Lula accumulates unforced errors in the first quarter – 03/31/2023 – Rodrigo Zeidan

On the one hand, concern for social well-being that brings hope to the country. On the other hand, exchanged signs of economic policy, which sometimes indicate new-developmentalism as in a third term of Dilma Rousseff, sometimes point to modernizing reforms.

In tennis, an unforced error can cost you a match or a championship. In economics it is not much different. As economic systems are complex adaptive systems, unforced errors, such as attacking institutional arrangement, can bring about perverse chain effects that postpone the country’s growth.

What is the balance of these three months of government? The reinstitutionalization of the social welfare system is by far the best thing the PT administration has done. We have a normal government, with empathy, that seeks the best for the different communities that make up the multifaceted Brazil.

Some examples are the fight against work analogous to slavery, the fight against hunger in the Amazon rainforest, the resumption of the environmental agenda and the recreation of the LGBTQIA+ Council.

Instead of seeing ministers pressuring poor families and hatching plans to let the herd pass, we have the normality of a government equipped with technical people that seeks to support all Brazilians, but that has enormous work ahead of it after the institutional destruction caused by the extreme right.

The problems in the economy were predictable, as the government did not present any concrete plan on what would be at the heart of Lula’s third term.

The attacks on the independence of the Central Bank are silly mistakes, made by banana republics. “I don’t like what an independent body with thousands of employees is doing, so I’m going to attack it as if the president were in charge of everything himself.”

Worse is the proposal to exempt BNDES loans from IOF. It seems that the economic team is not resigned to the fact that it cannot subsidize rich companies as it has done in the past. He scratches his finger to transfer money from Brazilians to shareholders in large companies. This proposal, like many others on the economic agenda of the 1970s that permeates the PT ideals, is terrible.

Rebuilding Bolsa Família, the best social program in Brazil’s history, is obviously a success. Minha Casa, Minha Vida, if well redesigned, could also contribute to an economic recovery. Mais Médicos is very necessary. But new ideas are lacking.

The new fiscal framework is something that can unlock investments, bringing confidence to the economy. But the government is unlikely to deliver something transformative, for better or for worse.

The question remains: what is the main policy axis of this government? We still don’t know the answer. That’s the problem with living in a country where presidential candidates don’t launch robust programs, but rather ideological platforms.

Details matter and, for a change, we’re going to see a government with clumsily constructed policies. If the conjuncture allows and there is creativity, decent policies will come out. But being governed at the whim of macroeconomic winds only brings one certainty: passengers leave feeling sick.

If, instead of chasing scapegoats, the government seeks to reform Brazilian government for the 21st century, Lula could once again emerge as the father of the poor. The president should have already resolved the tension between economic populism and the necessary reforms to society. The first quarter has passed. When will we know the answer?

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