It takes courage to change the failed economic model

The Brazilian economy has been eating dust for a long time. In 1980, our GDP per capita was 15 times that of China and 1.6 times that of South Korean; in 2020 it was equivalent, respectively, to only 79% and 26% of what was observed in these countries.

What did the Asians do? They realized that the most successful countries encourage industry and the important sectors around them; therefore, they expanded their participation in the international market via manufactured exports, using and abusing planning, good macroeconomic practices, scientific and technological development policies and education, focusing on strategic areas and always defending the interests of their countries.

Around here, we deliver our domestic market, hand in hand, via appreciated currency, to producers in other countries, without expanding exports of manufactured goods; while retail sales, discounted for inflation, are now double what they were in 2003, industrial production is at the same level as in 2005.

All possible difficulties were created for efficient local producers to operate in domestic and foreign markets: in addition to exchange rates, high interest rates, a distorted tax structure, ineffective industrial policies, insufficient investment in education and science and technology, and poor quality of public spending.

As a result, we de-industrialized and today we feel the worst consequence of this process: we stopped generating good jobs and people are having to make do with informality, in much more precarious occupations, and Brazil’s GDP per capita today is the same as in 2010. We lost 11 years.

Is it possible to reverse this scenario and return to generating good jobs, which is one of our main objectives, and to encourage real entrepreneurship? Definitely yes! Do we need to invest more in education? Of course, and Ceará de Ciro Gomes and his successors is a worldwide example. Do we need to participate more in international trade? Yes, but by stimulating exports, not by annihilating local producers. How to make?

First, it is necessary to structure a macroeconomic scenario favorable to those who produce: we must address the fiscal issue in the medium term, making the trajectory of public debt sustainable, through the reduction of subsidies and exemptions, the change in budget logic — which rewards those who spent more in the past , the institution of progressive taxation on profits and dividends, inheritances and assets, compensatingly reducing production, and improving the quality of public spending. Thus, the pressures against the fall in the interest rate are neutralized, the maintenance of the exchange rate at a competitive level and the public investments that we need to resume growth at this moment are made possible. Actions to reduce inflation and private indebtedness are also essential.

From a strategic point of view, we see that the US, Germany and France created plans to recover their industries and their space in the world economy, including high spending on infrastructure and research and development. There is no way for us to act otherwise.

A national development plan agreed between the public and private sectors, along the lines advocated by Ciro, is essential, providing for both scientific and technological development as well as the reduction of inequalities and the improvement of social indicators, which will recover with the improvement in the quality of jobs, educational advancement and specific policies for the most disadvantaged. Public management should be reoriented towards achieving the goals of this plan, acting in a matrix manner, monitoring and demanding results and rewarding good performance.

The environmental agenda constitutes an investment opportunity: the development of new energy sources, the reorientation of the use of oil, changes in the way of producing meat and other foods, the implementation of a low-carbon infrastructure and the necessary technological advances in the area of ​​health, for example. All of these factors will spur technological innovation and sophistication, including microelectronics, software and artificial intelligence. And let’s think about all the services that will be required by these activities.

There is, indeed, a lot of room for resuming growth, good jobs and the dignity of the Brazilian people. But it takes willingness and courage to change the failed economic model that has prevailed for decades.