Opinion – Bernardo Guimarães: What to expect from the new government’s economic policy?

The position of Secretary of Economic Policy is, in my view, the most emblematic of the Ministry of Finance.

The Executive Secretariat is considered the second most important position in the Ministry of Finance. But the Economic Policy Secretariat (SPE) aims to formulate projects and proposals and that’s where we should expect new ideas and plans.

In fact, in his book Sobre Formigas e Cigarras, Antonio Palocci states that the executive secretary appointed at the end of 2002 told him he preferred the SPE.

Those who have been in government say that, in practice, a good deal of time is devoted to putting out fires. Even so, measures with deep and lasting impacts on the country’s economy leave the SPE.

It is therefore important to know what Guilherme Mello, the new Secretary for Economic Policy, thinks.

Mello has works published in academic journals. So I went to read what he wrote. Press statements are sometimes difficult to interpret. A wrong sentence or out of context can generate noise, space is short to develop arguments, political motivations can affect speeches. However, articles in specialized journals do not suffer from these problems.

In an article, he analyzes what went wrong with the PT’s economic policies that culminated in the great recession of 2015-2016 (“The Growth Model of the PT Governments: A Furtadian View of the Limits of Recent Brazilian Development”).

Mello and his co-authors argue that it was necessary to change the structure of production and control the strategies of foreign companies operating in Brazil. They argue that these companies have imported too many intermediate goods. Then, there would have been a lack of demand for these goods and the production structure did not adapt.

The argument is based on old theories, seen for decades as outdated by the main schools of economics in the world, which guided the economic policy of Dilma Rousseff’s government —and insist on being called heterodox despite being almost all based on works of many decades. behind.

According to Mello and co-authors, the crisis occurred despite the industrial policy and BNDES credit operations at the time —and not because of these policies. They suggest that it was a mistake to maintain “neoliberal policies” from the time of FHC, and seem to think that there was a lack of being more radical in developmentalist policies.

The article’s conclusion is that it is necessary to “overcome the structural obstacles that conditioned Brazil to underdevelopment” (my translation). And how to do it?

The answer is given by citing a book written more than 60 years ago, with vague prescriptions (greater coherence between policies, strategic planning to generate everything good) and strange ones (mitigating limitations imposed by imported consumption patterns).

Economists have learned a lot about development and productivity over the past 30 years. A great evolution in empirical methods has enabled us to derive much more reliable results from microeconomic data. The integration of these results with macroeconomic models brought us valuable clues about the effects of public policies.

Much of this learning is ignored at many economics schools across the country.

And judging by the academic work of secretary Guilherme Mello, this learning will be absent in the body responsible for formulating economic policy in Brazil.

Here comes the new year and new government. It is a time for reflection and looking to the future. What will tomorrow be? How will my destiny be?

I remain happy with the end of the current government. I hope that the country finds a path of progress, development and improvement of life for the poorest, but the economic policy does not start with good omens.