At the end of eight years of Lula's reign as president of the Brazilian republic, I think it's time for a little reflection. With the international media waxing lyrical about the achievements of his government and prospects for the country in the coming years, the time has come for a little reality check. It is time to separate reality from emotion, something of a rare occurrence in Brazil.
Throughout his presidency, but increasingly so towards the end of his second term in office, Lula referred to himself as the embodiment of the Brazilian people. As the sociologist Chico Oliveira said in his interview given to the Estado de São Paulo newspaper on 01 January 2011: "Only two statesman in the 20th Century claimed that they were the embodiment of the people: Adolf Hitler and Joseph Stalin."
In a country so sadly lacking in the strive to excellence in practically any sphere, where good enough is so often accepted as being good enough, I think Lula honestly believed he deserved to be revered. He really was starting to believe his own hype. It was disturbing to watch. Yet Lula should be remembered more for what he didn't do rather than what he did do during his two terms in office.
Lula's government managed to get through the last eight years without even minor economic or political reforms. Lula happily took the credit for the improving macro economy, yet the hard yards where actually achieved by his predecessor's government.
Under Fernando Henrique Cardoso, privatizations were started, fiscal accountability was put in place, and more progress was made at opening up sectors of the Brazilian economy to international competition. Shortly after I arrived here in 1996 I watched the price of a fixed line connection fall from around USD1,500 to less than USD50,00.
Under Lula we have actually experienced a significant expansion of the the bloated and inefficient Brazilian state. There have been no further privatizations, only a massive increase in tax take. Private investment has been crowded out even more than in the past. Under Lula, we have seen the emergence of major private monopolies in such sectors as civil engineering and the meat industry, helped as they have been by concessionary loans from the state run BNDES, the Brazilian Development Bank.
Perhaps the thing that Lula will most be remembered for is the success of his "Bolsa Familia" welfare spending program (even though it was in fact initiated by his predecessor). Yet the Bolsa Familia program is a band-aid, not a cure. It addresses the fundamental problems of the Brazilian economy that Lula did not address: outdated labour laws that make it a liability to hire staff; inefficient and protected companies dominating key sectors and industries; a large state sector which spends practically zero on investment.
In a way the Bolsa Familia has created a welfare dependent section of the Brazilian population. The very poor of Brazil are now part of the formal economy, but there is no evidence that there is any social mobility out of the welfare trap. If anything lack of further economic reform has been sanctioned by this welfare program.
So, enough of waxing lyrical about the achievements of President Lula. Under his stewardship Brazil did not implode, let us give him credit for that. However the economy is no more dynamic than it was eight years ago. Public sector debt financing is still crowding out private sector financing and investment, and that looks unlikely to change. Economic control remains in the hands of a few protected companies that would not survive in a truly open economy.
Yes, Brazil can become an economic powerhouse in the 21st century, but not if it continues to adhere to discredited economic planning dogma of the mid 20th century all earlier. It takes leadership and the courage to make tough choices. Lula was not up to the challenge. He has left that for someone else.
