Looking for the Da Silva Lining in Brazil

by Roger Bybee

Z magazine, February 2003


The recent election of Workers Party leader Luiz Inacio "Lula" da Silva as president of Brazil, championing the needs of the desperate and despised, provokes cries from the U.S. corporate media that he will "undo a decade of sound reform."

Da Silva won an overwhelming 61 percent victory promising to produce jobs, food, and health care in line with a new model of development that rejects "neoliberal" market fundamentalism. Brazil contains the world's fourth largest gulf between rich and poor, according to World Bank statistics (New York Times, 11/8/02), but the unmet needs of the impoverished have received only token attention from past U.S.-backed Brazilian regimes-or from U. S.-based media.

Shamefully, major U. S. media accounts have mostly been framed by one question: To what extent will Lula be willing to ignore the basic needs of Brazil's desperately poor in order to satisfy Brazil's creditors at the International Monetary Fund and major U.S. banks? The implicit consensus of both news coverage and editorial comment in the major U.S. media is that Lula's primary obligation is owed to international financial institutions and investors, not the people who elected him.

Oddly, even people associated with international finance are increasingly questioning this logic. Former World Bank chief economist (and Nobel Prize winner) Joseph Stiglitz observed, "democracy always brings better results than the policies dictated by the IMF or by investors like George Soros" (Brazil, 8/02). Soros seems to agree: "If international markets take precedence over the democratic process, there is something wrong with the system," he wrote in the Financial Times (8/13/02). (Or as the global financier put it more sardonically, "In modern global capitalism, only the Americans vote, not the Brazilians"-Folha de Sao Paulo, 618102.)

"The Best Thinking Available"

Both in news stories and editorials, a l9th century neoliberal version of capitalism has become an unchallenged article of faith. Any departure from the required standard-maximum appeasement of international corporations and investors at all times-is regarded as a foolish and dangerous defiance of sound, universal economic principles.

This neoliberal testament calls for privatization of public services, elimination of subsidies for basic necessities like food and water, deregulating the flow of capital and reorienting the economy towards exports, with subsidies shifted to transnational firms. The impacts of this strategy-such as below-subsistence wages, environmental damage and shortages of domestic necessities-have become largely forgotten concerns for most commercial media in the U.S. (By contrast, Business Week, with a readership almost exclusively of businesspeople, freely admits (11/6/00), "The global economy is pretty much still in the robber-baron age" and "there's no point denying that multinationals have contributed to labor, environmental, and human-rights abuses. ")

In line with the neoliberal doctrine, the typical news analysis treats the demands of Brazil's creditors and their Bush administration allies as providing tough but ultimately therapeutic medicine for debtor nations. It may cause agony now to pay off international debt rather than funding programs that provide food, clean water, healthcare, and education to tens of millions. But diverting money from social programs for the foreseeable future is the only possible choice for the long-term health of Brazil's economy, media observers almost unanimously say.

"Painful and unpopular as they are, the economic strategies pushed by the IMF reflect the best thinking currently available, and over the long run they have been effective in many countries," declared the Milwaukee Journal Sentinel (10/20/02). "However much Silva's [sic] instincts and background may rebel against the idea, conforming to these strategies may represent Brazil's best hope for sustained economic growth and prosperity."

Brazil's remarkable level of inequality occasionally intrudes into the debate, as when a Washington Post editorial (10/30/02) acknowledged that Brazil's richest 10 percent controlled a staggering 47 percent of the national income, "compared with 34 percent in India and 31 percent in the U.S." But the Post quickly affixed the blame for this appalling concentration of wealth on Brazil's public sector, absolving policies promoted by the U.S. government or U.S.-based corporations. "This injustice has little do with the pro-trade, pro-market policies that leftists traditionally blame," the editorial informed readers. "Rather, Brazil's inequality reflects the government's failure to secure a fair distribution of the things needed to earn a living-chiefly education but also land." Of course, the policies prescribed by the Post would make it impossible for Lula to devote adequate funding to precisely such aims as quality education or land reform.

Above all, Lula must avoid giving any offense to transnational banks and corporations. He certainly needs to forget his past as a "union boss." The "boss," with its connotations of corrupt, dictatorial rule, hardly fits Lula as a central player in freeing his nation from brutal military domination, yet CNN. com, MSNBC, BBC, and many other outlets freely applied that label. Above all, Lula must "escape the vicious cycle of anti-business rhetoric, capital flight, factory closings and rising poverty rates that has doomed other Latin American leftist leaders," as Miami Herald columnist Andres Oppenheimer advised (10/20/02).

The Washington Connection

The media vision of a vicious cycle self-inflicted by Latin Americans' "anti-business rhetoric," leaves out one vital element in the cycle: the role of the U.S. government. In Brazil, the pivotal role of Washington virtually disappears in media discussions of the 1964 coup against democratically chosen President Joao Goulart, which put Brazil on a 21-year path of brutal military dictatorship. While the heavy hand of U.S. officials is well-documented (see, for example, A.J. Langguth, Hidden Terrors), recent major media uniformly fail to explain that the overthrow of democracy was at least U. S.-supported if not conducted with extensive assistance from Washington (e.g., New York Times editorial, 10/30/02; Washington Post editorial, 10/30/02; BBC, 10/4/02; AP, 10/26/02; CNN.com, 10/26/02).

To summarize some of the evidence press accounts leave out: U.S. officials had foreknowledge of the coup; the U.S. bankrolled Goulart's opponents; the U.S. Sixth Fleet moved into position offshore as a signal of support; and, finally, military leaders trained at the U. S. School of Americas conducted the coup. Brazil then became a favored recipient of U.S. aid and more than two decades of savage military rule ensued (Lula was among the thousands imprisoned for illegal labor or leftist political activity).

As for present-day Brazil, the potential for a fundamentally different model of development, oriented toward the needs of the impoverished, remains unthinkable for U. S. media. The Chicago Tribune (10/8/02), Christian Science Monitor ( 10/29/02), and Washington Post all called for massive doses of free trade for Brazil through the proposed Free Trade Agreement of the Americas.

The Post has promoted Mexico in the post-North American Free Trade Agreement era (since 1994) as a splendid model to emulate, pronouncing, "Mexico's success is largely due to its free trade agreement with the U.S. and Canada" and is thus "growing steadily richer"(editorial 10/5/02). While Mexico now has many more billionaires than before the signing of NAFTA, other aspects of "success" are hard to find. Mexican workers' wages have fallen sharply, thousands of domestic firms have gone out of business, Mexican environmental protections have been overturned, and it is now leaking jobs to even-lower-wage China.

However, the actual outcomes of the Mexican experiment with NAFTA have left no imprint on the minds of major U.S. editorial writers, who only heap praise on "free trade" practices in Mexico and Brazil, and unwaveringly call for its expansion to the entire hemisphere through the FTAA. The only worry, as the Washington Post warned (10/30/02): "There is a danger that a decade of sound reform could be undone by the kind of anti-trade populism that Mr. Da Silva and his Workers Party have traditionally expounded." Instead, the Post and other major media sternly warn Lula to stick to the neoliberal path of "sound reform. "

Much Pain, No Gain

In Brazil, following "the best thinking currently available" has not exactly produced "sound reform." Cardoso scrupulously worshipped the "free-market" formulas mandated by the IMF and its main controllers at the U.S. Treasury Department: high interest rates to fight inflation, privatization of public resources and financial "liberalization." The disastrous consequences: Income growth for ordinary citizens has averaged just 1.3 percent since 1994, while the external debt has ballooned to some $264 billion. This debt soared from 29 percent of GDP in 1994 to 62 percent currently, so debt repayment threatens to choke off Brazil's economic air supply and force a renegotiation of its debt.

Mark Weisbrot of the Center for Economic and Political Research, who closely studies Brazil, observes an almost-unvarying three-part formula in major media coverage of Lula's election. "First, the basic framework of the major media is that Lula must follow the prescriptions of the past, or he's in trouble. Yet these are clearly failed policies that yielded little growth and heavy debt.

"Second, Lula is held responsible for the Brazilian currency tanking even before he got elected. Third, the markets unquestionably know best what's good for a nation like Brazil."

The conventional media frame is clearly evident in Newsweek's article (11/11/02) on Lula and the new crop of populists in Latin America. Lula and "instant-gratification populists" across the region are promoting a "feel-good populist platform of more jobs, higher wages, bigger pensions and better healthcare," Newsweek reported. The article includes a warning about what Latin America will not be allowed to do: "The leaders of the populist backlash blame just about all their countries' woes on the market reforms of recent years. But they can't turn back now. No one has the money to bring back the days when bloated central governments controlled prices and protected local companies in a cocoon of tariffs. "

This formulation makes it seem like what Newsweek calls "the laws of economics" have dictated Brazil's choices, almost like the law of gravity. In fact, the policies that Brazil and other Latin American countries have adopted (willingly or not) seem to have had a large impact on these nations' economic environment. Weisbrot's CEPR documents that Latin Americans' per-capita Gross Domestic Product grew 75 percent in the two decades from 1960 to 1980 while generally following policies aimed at nurturing local industries and boosting domestic wages and buying power. But then growth plummeted to 7 percent during the 1980s and l990s, as governments followed the dictates of foreign bankers and neoliberal economists (American Prospect, 1/1/02).

Still, Newsweek and other U.S. media observers fervently cling to the neoliberal faith; "Brazil's government simply doesn't have the money" to decisively take another direction. The idea of not paying back all the money that was largely borrowed and spent by dictatorships is denounced by Newsweek as "leftist follies," and prompted then-Treasury Secretary Paul O'Neill to demand reassurances from Lula "that he's not a crazy person.

Ignoring Washington's Role

The assumption in the media is that the basic needs of Brazilians cannot take priority over paying back high-interest loans. While the 10 largest banks operating in Brazil-including Citibank and BankBoston-earned 22 percent there compared with 12 percent globally (NACLA, 10/30/02), they evidently cannot be expected to be content with lower payments and lower profits. Continued suffering must be endured by Brazilians denied food subsidies, schools, healthcare, and clean water. The risk of the high-profit loans to Brazil will continue to be assumed by the U.S. taxpayer, who largely financed the $30 billion IMF bailout announced this summer.

Even a largely sympathetic editorial (Baltimore Sun, 11/1/02) portrays Lula as having no choice but to cater to financiers. "Mr. da Silva has to recognize the importance of boosting investor confidence-he can't afford not to.... He has to reassure the financial world that he has indeed changed (from the leftist firebrand of the 1970s) as has Brazil and will work to promote stability at home and in the region. "

Da Silva certainly faces daunting challenges in seeking to uplift impoverished Brazilians while holding off the pressures of the international banks. But major U.S. media compound the barriers faced by Lula and Brazil when they contribute so little insight into the extent and sources of Brazil's poverty, the failure of neoliberal policies in Brazil and elsewhere, and the shameful role of the U.S. government in crushing democracy.

With this framing of Lula's election by major U.S. media outlets, how can American citizens be anything but mystified by Brazilians' overwhelming support for a new, people-focused alternative to market fundamentalism?

Roger Bybee is a Milwaukee-based writer and activist with the Wisconsin Fair Trade Campaign. He wishes to thank Noam Chomsky, Jim Naureckas, Mark Weisbrot, and Steve Watrous for helpful comments.

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