'Populismo' is killing Brazil

We recall the 2014 election that re-elected President Rouseff.  At the time, we posted here that the country was bitterly divided between those who pay taxes and the others who get government benefits.  As IBD posted:

Virtually every state that went for Rousseff has at least 25% of the population dependent on Brazil's Bolsa Familia welfare program of cash for single mothers, given for keeping children vaccinated and in school.

States with less than 25% of the population on Bolsa Familia overwhelmingly went for Neves and his policies of growth.

The World Bank and others praise Bolsa Familia's "poverty alleviation." Problem is, "some experts warn that a wide majority cannot get out of this dependence relationship with the government," as the U.K. Guardian put it.

And whether it's best for a country that aspires to become a global economic powerhouse to have a quarter of the population — 50 million people — dependent on welfare and producing nothing is questionable.

That was then, and this is not too long after that, or about six months later.

Over the last couple of weeks, thousands have marched across the country demanding change:

About 1.5 million protesters hit the streets across Brazil on Sunday in a major show of anger against leftist President Dilma Rousseff, who faces crises from a faltering economy to a massive corruption scandal at state oil giant Petrobras.

Many called for the impeachment of Rousseff, less than six months after she was narrowly returned to power in the most bitterly fought presidential race since the end of a military dictatorship in 1985.

The demonstrations are a perfect storm of failed populist policies and massive corrution at Petrobras, the state oil company.

One interesting sign in the demonstrations was one that said: "Go to Cuba."  This is a reference to the leftist inclination of the incumbent president.  It also points out that there must be a lot of middle-class people on the streets calling for change.

Rousseff will survive this, but it won't be easy.  The left has created this massive dependency that translates into votes. 

Unfortunately, the nation's stagnant economy is not generating the kind of growth projected a few years ago to finance the dependency scheme:

Economists again cut their growth outlook for Brazil this year and now see Latin America's largest economy stagnating.

Brazil's 2015 gross domestic product is expected to post zero growth, down from a forecast of 0.03% expansion last week, according to a weekly central bank survey of 100 economists. This marked the sixth consecutive reduction, according to the survey.

Brazil is another example of the failure of populism.   

Latin America should know by now that populismo does not create prosperity.  It just drives investors to other more attractive places, like Chile next door.  It also creates a bloated state, crony capitalism, and the corruption that comes with it.

Speaking of corruption, Anderson Antunes recently wrote that the "annual cost of corruption in Brazil is between 1.38% to 2.3% of the country’s total GDP."  In terms of money, that's between $30 and $50 billion!  That's a lot money that could be going to addressing some of the structural problems facing this huge country.

It's time for real change to come to Brazil.  Frankly, all that they have to do is look next door to Chile!   

P.S. You can hear my show (CantoTalk) or follow me on Twitter.

We recall the 2014 election that re-elected President Rouseff.  At the time, we posted here that the country was bitterly divided between those who pay taxes and the others who get government benefits.  As IBD posted:

Virtually every state that went for Rousseff has at least 25% of the population dependent on Brazil's Bolsa Familia welfare program of cash for single mothers, given for keeping children vaccinated and in school.

States with less than 25% of the population on Bolsa Familia overwhelmingly went for Neves and his policies of growth.

The World Bank and others praise Bolsa Familia's "poverty alleviation." Problem is, "some experts warn that a wide majority cannot get out of this dependence relationship with the government," as the U.K. Guardian put it.

And whether it's best for a country that aspires to become a global economic powerhouse to have a quarter of the population — 50 million people — dependent on welfare and producing nothing is questionable.

That was then, and this is not too long after that, or about six months later.

Over the last couple of weeks, thousands have marched across the country demanding change:

About 1.5 million protesters hit the streets across Brazil on Sunday in a major show of anger against leftist President Dilma Rousseff, who faces crises from a faltering economy to a massive corruption scandal at state oil giant Petrobras.

Many called for the impeachment of Rousseff, less than six months after she was narrowly returned to power in the most bitterly fought presidential race since the end of a military dictatorship in 1985.

The demonstrations are a perfect storm of failed populist policies and massive corrution at Petrobras, the state oil company.

One interesting sign in the demonstrations was one that said: "Go to Cuba."  This is a reference to the leftist inclination of the incumbent president.  It also points out that there must be a lot of middle-class people on the streets calling for change.

Rousseff will survive this, but it won't be easy.  The left has created this massive dependency that translates into votes. 

Unfortunately, the nation's stagnant economy is not generating the kind of growth projected a few years ago to finance the dependency scheme:

Economists again cut their growth outlook for Brazil this year and now see Latin America's largest economy stagnating.

Brazil's 2015 gross domestic product is expected to post zero growth, down from a forecast of 0.03% expansion last week, according to a weekly central bank survey of 100 economists. This marked the sixth consecutive reduction, according to the survey.

Brazil is another example of the failure of populism.   

Latin America should know by now that populismo does not create prosperity.  It just drives investors to other more attractive places, like Chile next door.  It also creates a bloated state, crony capitalism, and the corruption that comes with it.

Speaking of corruption, Anderson Antunes recently wrote that the "annual cost of corruption in Brazil is between 1.38% to 2.3% of the country’s total GDP."  In terms of money, that's between $30 and $50 billion!  That's a lot money that could be going to addressing some of the structural problems facing this huge country.

It's time for real change to come to Brazil.  Frankly, all that they have to do is look next door to Chile!   

P.S. You can hear my show (CantoTalk) or follow me on Twitter.