Opinion – Marcos Mendes: We need to learn from mistakes in public policies

In theory, public policies should try to solve problems that private contractual and commercial relationships cannot solve. For example, companies and households have no incentive to control all the pollution they generate, as this imposes a cost on them. Hence the need for environmental public policies.

Likewise, there are no efficient private means of organizing national defense or selling pandemic risk insurance. There are also limitations to private efforts to reduce poverty and inequality.

Public policies are designed to fill these gaps and improve the well-being of the entire population.

In practice, many policies fail. It is natural for this to happen. After all, every enterprise, public or private, involves risk. Innovative policies may not go as planned.

What is unnatural is that failed policies are not repealed. Let us not learn from our mistakes and let policies that went wrong in the past be implemented again, failing again. Or that, knowing the risks of failure, programs are launched on the spot, without prior evaluation.

Unfortunately, many public policies created in Brazil in recent decades have these harmful characteristics. To make a historical record of some of these mistakes, I organized the book “To not forget: public policies that impoverish Brazil”.

Topics such as the incentive given by the Federal Government for states and municipalities to take on excessive indebtedness, the high cost and low effectiveness of the Individual Microentrepreneur (MEI) program, the social security privileges of the military, the distortions of subsidized credit to large companies, the node created by the intervention in the electricity sector, the low effectiveness of educational policy, the survival of state-owned companies that add nothing, excessive commercial protection.

There are several causes of misguided, persistent and impoverishing public policies. The short-term bias of politicians, who want to leave a political mark in a four-year term, generates hastily designed programs and a lack of concern for long-term costs.

Policies are often responses to crises. There are demands for quick and simple solutions to complex problems. Emergency solutions are often expensive and inconsistent, compounding the problem in the long run. Therefore, they must be temporary. But they often persist. Tax exemptions created in the 2009 crisis, for example, have not been revoked until today.

Congress is about to revoke an increase in the price of electricity provided for in the contract, weakening legal certainty and discouraging incentives for future investments in the sector: prices contained force in the short term lead to even higher prices in the future.

A fragmented political system, like the Brazilian one, ends up opening up a lot of space for the influence of pressure groups, without there being any filters to stop opportunism. It is no wonder that Congress is trying to approve the construction of useless gas pipelines and the creation of additional service time for the elite of the judiciary.

There is also the phenomenon of trying to correct a problem by creating a second distortion. For example, complex tax rules encourage the creation of simplified special regimes, which end up making legislation even more complex.

Rowing against this current and establishing well-founded public policies is not trivial.

Each of the book’s 25 chapters shows a specific case, diagnosing errors and relating them to the causes described above. Our hope is that the evidence shown in the book will lessen the chances that mistakes will be repeated.

We are 33 authors, including academics, government technicians and professionals in the private area. All with many years of experience and research on the topics covered. Insper and Fundação Brava made the project possible, offering the book free of charge, which will be available in the usual reading apps from May 30th.