Analysis: Understand what Haddad has thought and can think about economics

What does Fernando Haddad think about economics? Hard to say, even pasting interviews and excerpts from the last four years, when his statements and texts had more relevance to the subject.

Furthermore, this somewhat unfair patchwork quilt could soon be replaced by a carpet of organized weft as soon as the new minister appoints a team, gives his guidelines and answers to the most urgent problems, among them that of the unlimited growth of the public debt .

A little of history. It caused some surprise that Fernando Henrique Cardoso was appointed Minister of Finance by Itamar Franco, in 1993, the fourth in seven months of government. About economics, the most systematic thing he had said was sociology or something close to economic history, academic works that had stopped there in the early 1970s. FHC led the creation of the Real Plan.

Anyone willing to research what the new minister thought would not find much more than generalities, to put it mildly. But his friendships and proximity to what would be the standard team of Toucan economists provided clues. But that was it. FHC was a shrewd politician, with a vision of history, also forward. He realized how to untie the giant knot of the economic problem with the political one, doing all this still in such a way as to take his career to the top.

This is not an unreasonable and disproportionate comparison of Fernandos, despite their superficial similarities (professors of social sciences at the University of São Paulo who happened to become finance ministers). It’s just an example.

Very recently, Haddad defended the increase in spending in the 2023 Budget, the Transition PEC package. He says that federal spending as a proportion of GDP would thus remain at the same level as in 2022, which would otherwise avoid disasters such as the one caused by the government of darkness (2019-2022), which controlled spending by simply failing to pay essential bills.

Until now, it is not known what Haddad thinks about the deterioration of economic expectations (interest rates and inflation) over the last month, caused by spending decisions and statements by the political leadership of the transition.

He has already shown appreciation for the idea that increased spending can have a “multiplier effect” (extra spending will yield enough GDP and revenue growth to be offset), which is, as a general thesis, at least controversial and inspiring economic bullshit thick.

On the other hand, Haddad has given emphasis, somewhat ignored, to improving the quality of spending. It seems like a banal generality. If taken seriously, it simply means creating methods to verify whether such spending has resulted: efficiency. It does not necessarily mean measuring effectiveness in order to cut costs, but to do more in areas such as health and education. The federal government has almost no such controls.

Haddad has already said vaguely in favor of some method of controlling the increase in spending and indebtedness (“fiscal rule”), but it is not known what, frankly. Without details, this is all talk. As mayor of São Paulo (2013-2016), he reduced the debt and contained the payroll growth.

He is in favor of approving the best tax reform ever formulated in the last 25 years, the one led intellectually by Bernardo Appy and which was formatted and amended in a reasonable manner by Congress. This reform is ready to be approved, but it must suffer from the lobbying of supposedly disadvantaged business sectors, which has helped to bury tax reforms for a quarter of a century.

Appy was secretary of the Ministry of Finance under Antonio Palocci, under Lula 1, one of the good cadres who ended up moving away from the PT governments.

He is in favor of fairer taxation, especially on citizens with higher income and wealth. It is hoped that, finally, he will be able to take this project forward.

Haddad seems to have a general appreciation for development policies: changing the country’s productive structure through various government interventions. Practically anything can come out of this, from inefficiencies and useless and pro-rich expenses, catastrophes like those of the Dilma Rousseff government, to new and intelligent correction programs and light orientation of market decisions, inventions of productive novelties and growth more directed towards the poor .

However, he has already explicitly and harshly criticized the Dilma government’s decisions, in particular microeconomic interventionism. He has always been in favor of public-private partnerships, a good idea that has so far failed in the country due to lack of regulation and decent guarantees.

He thinks that the BNDES can play a role in the “developmentalist” policy that became terrible and mortally infamous during the Dilma government. Again, maybe. BNDES, the federal development bank, can act in several ways, in project studies and smart financial engineering. But it has already been heard in the Lulian transitional government that the bank can be an instrument of bad subsidies for credit.

Haddad has already praised the BNDES support program for companies with national capital. He didn’t. What’s more, he has already suggested taxing or subsidizing banks, depending on the interest rate they charge. It’s been a while, four years, but you already suggested it.

In 2018, when he was not yet a candidate for president, Haddad spoke of revoking part of the labor reform (such as the one that greatly increased the risk of the worker having to pay the cost of a lawsuit and, thus, repressed the number of lawsuits) .

He also thought of using part of the international reserves (savings in hard currency kept at the Central Bank) in order to finance public investments and use state-owned ones in development plans. Ironically, the use of reserves to finance investment, until today always a bad idea, was also included in FHC’s 1994 government program, inserted there by the so-called “left wing” of the PSDB.