Latest / Trumponomics / 49: Slaves of Brazil — An Economic History

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49: Slaves of Brazil — An Economic History · Trumponomics

• 0:00
  Speaker 1: Brought to you by Stage Summit Live, the virtual conference
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  Speaker 1: that provides all the highlights of Stage Summit from the
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  Speaker 1: convenience of your desk. Celebrity entrepreneurs in saple workshops absolutely
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  Speaker 1: free register at Stage Summit livestream dot com. If you
• 0:15
  Speaker 1: think about the push that helped ring to power the
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  Speaker 1: Workers Party, right, it was all push or push Bush Bush,
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  Speaker 1: then not the Munich sense. No no, no, Hi, and
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  Speaker 1: welcome back to Bloomberg Benchmark, a show about the global economy.
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  Speaker 1: It's Thursday, August four. I'm Dan Moss, executive editor for
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  Speaker 1: Economics of Bloomberg in New York. I'm joined today in
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  Speaker 1: the studio by my co host Kate Smith. Kate, a
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  Speaker 1: few of us need reminding that this year's US election
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  Speaker 1: is playing out like no other. Just when we thought
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  Speaker 1: we'd heard it all, slave reinjected itself. Michelle Obama reminded
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  Speaker 1: us that slaves built the White House, and do remember
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  Speaker 1: she was immediately sniped out by Bill O'Reilly, who opined
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  Speaker 1: that the slaves were at least a well fared well.
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  Speaker 1: We figured out that since slavery and all that it
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  Speaker 1: connotes have popped up on the national stage, it might
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  Speaker 1: be an idea to look at just how much of
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  Speaker 1: a relationships slavery and everything connected to it has with
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  Speaker 1: international economics. And yes, I know we mentioned Brazil just
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  Speaker 1: last week, but with the Olympics due to start this month,
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  Speaker 1: what better region to focus on, or rather stay in
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  Speaker 1: than Latin America and DAN It's of course important to
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  Speaker 1: note that at the outside of this we're not just
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  Speaker 1: talking about slavery here. You know, most of the world's
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  Speaker 1: nation they practiced in forest unpaid work at some point
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  Speaker 1: in their history, and including of course here in the US.
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  Speaker 1: But the difference, and I think here's really the heart
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  Speaker 1: of the matter, is that some nations clung so long
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  Speaker 1: to their plantation based economies that they never developed the
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  Speaker 1: institutions to make that leap into the industrial societies. Here
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  Speaker 1: to help us unpack that is Viviani Rodriguez. She's probably
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  Speaker 1: better qualified than any person here at Bloomberg in New
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  Speaker 1: York to walk us through this and help you untangle this.
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  Speaker 1: Viv you are the managing editor for Latin American Economics
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  Speaker 1: and Government, and you are Brazilian yourself. Yes, I was
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  Speaker 1: born in Brazil then raised here, but absolutely born there.
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  Speaker 1: And you've also worked in Argentina. Yes, so I spent
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  Speaker 1: some time in Argentina, some time in Mexico. So when
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  Speaker 1: it comes to that in America, I've been fair to say,
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  Speaker 1: I've been all over the place south of the Rio
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  Speaker 1: Grande there. So what's the link between traditional agricultural economies
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  Speaker 1: and the political and economic upheavals that have dominated headlines
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  Speaker 1: in Latin America. What's the starting point here? How should
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  Speaker 1: we begin to in this Well, it's a very fascinating topic.
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  Speaker 1: And and as you said, a lot of people just
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  Speaker 1: go back twenty thirty years to try to explain a
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  Speaker 1: lot of the problems and the struggles in places like
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  Speaker 1: Latin America. Right when you think about Brazil, and if
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  Speaker 1: we are willing to go back further, right, and if
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  Speaker 1: we go a hundred years ago, a little over a
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  Speaker 1: hundred years ago, Brazil was a country that abolished slavery
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  Speaker 1: in eight eight I mean, you actually started phasing out
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  Speaker 1: slavery in eighteen seventy one. So it's not too far
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  Speaker 1: away from the whole war here of the Civil War
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  Speaker 1: in the United States. But it did it a little
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  Speaker 1: bit haphazardly in the sense that it was not a
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  Speaker 1: it was mass scale slavery. It wasn't like in the
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  Speaker 1: United States, concentrated in a only like in the southern
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  Speaker 1: part of the country here in the United States, and
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  Speaker 1: we didn't have a lot of policies really trying to Okay,
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  Speaker 1: we're going to end the plantation system and make this
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  Speaker 1: a modern industrialized based economy. Right, So basically what Brazil
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  Speaker 1: did at the time was just a replaced wave labor
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  Speaker 1: with very low immigrant labor coming mainly from Italy, and
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  Speaker 1: that persisted in Brazil I would say for thirty or
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  Speaker 1: forty years from Italy. Well a lot of yes, Italian immigrants.
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  Speaker 1: So basically what we had is massive waves of immigration
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  Speaker 1: in the way portion of nineteenth century in Brazil, and
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  Speaker 1: until I would say nineties, the country did not really
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  Speaker 1: thought about the process much in trying to make Brazil
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  Speaker 1: a viable industrialized economy. Now, to be fair, Brazil is
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  Speaker 1: by no means the only commodity dependent place on Earth.
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  Speaker 1: Australia where I'm from, has certainly had its share of
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  Speaker 1: vulnerabilities linked to commodity prices. This New Zealand, uh, the
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  Speaker 1: South Africa, there's Norway. What's unique here? Well, first, I mean,
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  Speaker 1: we have different cultures, we have different You know, the
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  Speaker 1: model in which Brazil was colonized was very different than
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  Speaker 1: some of the tries that you mentioned, right. I mean
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  Speaker 1: a big difference between United States and Brazil, of course,
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  Speaker 1: was that for maybe two hundred years, three hundred years
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  Speaker 1: that the Portuguese who colonized Brazil, they set up the plantations,
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  Speaker 1: they set up the farms, but they didn't really populated
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  Speaker 1: the country, right. I mean, the owners of these farms
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  Speaker 1: stayed back in Portugal, and only like Portugal really like
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  Speaker 1: moved to Brazil. The court moved to Brazil in eighteen
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  Speaker 1: or weight when they were fleeting fleeing from Napoleon up
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  Speaker 1: and that ended up contributing to the independence of Brazil
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  Speaker 1: and eight tight. I mean, this this podcast is really
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  Speaker 1: great because we're talking a lot of history in Brazil.
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  Speaker 1: But the reality is, I mean, Brazil for many years, right,
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  Speaker 1: and for many decades remained heavily dependent on an agrie
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  Speaker 1: business model. We did have big bursts of trying to
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  Speaker 1: promote industrialization in the country, namely after nineteen thirties when
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  Speaker 1: you started bringing the auto industries still industries, heavy electric machinery,
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  Speaker 1: right Amina, And that's how zil Is started to diversify
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  Speaker 1: and start of being one giant farm, right producing cane
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  Speaker 1: and coffee and actually most of the products that produces
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  Speaker 1: today except for soy, I mean, and trying to become
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  Speaker 1: an industrial powerhouse. It managed to fulfill part of that,
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  Speaker 1: right if you think about it, I mean Brazil. You know,
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  Speaker 1: the industry industrial GDP in Brazil accounts for close to
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  Speaker 1: ten percent of the country's GDP uh. The auto industry
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  Speaker 1: is gigantic steel mining, all of that, right. But the
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  Speaker 1: reality is, and this is what very interesting we and
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  Speaker 1: more recent to Brazil history into some of the Latin
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  Speaker 1: American other Latin American countries too, We ended up having
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  Speaker 1: and being plagued by military dictatorships in the nineties, sixties
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  Speaker 1: and so on and so forth. And that really it's
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  Speaker 1: when it took the turn for the wars. Here Kate
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  Speaker 1: is dying to ask you a follow up on the
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  Speaker 1: military I am. I'm fascinated by the connection between military
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  Speaker 1: coups and their economy. So how is that played out
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  Speaker 1: in Brazil? I mean, this is a content. Actually, the
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  Speaker 1: entire continent of South America, I mean, the continent seems
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  Speaker 1: to be plagued by military cups. I mean I'm thinking
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  Speaker 1: back to the eighties and most of those governments were
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  Speaker 1: under under army rule at that time. So why has
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  Speaker 1: Latin in particular had such a struggle with this, Well,
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  Speaker 1: let's try to just qualify it a little bit more.
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  Speaker 1: When we're talking the big Latin American dictatorships were mainly
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  Speaker 1: talking Argentina, Chile and Brazil, right, and and and it
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  Speaker 1: and it comes. I mean they were in the making
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  Speaker 1: for I would say maybe decades, right, But you have
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  Speaker 1: to come back and think the sixties, think about the
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  Speaker 1: Cold War. The world was really divided into you know,
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  Speaker 1: liberalism of the US centric policies and the Red menace
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  Speaker 1: in a certain way, right, uh. And these countries were
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  Speaker 1: countries that were very influenced. I would say that in America,
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  Speaker 1: you know by the what happened in Cuba in nineteen nine,
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  Speaker 1: Czech Rivara, you know, it was born in Argentina. So
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  Speaker 1: the so there was a plus the income in equal quality, right,
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  Speaker 1: and again getting back to the slavery point here, Brazil
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  Speaker 1: is a country that struggled to make the transition and
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  Speaker 1: had a good chunk of its population disenfranchised from the
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  Speaker 1: get go, right, and this income in equality, so that
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  Speaker 1: the whole. The socialist approach, right, was always very very
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  Speaker 1: tempting for a good large portion of society. And what happens,
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  Speaker 1: obviously is that in nineteen sixty four we ended up
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  Speaker 1: having a military coup in Brazil and we ended up
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  Speaker 1: becoming under military dictatorship until actually officially right now, link
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  Speaker 1: this to the economic structure for US. Okay, did the
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  Speaker 1: imposition of military rule effectively freeze economic development? Not that
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  Speaker 1: it frees economic development, but it took only to one side.
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  Speaker 1: I mean, armies are usually I mean they take over,
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  Speaker 1: but they're not the best managers, right, especially in a
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  Speaker 1: large economy like Brazil. So it's all about let's build infrastructure,
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  Speaker 1: let's employ people, let's build a lot of dams. Let's
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  Speaker 1: controlled economy. These five year plans think a little bit
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  Speaker 1: Soviet Union style, right. So they're very good in these
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  Speaker 1: gigantic plants and aspirations on paper. But the reality of
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  Speaker 1: not having an industry that supplies all this modernization, investment
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  Speaker 1: in technology, so on and so forth, what you create
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  Speaker 1: its giant inefficiencies throughout the economy. So what it happens
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  Speaker 1: is that Brazil, especially after the oil chalks of the nineties,
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  Speaker 1: seventies and everything started coming to the eighties really really
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  Speaker 1: in very bad financial check. And what was it about
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  Speaker 1: the economic development of these countries that brought the military
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  Speaker 1: into the political system in the first place. Again, I
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  Speaker 1: hate to hark on about this, but they're not the
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  Speaker 1: only commodity dependent economies. They weren't the only economies caught
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  Speaker 1: in the Cold War. What happened here, Well, let's talk
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  Speaker 1: first again qualified a little bit. Let's talk about Brazil
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  Speaker 1: different than Argentina and Chile too to many degrees here,
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  Speaker 1: but we actually enjoyed a certain degree of financial and
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  Speaker 1: even economic stability. The early sixties in Brazil were considered
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  Speaker 1: a period of stability and and of growth. It was
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  Speaker 1: more a political ideological sense of crisis that actually precipitated
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  Speaker 1: the crisis. I'm sorry that the military coup than actually
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  Speaker 1: an economic crisis. Right. Different, And now we're jumping back
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  Speaker 1: to just what happened next last year. I mean, the
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  Speaker 1: fact that Brazil's economy is in real bad shape contributed
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  Speaker 1: a lot to the impeachment of President Rusaph. We're gonna
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  Speaker 1: have a word from our sponsor, and then Kate's going
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  Speaker 1: to come back and ask about polarization. In Brazil, how
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  Speaker 1: it's affecting the economy today, and how it's rooted viv
• 10:40
  Speaker 1: in what you just talked about brought to you by
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  Speaker 1: highlights of Stage Summit from the convenience of your desk.
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  Speaker 1: Celebrity entrepreneurs, Incifle workshops absolutely free registered at Stage Summit
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  Speaker 1: livestream dot com. I think the natural question for me, now,
• 11:06
  Speaker 1: what as I'm hearing this is, I mean, how racially
• 11:09
  Speaker 1: polarized is Brazil. I mean, if you spend a lot
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  Speaker 1: of time in Brazil, now, I mean, can you can
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  Speaker 1: you give us a little bit of like boots on
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  Speaker 1: the ground color of what it's like. Yes, So it's
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  Speaker 1: it's a very interesting thing about Brazil. Right. So the
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  Speaker 1: first census of Brazil, which was in eighteen seventy I
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  Speaker 1: believe or seventy five. You know, we gotta be a
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  Speaker 1: little I'm not a story and so maybe the dates
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  Speaker 1: are not precise, but basically divided the population only in
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  Speaker 1: two classes, right, slaves and non slaves, and it found
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  Speaker 1: out that fifteen percent of the population, this is at
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  Speaker 1: the end of the nineteenth century. Uh, we're comprised of slaves,
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  Speaker 1: and by and large slaves meant, you know, black slaves
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  Speaker 1: brought to Brazil against their will from Africa. What happened
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  Speaker 1: is this that for a considerable portion of the twentieth century, Brazil,
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  Speaker 1: you know, and in the census showed that people always
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  Speaker 1: qualified themselves somehow as mixed race, right, or even white.
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  Speaker 1: Coming to two thousand and ten, we've seen quite an
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  Speaker 1: interesting shift here for the first time in Brazil, you know,
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  Speaker 1: recent history. The census um showed that close to fifty
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  Speaker 1: one of the population in Brazil and we're talking about
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  Speaker 1: two hundred million people the overall population to find themselves
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  Speaker 1: as either black or mixed race. And that is actually
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  Speaker 1: a gigantic shift in Brazil because this means that they
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  Speaker 1: are the majority. And then for the first time, Brazil
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  Speaker 1: is beginning to accept itself as a country that is
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  Speaker 1: non predominantly white, and and that is a novelty. It
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  Speaker 1: was it was its big I think for Brazil to
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  Speaker 1: see itself and admit to itself into the world. That
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  Speaker 1: that's how it is so link that to the deepest
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  Speaker 1: recession on record that Brazil is suffering now and the
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  Speaker 1: impeachment of the president. Well that's not I'm not sure
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  Speaker 1: if this is the reason why we had the biggest
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  Speaker 1: recession in Brazil. But a little bit like in United States.
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  Speaker 1: I mean, income inequality is good to the lowest. The
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  Speaker 1: poorest strata of society in Brazil is predominantly black and
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  Speaker 1: mixed race, right, I mean the black portion of the
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  Speaker 1: society is the one that is the disenfranchised. Unemployment is higher,
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  Speaker 1: they have less access to um healthcare bank accounts. So
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  Speaker 1: you know, all kinds of studies show that, right, if
• 13:26
  Speaker 1: you think a little bit about impeachment. But before, if
• 13:29
  Speaker 1: you think about the push that helped bring to power
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  Speaker 1: the Worker's Party, right, it was all push or push push, push,
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  Speaker 1: then not the Munich sense, No, no, no, the push
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  Speaker 1: that we're talking about the military, Yes, that brought to
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  Speaker 1: part of the Workers Party. It's obviously, you know, their
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  Speaker 1: platform has always been to try to address income inequality
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  Speaker 1: in the country, and they catered a lot to the
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  Speaker 1: north and northeastern part of Brazil where you know, a
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  Speaker 1: lot of you know, havey predominantly poverty and higher unemployment rate.
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  Speaker 1: So with all of the things we've discussed, they've created
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  Speaker 1: this kind of political and economic culture of you know, grab,
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  Speaker 1: what's mind while I'm in the office, because God knows
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  Speaker 1: how long I'll be there. I mean, how does that
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  Speaker 1: kind of attitude in in government and politics? Also? I mean,
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  Speaker 1: like Dan has been saying this entire episode, connect that
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  Speaker 1: for us, what's the connection to that and the economy
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  Speaker 1: and why they're in this huge recession. Well, the recession
• 14:32
  Speaker 1: can be explained by many factors. I'm not to be honest,
• 14:35
  Speaker 1: I'm not sure that demographics is the biggest determinant of
• 14:40
  Speaker 1: Brazil's economic recession. But obviously, when you have large countries
• 14:45
  Speaker 1: with large populations, where there's a lot of wealth concentration, right,
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  Speaker 1: I mean, you are prone to to your less I
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  Speaker 1: mean your ability to withstand shocks. And this comes to
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  Speaker 1: the commodities and maybe the parallel those tradias and the
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  Speaker 1: labor market issue. I mean, these are more fractured society
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  Speaker 1: is therefore again the ability to withstand a shock or
• 15:09
  Speaker 1: a downturn. I mean it's it's severely diminished, right, because
• 15:13
  Speaker 1: then you quickly disenfranchise an even larger portion of the
• 15:16
  Speaker 1: society that loses their job, that loses the credit cards,
• 15:19
  Speaker 1: that losers the access to everything, and you task the
• 15:22
  Speaker 1: system that cannot absorb that loss anyway. Right, So if
• 15:26
  Speaker 1: you think about Brazil, think about how that the middle
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  Speaker 1: class miracle boom that took place in the last in
• 15:33
  Speaker 1: the beginning of the two thousand's quickly almost evaporated in
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  Speaker 1: just a matter of years, in the sense that the
• 15:41
  Speaker 1: minute people have started losing their jobs, I mean, the
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  Speaker 1: entire system crumbled. So one of the legacies of slavery
• 15:47
  Speaker 1: and that plantations structure, which you said earlier continued and
• 15:51
  Speaker 1: after slavery was abolished, is that you have a huge
• 15:55
  Speaker 1: group of people in Brazil disenfranchised yet have not benefited from,
• 16:01
  Speaker 1: say a civil rights movement, and that partially explains the
• 16:05
  Speaker 1: polarization today. Well, it's fair to say that unit Brazil
• 16:10
  Speaker 1: has struggled to complete that transition civil rights. No, you're right,
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  Speaker 1: not in the sense that we had here in the
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  Speaker 1: United States. There was not something as organized or perhaps
• 16:22
  Speaker 1: even so dramatic as in the United States, complete different histories.
• 16:26
  Speaker 1: But again, I mean it's always in Brazil things are
• 16:29
  Speaker 1: almost like soft right in a certain way. That's why
• 16:33
  Speaker 1: hence the what we saw at the census with people
• 16:36
  Speaker 1: themselves qualifying themselves as of black or mixed race, uh origin.
• 16:46
  Speaker 1: It's very key to a nation. Now, first you need
• 16:49
  Speaker 1: to know who you are before you can start demanding
• 16:52
  Speaker 1: the right things from your own government. To begin with
• 16:55
  Speaker 1: proper representation, right, I mean it's not a question that
• 16:59
  Speaker 1: in still I mean until very recently, mixed race, black
• 17:03
  Speaker 1: you were underrepresented and even women underrepresented in government. This
• 17:08
  Speaker 1: new interim president, Timor was seriously criticized by naming an
• 17:12
  Speaker 1: entire cabinet comprised of white men after he took over.
• 17:16
  Speaker 1: So no, Lauretta Lynch, no Condi Rice, nothing like this,
• 17:20
  Speaker 1: I mean not as much, not not in the way
• 17:23
  Speaker 1: we should Brazil should. For a country out that side,
• 17:26
  Speaker 1: we had one or two, We had one chief justice
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  Speaker 1: in Brazil. Uh, you know a couple of years ago.
• 17:32
  Speaker 1: We have a minister here and there, a lot of
• 17:34
  Speaker 1: I would say sports figures, popular coach of figures, artists, right,
• 17:39
  Speaker 1: but we we are far far from having a black
• 17:45
  Speaker 1: or mixed race president, even though I think that would
• 17:48
  Speaker 1: be a you know something that Brazil has to aspire to.
• 17:51
  Speaker 1: Let's sum out for a moment, because the kind of
• 17:53
  Speaker 1: the issues that you're talking about right now are fascinating,
• 17:55
  Speaker 1: not only because they intrinsically are, but I mean, you
• 17:58
  Speaker 1: could swap out Brazil for so many other countries, um
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  Speaker 1: specifically in Latin I'm like, we're talking about right now,
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  Speaker 1: So what I mean when from what you've seen, I mean, what,
• 18:07
  Speaker 1: what are some of the lessons that other countries in
• 18:09
  Speaker 1: the region can take from Brazil to avoid falling in
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  Speaker 1: these footsteps? Well, I mean, first, when you say lessons
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  Speaker 1: about that's preventing from, for example, getting into a big
• 18:20
  Speaker 1: crisis that we're seeing right there, I mean, obviously we
• 18:25
  Speaker 1: have models in Latin America that a assign a lot
• 18:28
  Speaker 1: of power to the presidents, and the presidentialism is very uh,
• 18:32
  Speaker 1: you know, one person can have a lot of sway
• 18:34
  Speaker 1: in these economies, right. I think, for example, what's happening
• 18:37
  Speaker 1: in in Venezuela, Right, Okay, that could be the factory
• 18:41
  Speaker 1: that you know, people discussed if it is actually a
• 18:44
  Speaker 1: democracy or not, especially at this stage. But you have
• 18:47
  Speaker 1: systems that create and and and concentrate a lot of
• 18:50
  Speaker 1: power into one single person to begin with. And then
• 18:54
  Speaker 1: this is just on the political side, but economically speaking again,
• 18:58
  Speaker 1: I mean, you know, we have to try these regions
• 19:01
  Speaker 1: have to try to go transcend the agribusiness one clients
• 19:06
  Speaker 1: type of model, right, education. It's a big deathit throughout
• 19:10
  Speaker 1: that in America. Try to impose societies and again I
• 19:13
  Speaker 1: mean have societists that are more equally distributed, you know,
• 19:16
  Speaker 1: better representation, better income distribution, so on and so forth.
• 19:20
  Speaker 1: I mean Brazil that it's a it's a good example
• 19:24
  Speaker 1: of how actually quickly everything can evaporate if you don't
• 19:30
  Speaker 1: promote real, stable reforms in the base of the country. So,
• 19:34
  Speaker 1: given this persistent political and economic lopsidedness that you've described,
• 19:40
  Speaker 1: let's look into the future for a second. So is
• 19:43
  Speaker 1: this whole democracy thing just a fat in Latin America. No,
• 19:47
  Speaker 1: I don't think so. I mean, especially coming from a
• 19:51
  Speaker 1: if you look at these three countries where you know,
• 19:54
  Speaker 1: experienced longer and you know, Chiley, Argentina and Brazil, I
• 19:58
  Speaker 1: mean you have now a generation of people who were
• 20:00
  Speaker 1: born and are beginning to come of age and even vote,
• 20:03
  Speaker 1: you know, that grew up under a democracy. These people
• 20:06
  Speaker 1: will not return to a non democratic state, you know,
• 20:10
  Speaker 1: I mean, Brazil will not allowed that to happen. Society
• 20:13
  Speaker 1: is not such that will You know, the press is
• 20:17
  Speaker 1: free processes, due course, I mean, yes, there's been questions
• 20:20
  Speaker 1: about the whole process and the legality of the process
• 20:23
  Speaker 1: in Brazil regarding President Roussef, but it was oversown by
• 20:26
  Speaker 1: the Supreme Court. So on. We did exchange some emails
• 20:30
  Speaker 1: the evening of the attempted Turkish coup. You sure about this? Well? Obviously,
• 20:36
  Speaker 1: once you if someone seizes an opportunity to put the
• 20:40
  Speaker 1: tanks rolling on the streets, especially if in a situation
• 20:44
  Speaker 1: of a severe unrest, right, it's always tempting, you know
• 20:49
  Speaker 1: how it is. Once once the tanks are out there,
• 20:51
  Speaker 1: it's kind of hard to put them back, right, Uh.
• 20:53
  Speaker 1: And then obviously everybody wants to prevent a situation. But
• 20:57
  Speaker 1: I mean, society is in in places like Brazil or
• 21:00
  Speaker 1: nowhere near what they were in. Well, Viv, thanks for
• 21:05
  Speaker 1: joining us. You're doing a terrific job running economic and
• 21:09
  Speaker 1: government coverage in Latin America. Benchmark will be back next week,
• 21:14
  Speaker 1: not about Brazil, and until then, you can find us
• 21:17
  Speaker 1: on the Bloomberg terminal, Bloomberg dot com, as well as iTunes,
• 21:20
  Speaker 1: pocket Cast, and Stitcher. While you're there, take a minute
• 21:24
  Speaker 1: to rate and review the show so more listeners can
• 21:27
  Speaker 1: find us and let us know what you thought of
• 21:29
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• 21:31
  Speaker 1: at Daniel Moss, d c at by Kate Smith and
• 21:36
  Speaker 1: Viv underscore Rod Do they get that right? You did?
• 21:42
  Speaker 1: Thanks so much for joining us. Thank you. Brought to
• 21:55
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• 21:59
  Speaker 1: all the highlights. It's Age Summit from the convenience of
• 22:01
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• 22:07
  Speaker 1: SAGE Summit live stream dot com.