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Rodrigo Constantino

Um blog de um liberal sem medo de polêmica ou da patrulha da esquerda “politicamente correta”.

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Bolsonaro: so far so good

 

So Jair Messias Bolsonaro will be the next president of Brazil. What to expect? Who is he? And what kind of team will he build? If we judge only by the mainstream media, we should definitely be very scared. But is it really that bad? Is he only a rightwing populist, or even worse, a fascist and potential dictator? I’ll try to show that it’s not the case, that actually there is a real possibility he could be one of the best presidents Brazil has for the last decades.

First of all it’s important to understand the context in which he won. Bolsonaro is in politics for a long time, but he was seen as an outsider anyway. The reason is that he was never part of the establishment, of the group that controlled the power. As the Car Wash operation made almost every important politician looks suspicious and corrupt, Bolsonaro could rise as a symbol of honesty, and that’s not a small matter in Brazil today.

One of his best choices as minister was Sergio Moro, the judge behind Car Wash operation. That tells a lot about his priorities. To fight corruption and to change the way politics works now are two main goals of the new president. And Brazilian people were really tired of the way the system works: only to help politicians and their friends, while everyone else had to pay the price, a huge price.

The parties in power always exchanged jobs for votes, and that’s how it works usually. But Bolsonaro chose his ministers by their abilities, their historical records, their capacity of execution and knowledge in each area. It may sound ordinary for American people, but it’s something completely new in Brazil. That’s the first big difference in his behavior.

When it comes to the economy, one of the most important sectors in a country with 13 million unemployed, Bolsonaro chose Paulo Guedes, a brilliant economist with his Ph.D. from Chicago University. Guedes is a classic liberal and wants to reduce a lot the size and intervention of the government in the economy. Privatization is not a bad word anymore, as it used to be. It’s his sacred word to take the state out of the way and cut the federal debt, which is almost 80% of the GDP – an unsustainable level for emerging countries.

I’ve known Guedes for a long time and he was my boss for 6 years when I worked in the financial sector. I can tell he is not only brilliant as an economist, but he is also a patriot who really wants to leave a better country as his legacy. And if there is someone who can give the right prescription for our diseases it’s him.

Some investors were afraid that Bolsonaro would not follow his advices, because of the elected president’s past views on economy. But he is humble and knows that he doesn’t know everything, which is a great quality. That’s why Guedes so far has had all the autonomy he needs to make decisions. It was clear when he chose Joaquim Levy, a former minister in the Labor Party’s government, to run the BNDES. Bolsonaro was not happy with the political cost of that choice, but he accepted anyway, which shows Guedes’ strength.

Guedes also indicated many more respectful names for first and second ranks. The next chairman of Central Bank, Brazilian Federal Reserve, will be Roberto Campos Neto, a very talented economist who works on Santander Bank and has experience abroad. To Petrobras, the largest state-owned company in Brazil, he chose Roberto Castello Branco as CEO, a classic liberal and former director in Vale, the giant in the mining sector. He also chose important names of the last administration to continue their great work, such as Mansueto Almeida as Treasury Secretary, who is known for his experience in public finance.

Salim Mattar, one of the best CEOs of the country, founder of Localiza Rent a Car, was appointed as Secretary of Privatization, which is also incredible. Salim is known for his classic liberal support and is very enthusiastic about reducing the government’s size. Together with Guedes, that challenge is in the best hands a liberal could dream of.

Moro and Guedes are not the only stars in the team. There is Marcos Pontes, an astronaut who worked for NASA and has an impressive curriculum, Ernesto Araújo, a diplomat that understand the importance of the cultural war and the necessity to get Brazil closer to the West values, as many others. A freer economy, less protectionism and focus on results: that’s the new face of the government.

What can be said with confidence by now is that Bolsonaro chooses his team looking at their true abilities, not their political affiliation. That’s not sufficient for a good government, but it’s a necessary condition. And that was not the way things were done in the past. So we’re talking about a very important change, which justifies more optimism going forward.

What could be, then, the risks? The most obvious one is an eventual disagreement between Bolsonaro and Guedes. Their relationship is new, and both have strong personalities. If, by any chance, there is a relevant issue that Guedes thinks is essential and Bolsonaro doesn’t support, there could be problem. And if Guedes decides to leave or is fired by the president, nobody will believe in Bolsonaro’s willingness to really fight the deep state privileges in the public sector anymore. Asset values would melt down very fast in this scenario.

The other major risk is the political execution of their agenda. Bolsonaro, as mentioned, is a congressman for decades, but he belonged to the low rank of power, and depended much more on his speeches than on getting things done. Guedes is an academic and has experience as entrepreneur, but not in politics. Brasilia works in a different beat, and Guedes already said some things that show he’s not familiar with that reality, as when he suggested people should put a lot of pressure in their representatives through social media to approve the reforms. There was immediate response by the Congress, with salary increases that makes the message loud and clear as a threat.

Onyx Lorenzoni, the chief of Staff and the “captain” of the team, is a well-known politician, but was never part of the upper level as well. He will be responsible for all the necessary articulation to approve the reforms, and it looks like that mission could be above his capacity. Time will tell, but that could be the largest bottleneck in the agenda, because the reaction of organized groups will be very strong, and some reforms are not that popular, especially because the results won’t come quickly.

All that said, it’s only rational to feel optimist about Brazil’s future. We had decades of leftism in politics, and now there is a real possibility of moving in the right direction. Brazil could use some economic freedom and conservative values for a change. It’s not going to be a miracle, and improvements will take a long time. But every journey begins with one step. And with Bolsonaro, it seems that Brazil finally decided to take that step. So far so good.

* I apologize for my English. Usually I don’t write in that language, and living in Florida for almost four years, the only thing I learned was a little bit of Spanish. But I hope that’s enough to spread the message, because the American people will never know what is really going on in Brazil if it depends on the mainstream media, so biased to the left.

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Rodrigo Constantino

Economista pela PUC com MBA de Finanças pelo IBMEC, trabalhou por vários anos no mercado financeiro. É autor de vários livros, entre eles o best-seller “Esquerda Caviar” e a coletânea “Contra a maré vermelha”. Contribuiu para veículos como Veja.com, jornal O Globo e Gazeta do Povo. Preside o Conselho Deliberativo do Instituto Liberal.

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