Brazil’s 80’s economic crisis vs. UK/US/Europe’s current crisis
There is a strange sense of deja vu for ayone who felt in full the Brazilian economic crisis in the eighties and who is now being affected by the British/E.U. recession. With destiny having made me witness the same fate for two different people at two different times there is an empathy with what the young people are going through and a privileged position to compare both cultures and psychologies when reacting to bad times.
The first observation is that the Brazilian crisis was much worse. When the mixture of recession and galloping inflation hit the country, neither the population nor the government understood what was going on; the last case of hyperinflation and economic stagnation had been in Germany in the 1930’s and, apart from coming up with an ethnocentric and a bellicose dictatorship, there was no other known formula to counter that crisis. In the 1980’s, the Brazilian crisis was peripheral; the big international financial powers were safe and for Brazilians there was no billionaire agreement to save their banks. From the big banks’ point of view they had little to lose and could afford a much more detached posture than they are having now. From the Brazil’s point of view, with no power to drag prosperous countries down the drain with them, it had no negotiation clout and in order to get any money the authorities had to bow low to the IMF’s demands which at the time was inexperienced in dealing with recessions and therefore much more draconian and insensitive.
For the people, there was also no national insurance network to help them, even if minimally, and this put many families in a distress that will be unknown for most Brits in their crisis experience. Dramas hit close to home and several friends and their families lived through suicides, economic exiles and degradation in all forms. In my case, the long absence of career opportunities after I graduated decreed an economic exile. This happened despite my being well-connected in Rio’s upper middle class, having a bachelor’s degree in one of the best economics universities in the country and being more fluent in English than any of my colleagues
The second observation is that despite being so different culturally both administrations opted for similar attitudes when faced with a crisis; namely cowardice, arrogance and following the disastrous conservative recipe of “tidying” up the house to make growth appear magically. In both cases, the beginning of the crisis was marked by the governments rushing to save the powerful hoping that they would come back with jobs for the less privileged. In Brazil it took some time to realize that this was not a pattern that big money followed, their only interest was to keep their money safe. It is anyone’s guess how long it will take the coin to drop in the UK.
The third observation is that when the crisis began in Brazil, the country was still under a dictatorship. This was perverse, in particular for its less protected citizens. The apparatus and practices that had created the inflation and the recession were never going to be the agents cure the problem. It was only when the country became a democracy and had the people backing a group of decision makers who were driven by no agenda other than solving the country’s issues that drastic and effective measures could be taken. In this the UK, Europe and the US are better equipped.
The fourth and last observation is that the indifference of the international community to the country’s plea ended up being its main strength for navigating out of dire straits. When they realized that they were in this alone the country’s financial and economic planners had sufficient autonomy to manoeuvre in unorthodox ways which, despite accidents on the way, ultimately put the country in its current favorable position. In this the “first world”, and in particular the UK, has more problems; the disproportionate power say that the financial institutions have in their economies allows for much less room for manoeuvre.
All in all it is interesting to see the countries who once left Brazil to die in the desert encountering the same problems further on down the line. The sad part is that there seems to be universal pattern where the people who did not participate in the bad decision-making end up being the ones who pay the price when things go wrong.