and a massive internal
1:58
Speaker 1: market boosted by membership of South America's Customers Union, has
2:01
Speaker 1: resulted in a remarkably closed economy. Foreign trade accounts for
2:06
Speaker 1: a measly twent of Brazil's GDP compared with the global
2:10
Speaker 1: average of But as the country's new government came to power,
2:15
Speaker 1: promising to change all that, I went to Santos, Brazil's
2:18
Speaker 1: gateway to the world, to find out how song sign
2:26
Speaker 1: of Disco for perfect card. I'm perched on a yellow
2:34
Speaker 1: boat that's floating in the port of Santos, just in
2:37
Speaker 1: front of a huge black ship which is being loaded
2:41
Speaker 1: with sugar. Around ten of the world sugar passes through
2:46
Speaker 1: this port. Santos is just forty miles from the city
2:50
Speaker 1: of South Paolo and lies on the front line of
2:52
Speaker 1: Brazil's efforts to open its economy to the world. It's
2:56
Speaker 1: the largest port in South America and Santos handles around
2:59
Speaker 1: one third the brazils foreign trade, including much of the
3:02
Speaker 1: world's coffee, orange, juice and sugar. Okay, to please, can
3:13
Speaker 1: you tell me your name and your title and where
3:15
Speaker 1: we are. My name is Sally Regina Sosa. I'm a
3:21
Speaker 1: journalist of CODESPI, the part authority of Port of Santos.
3:27
Speaker 1: So SELLI tell me a little bit about the port
3:30
Speaker 1: of Santos. Santally, the part of Santos has around for
3:34
Speaker 1: tin kilometers of kids, enough for fifty five ships. Today.
3:39
Speaker 1: We handle all kinds of cargo, paper, sells, soybeans, sugar, wheat,
3:45
Speaker 1: chemical products, petrolum derivatives and alcohol. Good to float in
3:58
Speaker 1: and art of Santos for almost five hundred years. It's
4:01
Speaker 1: the gateway to greater Selparlo, the most industrialized region in
4:04
Speaker 1: the Southern Hemisphere and the biggest consumer market in Latin America.
4:15
Speaker 1: The largest continued terminal of South America is in Brazil,
4:20
Speaker 1: with intelligence and logistics and efficient CTPS the biggest privately
4:25
Speaker 1: owned terminal in the port. After showing me its corporate
4:28
Speaker 1: video in Italian Nomura, BTPs commercial manager gave me a tour.
4:38
Speaker 1: So basically where you're standing right now uses to be
4:41
Speaker 1: a garage repository where all the trash would be, uh say,
4:45
Speaker 1: dispatched from the portal centers, and it was two years
4:48
Speaker 1: of remediation built on the side of a former trash dump.
4:52
Speaker 1: The BTP terminal now boasts eight state of the art
4:55
Speaker 1: cranes that were loading containers onto two massive ships. As
4:59
Speaker 1: we start talk coffee, meat and this is going to
5:03
Speaker 1: the US, probably with lots of construction material. How does
5:08
Speaker 1: the performance in Brazil's economy as a whole impact the
5:12
Speaker 1: number of containers that passed through her? Oh, there is
5:15
Speaker 1: a direct impact. So basically, if the country is importing more,
5:19
Speaker 1: as it was the case of last year, we get
5:22
Speaker 1: a higher volume of imports, whereas now the exports are
5:26
Speaker 1: a little bit still picking up our volume containing volume
5:30
Speaker 1: exports are slower as well. Predictions for this year's growth
5:35
Speaker 1: through a little bit better than last year, So you're
5:37
Speaker 1: hoping that whole mean more containers will pass through this
5:41
Speaker 1: laar We are expecting bigger volumes this year, and of
5:44
Speaker 1: course the exchange rate or the political situation also have
5:48
Speaker 1: an impact on the volume. So we're expecting all the
5:51
Speaker 1: best for Brazil this year. All the economy is picking up,
5:54
Speaker 1: hopefully our volumes are picking up as well. Since Brazil's
6:03
Speaker 1: economy dropped off a cliff between two thousand and fourteen
6:06
Speaker 1: and two thousand sixteen, the country has barely returned to growth.
6:10
Speaker 1: Boosting foreign trade would obviously help its recovery, and here
6:13
Speaker 1: there's massive room for improvement in any typicult operation. If
6:27
Speaker 1: you have a hundred spaces, you want to sell a
6:30
Speaker 1: hundred spaces. Antonio Dominos is the managing director on the
6:34
Speaker 1: East Coast of Latin America for the Shipping and Logistics
6:37
Speaker 1: conglomerate MASK. If Brasili you only sell a hundred, you
6:43
Speaker 1: will be seen sixty or fifty, So half half of
6:47
Speaker 1: your cargo will not show up at the port. Why
6:50
Speaker 1: why won't the cargo show up? Because the costin will
6:53
Speaker 1: tell us. You know, I was unable to find a drucker.
6:56
Speaker 1: I couldn't get all the documentation on dying. It was
6:59
Speaker 1: a stock on inspections. So the carol will not arrive
7:03
Speaker 1: to the port. So here in Brazil, we have been
7:05
Speaker 1: forced to overbook every single vetter, sometimes as much as
7:12
Speaker 1: to be able to sail at so that creates a
7:15
Speaker 1: lot of challenges for US. Mass distinctive white containers feature
7:21
Speaker 1: prominently around the port of Santos, one of the seventeen
7:24
Speaker 1: ports the company uses in Brazil. Despite its strong presence
7:28
Speaker 1: in the country, Mr Domingez points out the Brazil remains
7:30
Speaker 1: a challenging place to do business, and while he welcomes
7:33
Speaker 1: the new government's talk of privatization and free trade, state
7:37
Speaker 1: dominance and protectionism and not the only issues Polo Gages
7:40
Speaker 1: will have to address. We love Brazil, we see brestil
7:44
Speaker 1: as a land of opportunities, but there's also a country
7:47
Speaker 1: that needs to understand that infrastructure is key for development.
7:53
Speaker 1: And it's not only about building new ports. It's about
7:56
Speaker 1: making sure that you connect the port with the with
7:59
Speaker 1: the with the consumer centers where the population is. So
8:02
Speaker 1: you need railways, you need roads, You need infrastructure at
8:07
Speaker 1: the beginning at the end to make sure that they
8:09
Speaker 1: are able to to move that cargo. And it's not
8:12
Speaker 1: just about improving the infrastructures. Will have to look at
8:16
Speaker 1: the tariff. They are very high tariffs here in these
8:18
Speaker 1: county two imports. The customs systems, it will have to
8:23
Speaker 1: be revampant. You have to be easier to be able
8:25
Speaker 1: to bring cargo into the country. The taxes in the
8:29
Speaker 1: country are highly unpredictable. You know, it can vary a
8:32
Speaker 1: lot from one come way to the next, and and
8:34
Speaker 1: they're not many good ideas why they are varying. So
8:38
Speaker 1: the legal systems think is overburned in this country. You know,
8:42
Speaker 1: you have a lot of hurdles that you need to
8:44
Speaker 1: to actually look through, so that that also needs to
8:47
Speaker 1: be simplified. All in all, the procedures to set up
8:51
Speaker 1: a company needs to be easier. The sprawling megalopolis of
9:01
Speaker 1: Sal Paulo is the engine room of Brazil's economy. If
9:05
Speaker 1: Latin America's largest nation is to start motoring again, here
9:08
Speaker 1: is where it will start. Tomasato is the head director
9:16
Speaker 1: of Trade and Foreign Affairs ATSP, the Federation of Industry
9:20
Speaker 1: of the State of sal Paolo, Opening of Brazilian The
9:23
Speaker 1: government was voted into office with this promise, so it's
9:27
Speaker 1: something that Brazilians vote for, so it has a mandate
9:31
Speaker 1: to do this. One thing is saying what you want
9:34
Speaker 1: to do the other things saying how we are going
9:37
Speaker 1: to get there right now? What the I would say
9:41
Speaker 1: that the biggest single problem that Brazil has is unemployment,
9:46
Speaker 1: So opening the economy without doing the other reforms means
9:50
Speaker 1: more unemployment. Around twelve percent of the country's workforce is
9:54
Speaker 1: still out of a job, and Mr Zanato fears that
9:57
Speaker 1: lowering trade tariffs without simplifying the tax system and liberalizing
10:01
Speaker 1: the labor market could make matters worse among investors, unless
10:05
Speaker 1: and economists. There's also a consensus that the first priority
10:09
Speaker 1: of the new government needs to be an overhaul of
10:11
Speaker 1: Brazil's massively overstretched pension system. It's a little bit like
10:15
Speaker 1: the Titanic. I mean, you're going against the iceberg and
10:19
Speaker 1: the pension reforms. Is that movement at the at the
10:23
Speaker 1: helm that shows that we are not hitting the iceberg anymore?
10:26
Speaker 1: With imminent disaster averted, the administration can then concentrate on
10:30
Speaker 1: opening the economy. But ensuring that such a move as
10:33
Speaker 1: a success will it requires skillful coordination between all the
10:37
Speaker 1: branches of government. Opening the economy depends only of one ministry.
10:43
Speaker 1: Um having a better business environment depends on other ministries
10:50
Speaker 1: and the rest of the government and also on Congress.
10:53
Speaker 1: So so one thing is a given. They are there's
10:56
Speaker 1: something we have to fight, I understand. And when you
11:00
Speaker 1: when you pay attention what Ministry public is says, I mean,
11:06
Speaker 1: it makes a lot of sense. Okay, And and this
11:10
Speaker 1: is why you have this kind of bullish environmental expectations.
11:18
Speaker 1: But you know, any professor in the strategy on a
11:22
Speaker 1: business school tell you that good strategies ten percent elaboration
11:27
Speaker 1: and implementations. Brazil ever attempted to liberalize before, uh it did.
11:37
Speaker 1: It did something like that in eighty nineteen. It was
11:41
Speaker 1: a disaster because it's just opened the economy withoubt and
11:45
Speaker 1: was not able to to to push through the other reform,
11:49
Speaker 1: so so we had hyper inflation on employment. Was such
11:52
Speaker 1: a disaster that the last twenty eight years nobody talked
11:56
Speaker 1: about this. With a massive internnel market, bull has long
11:59
Speaker 1: since the whole reason to open its economy to the world.
12:02
Speaker 1: With the country well on the way to another lost decade,
12:05
Speaker 1: there's a feeling that this time it may be worth
12:07
Speaker 1: the risk. What are the potential dangers or pitfalls of
12:12
Speaker 1: a more liberal Brazil. Look what's sappining outside of Brazil.
12:20
Speaker 1: I don't know if you're British or not, but seeing Brexit,
12:23
Speaker 1: seeing Donald Trump, and they are the result of the
12:30
Speaker 1: end of the day mainly Limon Brother crisis and very
12:33
Speaker 1: liberal economy. So so we have, I mean, you have
12:41
Speaker 1: very good examples of the pitfalls that you can have
12:44
Speaker 1: in a very liberal economy. Now that's said, Brazil is
12:50
Speaker 1: getting out of almost seventy years of state driven economy
12:56
Speaker 1: and he got us what he got, So we need
12:59
Speaker 1: we need owl Maybe a neo liberal Old style or
13:04
Speaker 1: Chicago school for some time makes some sense for Brazil.
13:09
Speaker 1: There's really no precedent for the rapid liberalization of an
13:12
Speaker 1: economy the size of Brazil's South Korea in the nineties sixties,
13:16
Speaker 1: or Chiles a decade or so later. Off a few
13:18
Speaker 1: clues as to Watson Store for Latin America's largest nation.
13:22
Speaker 1: But with Brazil still struggling to recover from years of recession, corruption,
13:27
Speaker 1: and political conflict, this new government argues that it has
13:30
Speaker 1: no choice but to find out that was Priuce Douglas.
13:39
Speaker 1: Now you might remember I spoke to Larry Summers last week,
13:41
Speaker 1: the Harvard economist and former Treasury secretary and adviser to
13:45
Speaker 1: President Obama. I took the opportunity to ask him about
13:48
Speaker 1: what was going on in Brazil and also about the
13:52
Speaker 1: radical left wing prescriptions for the economy recently coming out
13:55
Speaker 1: of the US. Without getting into the details, Larry, I'm
14:10
Speaker 1: sort of interested. You had so many years when you
14:13
Speaker 1: were chief economist at the World Bank, and then were
14:15
Speaker 1: you at Treasury and helping Mexico with its debt crisis.
14:19
Speaker 1: How should we think about this kind of quite old style,
14:22
Speaker 1: if you like, pro market recipe coming to Brazil at
14:26
Speaker 1: a time when sort of that that kind of model
14:29
Speaker 1: of market policy is being so questioned elsewhere in the world,
14:32
Speaker 1: and you know, not least in the US. Not an
14:35
Speaker 1: expert on the Brazilian situation, but it seems to me
14:39
Speaker 1: that a large part of credit has been allocated by
14:44
Speaker 1: government in Brazil, with vast misallocation of capital, very substantial corruption.
14:53
Speaker 1: Levels of real interest rates that for most of the
14:57
Speaker 1: last decade were six percent or more, are real interest
15:01
Speaker 1: rates that are unlike anything we saw in the United
15:05
Speaker 1: States because of the very large government role in credit markets.
15:10
Speaker 1: I think the instinct to clean that up is probably
15:14
Speaker 1: the right instinct. I think the instinct to have pensions
15:20
Speaker 1: that are not unreasonably generous relative to people's final incomes,
15:26
Speaker 1: to be in line with the rest of the world
15:29
Speaker 1: in terms of the scale of your pensions relative to
15:32
Speaker 1: the scale of your economy, that feels like a reasonable
15:36
Speaker 1: urge to pursue in Brazil. So I think that broadly, Um,
15:43
Speaker 1: you can't judge which way an economy should move without
15:48
Speaker 1: knowing where it is. And Brazil, after eight years of
15:56
Speaker 1: really quite extreme twelve years of quite ex dream quite
16:01
Speaker 1: leftist government, really had become very much a state controlled
16:10
Speaker 1: economy with a state that was not really highly competent
16:20
Speaker 1: or able to act with complete integrity. And so I
16:24
Speaker 1: think the direction of reform that the Balston Arro administration
16:30
Speaker 1: wants to move in is broadly correct. And as I
16:33
Speaker 1: say that as someone who is very much aware of
16:38
Speaker 1: the similarities between Boston Arro and Donald Trump on many
16:44
Speaker 1: different dimensions and certainly doesn't hold a brief for either,
16:49
Speaker 1: I mean, what is interesting is that you have to
16:51
Speaker 1: the two of the most important economies in Latin America
16:53
Speaker 1: have now got new presidents who have represent a completely
16:56
Speaker 1: different approaches. In Mexico, somewhere that has had years of
17:00
Speaker 1: reform and is in a very different place in terms
17:04
Speaker 1: of the degree of liberalization and its economy. I mean,
17:07
Speaker 1: I guess can you can you sympathize there with the
17:09
Speaker 1: idea that there's a government student that now wants to
17:12
Speaker 1: have more focus on what you might call the left behind.
17:17
Speaker 1: I can sympathize with the desire to focus on the
17:21
Speaker 1: left behind. And I think that income distribution oligarchy have
17:27
Speaker 1: been real issues in Mexico for a long time. I'm
17:32
Speaker 1: not sure I can sympathize quite as well with the
17:36
Speaker 1: idea of keeping the private sector out of sectors like
17:40
Speaker 1: whale and telecommunications. I'm not sure I can sympathize quite
17:45
Speaker 1: as much with the more cavalier approach that sometimes seems
17:50
Speaker 1: to be taken to in Mexico on issues relating to
17:54
Speaker 1: property rights or enforcement of contracts. But I ain't the
17:58
Speaker 1: emphasis on investing in people, on education and kids, I
18:04
Speaker 1: think it's all quite appropriate. I had one more thing
18:07
Speaker 1: I wanted to ask you about. We've had several years
18:09
Speaker 1: of you contributing debates about macro policy, and you're very
18:14
Speaker 1: much associated with the view that we should be changing
18:18
Speaker 1: our attitude to fiscal policy, and particularly in the event
18:22
Speaker 1: of another downturn, we should have a different approach to
18:26
Speaker 1: to the sort of sustainability of of fiscal stimulus, and
18:31
Speaker 1: we should expect to rely more on fiscal policy down
18:33
Speaker 1: the road because of this situation, a very low interest
18:36
Speaker 1: rates and the fact that monetary policy is going to
18:38
Speaker 1: be constraint. And the surprise comes from people who've heard
18:41
Speaker 1: all of that. And then here you so vigorously condemning
18:45
Speaker 1: the proposals of the likes of Alexandria Cortez Um, who
18:50
Speaker 1: is also associated with sort of in a sense talk
18:54
Speaker 1: of of of fiscal stimulus and fiscal activism. Why is
18:59
Speaker 1: it so important to you to draw its distinction between
19:02
Speaker 1: those kind of radical democrat proposals and what you've been
19:06
Speaker 1: talking about over the last few years. I think it's
19:10
Speaker 1: a fair uh fair question, Stephanie. As I hear the
19:18
Speaker 1: proposals that come from the so called modern monetary theorists,
19:26
Speaker 1: there seems to be an implication that you can do
19:29
Speaker 1: whatever you want with fiscal policy if you're just willing
19:35
Speaker 1: in some appropriate way to print money. You know. The
19:40
Speaker 1: analogy I'd like to use is with um incentives and
19:44
Speaker 1: supply side economics. There was a valid recognition in the
19:49
Speaker 1: late nineties seventies that in addition to their demand effects,
19:53
Speaker 1: tax has had UM incentive effects on how much people
19:57
Speaker 1: wanted to work and save and invest and so forth.
20:01
Speaker 1: That was an important insight, but then it became UM
20:07
Speaker 1: a claim that tax cuts would pay for themselves, which
20:11
Speaker 1: was completely irresponsible with the Laugher curve. And I feel
20:16
Speaker 1: the same way about modern monetary UH theory that it
20:22
Speaker 1: takes a valid idea that you know, a low interest
20:25
Speaker 1: rate environment, more expansionary fiscal policy than we would have
20:30
Speaker 1: previously thought was appropriate UM is appropriate, and turns it
20:36
Speaker 1: into an absurd free lunch kind of idea that we
20:41
Speaker 1: don't need to think about budget constraints. But in this environment,
20:47
Speaker 1: if we have a prolonged period of super low interest rates,
20:52
Speaker 1: it is the case that we could be less concerned
20:55
Speaker 1: about I think I've been very I think I've been
20:58
Speaker 1: very clear that UH justice. People can afford to buy
21:02
Speaker 1: a more expensive house when interest rates are low than
21:07
Speaker 1: when interest rates are high. The government can afford to
21:11
Speaker 1: run a larger deficit and run up we're debt when
21:15
Speaker 1: interest rates are low than when interest rates are high.
21:19
Speaker 1: But that doesn't remove the obligation to budget and plan
21:27
Speaker 1: and make choices, and the problematic aspect of at least
21:32
Speaker 1: much of the advocacy of modern monetary theory is the
21:35
Speaker 1: suggestion that is somehow don't have to make uh choices
21:40
Speaker 1: and you don't have to plan in careful ways around
21:43
Speaker 1: your budget. And I do think that's an irresponsible idea. Now,
21:54
Speaker 1: I just have time to give you one more piece
21:56
Speaker 1: of news, and that's the announcement of the not at
21:59
Speaker 1: all cover to prize of most Miserable Economy of the
22:02
Speaker 1: Year for eighteen, as measured in the latest Bloomberg Misery Index. Now.
22:08
Speaker 1: Katarina Survivor is an economic data editor in the Global
22:13
Speaker 1: Economic Surveys team for Bloomberg, and she put this year's
22:16
Speaker 1: index together along with our Southeast Asia economy reporter Michelle
22:20
Speaker 1: jam Risco. Katerina is here with me. Now, Katarina, tell
22:23
Speaker 1: me how this index is compiled and who's top of
22:26
Speaker 1: the list, Who's most miserable for this year? Hi? Yes, So,
22:30
Speaker 1: our Misery Index is the classic combination of countries unemployment
22:35
Speaker 1: rate and inflation rate, and in our Bloomberg Index, we
22:39
Speaker 1: have sixty two countries for which we have a good
22:42
Speaker 1: amount of private sector estimates. So we're talking about banks,
22:46
Speaker 1: academic institutions, research institutions. And at the top of our
22:51
Speaker 1: list is Venezuela, which will come not as not much
22:56
Speaker 1: of a surprise. In Venezuela this year has in eye
23:00
Speaker 1: popping misery score of eight million, and that is mostly
23:05
Speaker 1: due to its extremely high inflation. I imagine that's an
23:11
Speaker 1: all time records. Yes it indeed it is in the
23:15
Speaker 1: in all the five years that we've been doing. Yes, absolutely.
23:19
Speaker 1: Um And our calculation of Venezuela's actual misery score for
23:23
Speaker 1: last year, which is based on um I m F data,
23:27
Speaker 1: because the country has not published economic data in quite
23:30
Speaker 1: a while, is just about nine hundred and thirty thousands.
23:33
Speaker 1: So you can see that that is a substantial increase
23:36
Speaker 1: even over last year's. So I guess this isn't a
23:39
Speaker 1: list that you really do want to be top off.
23:41
Speaker 1: You want to be bossom. So so who is the
23:44
Speaker 1: which is the least miserable country this year? Our least
23:48
Speaker 1: miserable country and this has been all five years that
23:51
Speaker 1: we've done this index is Thailand. They have kind of
23:54
Speaker 1: unique ways of calculating unemployment, so we don't like to
23:59
Speaker 1: focus too much on their position in this way. When
24:03
Speaker 1: you say unique, you mean they just don't count all
24:05
Speaker 1: of them? Is that yes, I think it's great. I'm
24:08
Speaker 1: not completely I'm not an expert in in the Thaie economy,
24:14
Speaker 1: but they yeah, I think they don't quite count all
24:19
Speaker 1: of the people. Or perhaps there's a bit of a
24:22
Speaker 1: shadow job market as as we see in in quite
24:27
Speaker 1: a lot of countries. So what is it? We probably
24:29
Speaker 1: wouldn't think of Thailand as the les miserable country or
24:34
Speaker 1: maybe even happiest country. But what are the other countries
24:38
Speaker 1: that appear low on this list? So we have are
24:42
Speaker 1: in our number two spot is Switzerland, um, and they've
24:45
Speaker 1: improved a bit over last year. We also have Singapore
24:49
Speaker 1: in the third spot, and then Japan, which I think
24:53
Speaker 1: also won't be too surprising to people as they have
24:56
Speaker 1: had persistently low inflation and and that's probably a country
25:00
Speaker 1: that's a good example of UM. You know, maybe this
25:04
Speaker 1: this low number is not quite a great thing. I
25:10
Speaker 1: guess that's one of those things that probably the feature
25:12
Speaker 1: of this index is that it's not so bad at
25:15
Speaker 1: capturing misery because it's combining the inflation and the unemployment,
25:20
Speaker 1: and if you've got high numbers on both, you're not
25:22
Speaker 1: likely to be in a good state as an economy,
25:24
Speaker 1: but it probably doesn't doesn't really capture what's going on
25:29
Speaker 1: further down the list, because if you've got very low inflation,
25:32
Speaker 1: you might still be quite miserable, or you certainly might
25:35
Speaker 1: have quite a slow growth, quite a stagnant economy. Exactly. Yeah,
25:39
Speaker 1: And that's been the story of the index this year
25:42
Speaker 1: because we're seeing quite a lot of countries that have
25:45
Speaker 1: improved their score, such as the US and the UK.
25:49
Speaker 1: But it's not necessarily a positive thing because both of
25:53
Speaker 1: these countries are battling pretty low inflation, and and that's
25:57
Speaker 1: not a great barometer of economic sentiment and just well
26:02
Speaker 1: being because it shows that the consumer is not as
26:06
Speaker 1: confident as perhaps consumers should be in a healthy and
26:09
Speaker 1: strong economy. And of course we have the same old
26:12
Speaker 1: debates about whether or any of these measures GDP, inflation
26:16
Speaker 1: or I think can really get to what's going on
26:19
Speaker 1: in the country and whether a real measures of well
26:23
Speaker 1: being and whether people are satisfied with life. But I
26:26
Speaker 1: do notice that you certainly it's as as is traditional.
26:31
Speaker 1: There are a lot of South American countries on this list.
26:35
Speaker 1: We don't just have Venezuela at the top, where it's
26:37
Speaker 1: extraordinary inflation rate nine. In two thousand and eighteen it
26:42
Speaker 1: had a nine twenty nine thousand percent inflation rate. But
26:46
Speaker 1: you also have Argentina in the top ten. You've got Argentina, Uruguay, Brazil.
26:54
Speaker 1: So some things don't change, yeah, exactly. And Argentina has
26:59
Speaker 1: held onto that second spot for a while as well.
27:02
Speaker 1: It looked last year like things were improving a bit,
27:04
Speaker 1: but they're now in their second recession in three years, UM,
27:08
Speaker 1: battling extremely high inflation. I mean, nowhere near Venezuela's, of course,
27:13
Speaker 1: but in March it was at fifty percent year over year.
27:17
Speaker 1: I mean that's a very high number. And the government
27:20
Speaker 1: has just rolled out some price freezes UM, I think
27:24
Speaker 1: in part to try to make things a bit easier
27:26
Speaker 1: for the consumer there. I think the past year has
27:30
Speaker 1: been one of some issues in South America again, and
27:34
Speaker 1: and it's it's kind of sad because it's in countries
27:37
Speaker 1: that UM. There. There seemed to be some good progress
27:42
Speaker 1: going on with the economies UM in the past couple
27:46
Speaker 1: of years, and that seems to have rolled back a bit,
27:48
Speaker 1: especially for Argentina and Brazil. In the years time, we'll
27:53
Speaker 1: have you back and see whether all of these reforms
27:56
Speaker 1: in Brazil have managed to take it off the top
27:59
Speaker 1: ten slope, but Katerina Surriva, thank you very much for
28:01
Speaker 1: joining us. Yes, thank you, it's a pleasure. Thanks for
28:13
Speaker 1: listening to Stephanomics. We'll be back next week with more
28:16
Speaker 1: on the ground insight into the global economy. In the meantime,
28:19
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28:30
Speaker 1: analysis from Bloomberg Economics, follow at Economics on Twitter. You
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Speaker 1: can also find me on at my Stephanomics. The story
28:38
Speaker 1: in this episode was reported and written by Bruce Douglas.
28:41
Speaker 1: It was produced by Magnus Hendrickson and edited by Scott Lamman,
28:45
Speaker 1: who's also the executive producer of Stephanomics Special thanks to
28:49
Speaker 1: Professor Larry Summers, Katerina Survivor, Raymond Collet, and Simon Iglesias.
28:55
Speaker 1: Francesca Levy is the head of Bloomberg Podcasts. Say