Opinion – Marcos Mendes: What will a developed society do for us?

Economist Oded Galor recently released the book “The Journey of Humanity: the Origins of Wealth and Inequality”. The work is impressive in explaining the process of economic growth by compiling evidence dating back to the period before Homo sapiens migrated out of Africa. The work makes it clear that a central condition for the phenomenon of growth is human capital. Successful societies were those that allowed the majority of their members to develop their potential.

The growth would have occurred unevenly in the world due to geographic, historical, cultural and institutional conditions, which in some cases allowed and in others hindered the use of all the creative potential of the human being.

For Latin America, the diagnosis is consistent with the literature that has been developing since the 1990s. Our favorable geographic conditions for export monoculture have generated concentration of land ownership and wealth, slave labor without investment in human capital, institutions policies and cultures that excluded most of the population from the political process, laws and governments more focused on preserving privileges than providing public goods for all.

Despite showing that the current level of development of each country has deep historical roots, Galor says that the fate of nations “is not set in stone”. He concludes the work by stating that societies that succeed in forging social cohesion, inducing a future-oriented mentality, favoring education and the inclusion of all, will become developed.

A future-oriented mindset (effort today, reward tomorrow) is critical to capital and knowledge accumulation. Social cohesion facilitates agreements, generates trust in others and allows everyone to accept present sacrifices in the name of future benefits. It also allows contracts to be made with unknown people, expanding the possibilities of trade gains.

What to expect from Brazil from this perspective? Data from the World Value Survey show that we are doing poorly in terms of social cohesion. Only 6.5% of Brazilians believe that most people are trustworthy, compared to an average of 27% in other countries. We ranked 80th out of 88 countries in the distrust ranking.

As for the collective effort to solve society’s problems, 48% of Brazilians believe that the government is responsible for meeting people’s needs, as opposed to individual efforts. The average is 16.5%. Only Jordan and Zimbabwe place more responsibility on the government. The curious thing is that Brazilians do not trust the government, being fifth on the list of the most suspicious. Therefore, the message seems to be one of individual disengagement with the solution of collective problems, throwing to a third party (the government) the responsibility that one does not want to assume, and of turning to the government whenever he needs to solve a problem of his interest group.

In terms of a future-oriented mindset, we’re not doing well either. High interest rates, high public debt and low savings are measures of impatience and preference for the present. World Bank data show that we have the second highest real interest rate in the world. Public debt is the 14th largest among 79 emerging countries (IMF data). Our savings rate is very low, ranking 121st among 173 countries.

Our poor results on international proficiency exams in math, science and reading show that we are not doing well in terms of human capital either.

It will not be easy to reverse these conditions that hold back growth. One possibility would be to unite society around a few but relevant quantitative goals, such as school learning, the reduction of poverty and violence.

Focusing on the results that make a difference in the long term, without neglecting the basics, which is to prevent the economy from collapsing due to voluntary management, based on magic formulas for immediate growth, which always ended in disaster.