Market only sees a problem when it becomes an expense – 03/18/2023 – Celso Rocha de Barros

A Genial/Quaest survey revealed that 98% of market managers (out of a sample of 82) disapprove of Lula’s economic policy. The first thing to say is that if the 2% of managers who disagree are right they should be making a lot of money in the coming years.

In a sense, the result of the survey was to be expected. Fund managers are certainly among the richest 1% of the population, which is not fertile electoral territory for the left. And it would be ridiculous not to recognize that managers, like all other human beings, have their political opinions.

For example, this column has been baffled since December by people in the market who thought Haddad was a radical. Today there doesn’t seem to be anyone who thinks that, but Haddad hasn’t changed, the market has surrendered to the evidence.

By the way, it’s good to remember: a good part of the class that today is afraid that “Lula won’t let Haddad work” had the chance to elect Haddad president in 2018. for Disney.

This is not to say, however, that the left and the market can never agree with each other, or that the left does not make mistakes that reinforce the market’s poor perception of it.

The market has very intelligent people who earn a lot of money if they correctly diagnose certain subjects, such as GDP variations or the fiscal situation. It is worth listening to them about these guidelines. On the other hand, there is a whole universe of relevant problems that take time to become a drop in GDP or an increase in spending, or never seen. About this, it is better not to listen to the market.

For example, a good part of Lula’s increased spending so far has been to resolve crises left by Bolsonaro in the social area. These expenses were contracted when Guedes left Brazilian workers without a real increase in the minimum wage for four years, or when Damares refused to send water to Yanomami children. But they only appeared in the market account when they became expenses, already under another government.

On the other hand, if the market only sees the problem when it turns into spending, the left sometimes only sees the crisis when it turns into spending cuts. Like the market in the cases above, it also tends to place the blame on the guy trying to fix the problem.

In the subsidies given by the first Dilma government, the entire story of Joaquim Levy’s adjustment is already told. Why would the business community have invested the resources given by Dilma if it was clear that they would cause a fiscal crisis, forcing the government to make a strong adjustment? The guy who set up a factory in 2012 with his tax break found how many consumers in 2015?

A good way to reconcile these horizons is a well-thought-out fiscal rule, which, as former Minister Nelson Barbosa has already said, has to please “the streets and Faria Lima”.

Apparently, the new tax rule should be like this. The proposal has not yet been leaked, but what emerges from the interviews so far is that it should be much better than the spending cap approved in 2017.

I hope that the rule is good, that the reactions of the streets and of Faria Lima are reasonable, and that the 2% of managers in the first paragraph spend the rest of their lives laughing in the face of their colleagues at the firm.

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