Why can’t Brazil get it together? Crony Capitalism

d l cc

For all the cronyism we have in the United States, and we have plenty and it is growing, Brazil is far beyond us. It is truly a crony capitalist state through and through. It has probably always been but the country’s recent socialist leaders haven’t helped things.

(From The Library of Liberty and Law)

The country’s economic difficulties and its racial and social stratification rest upon a flawed foundation that can be summed up in a phrase he uses: “state capitalism.” The entwining of political power with economic power is an ill against which every modern democracy fights. Brazilians, though, have not waged the fight effectively.

In Brazil, extortion and bribery in permitting and licensing are routine; government regulations are pervasive but not well-enforced; and the legal process is opaque to the ordinary citizen. We read here of Brazil’s state development bank, the BNDES, which makes subsidized loans to businessmen and has lent billions to the construction industry. We read of the steering of government contracts, the elite’s buying up of shares in each other’s companies at bargain prices, and the gifting of radio stations and television stations to members of the legislature. The last-mentioned cronyism “may explain why, even though the new [1988] democratic constitution called for a ban on media monopolies and oligopolies, Congress never drew up the legislation to implement it,” observes Cuadros.

Given all of this, there could scarcely be an individual Brazilian—whatever that individual may believe, or may have told Cuadros in an interview—who could accurately say he amassed his fortune without the government’s help. Nor are “neoliberal” or free market policies the source of the acute levels of inequality prevailing in this country of 209 million souls, though Cuadros seems loath to draw that conclusion.

Click here for the article.