I have a deep intellectual and moral respect for Henrique Meirelles. His
simultaneous global and microscopic vision of problems involving the economy is
so accurate that all governments, irrespective of whether they are “right” or
“left”, seek to hire him whenever things are difficult, or impossible.
Meirelles is a human and conjugated example of telescope with microscope. He is
always calm and coherent; the logic of numbers and facts, tempered by his
long-standing experience in dealing with the human race, of which there is only
one. There is not one communist “race” and another that is capitalist.
In fact, by the way, even though I do not work in the economics area, I
think that these two terms (capitalism and communism) are outdated, given that
money, in itself, has no ideology. Money is money, purchasing or investment
power, just that. After birth, it has no knowledge of its parents. What human
beings essentially want – when they are not involved in a power struggle – is
satisfactory gain (isn’t it?); adequate housing, enough to eat, a good school
for their children, satisfaction in love, owning a car and a sensation of
reasonable liberty. Even in the indoctrinated Soviet Union and its satellite
countries, innumerous citizens joined the Communist Party thinking of ration
cards, which were more generous for party members, than the phrases of Karl
Marx. I was surprised at the lack of significant protest, on the part of the
Russian people, when communism was replaced by capitalism, although preserving
some traces of its origin. Any government, irrespective of political leaning,
that satisfies the aforementioned desires regarding consumption, will have the
full approval of the electorate. This explains why Meirelles accepted an
invitation to work for Lula da Silva and now works for Michel Temer. He knows
the truth and the relativity of statistics. He knows how money circulates or
hides itself, its internal logic and, principally, the minds of people when
they intend to earn it and spend it. And therein lies his greatest problem: he
knows perfectly well what the right thing to do is; but how is he to convince
those who do not know but think they know?
Why am I writing this introduction which, despite being full of praise,
is also sincere? Because, without any intention of criticizing him, I would
like to present him with a suggestion, a further remedy as a way out from the
tremendous crisis that is ravaging us; a suggestion that I have still not seen
mentioned in newspapers or on television. Not by Meirelles or anyone else.
Perhaps this silence can be explained by the fact that the suggestion is mere
repetition of that which already exists. Nevertheless, I am making it all the
same, considering the hypothesis, not altogether rare, that sometimes an
“outsider” - exactly because he or she does not work in the area, is able to
show a new way out, or a new way of improving a policy that is already in
effect.
I refer to the problem (politically highly dangerous) of the long-term
patience required of the restless Brazilian people to see our economy mended,
which has been progressively devastated for more than a decade of incompetence,
demagogy and negligence. Finally topped by the poisonous cherry on the cake:
widespread dishonesty in the use of public funds, revealed in the “Carwash”
investigation. So “normal”, routine, that many even say, or do not say but
think: “Okay, there has been generalized thievery, yes; but at least there was
employment, production, consumption and collection of taxes. Brazil
“functioned”, despite the corruption, or exactly as a result of it. Perhaps it
would be better to close my eyes to dishonesty as long as the country is moving
forward… and I have a job! How long will my family be able to endure the long
and grueling treatment proposed by the new federal government? It’s too harsh
and has repercussions on states and municipalities!”
In theory, whoever thinks like that is not thinking correctly, but when
need is great, it pushes logic aside. One day (and this day has already
passed), the euphoric excessive spending of the Workers’ Party would have to
come to a halt, stopped by the economic force of facts. It so happens that
millions of Brazilians, of inadequate schooling (it being no fault of their own
that they are poorly educated or ill-informed judge their governments by their
ability to generate immediate results. They think that, with a change of
government, Temer would have to “make things improve” at the snap of a finger,
in a few months, forgetting the long slow process of impeachment. Months lost
because of a stubborn woman.
They think like this: “What is Temer promising, sacrifices? “Blood, sweat
and tears” were inspiring words in Churchill’s England, fighting alone against
Hitler, but it was a time of bombing, a daily struggle to escape death, running
to air-raid shelters before the Nazis came back to drop more bombs, on the same
day. Blood and rubble on a daily basis. But Brazil has not reached such an
extreme point…”. A significant percentage of the Brazilian population thinks
exactly in this way. Principally the percentage most affected by a remedy that
is logical but difficult to swallow.
I am sorry to say that, within a year, there is a danger of “ordinary
folk”, and even part of the middle class, not experiencing a solution to their
financial plight in their pockets or jobs. Lula and Dilma – skilled in saying
that which is pleasing to simpler ears – could re-take power in the 2018
election. Just beckoning with an “attractive” increase in consumption and
employment. “The good old times of Lula! Carefree spending! Public debt can go
to hell! They say it’s 70% of the GDP, but I never felt it in my pocket.
However, I felt it in my bones, because I didn’t have meat any more during the
time I was unemployed”.
And so “LuloPTism” comes back to power. And, one month later, it could
even give itself the luxury of boasting, in the media, of its “competence”
regarding the economy because it will then be in a better situation, thanks to
the harsh corrective measures adopted previously by Temer and Meirelles. These two public figures will involuntarily
prepare a “bed” for Dilma or Lula to lounge on, posing as great economists. A
situation similar to that which occurred when Lula succeeded Fernando Henrique
Cardoso, who handed over a country with fiscal responsibility and no inflation
to Lula. I repeat: with a protracted economic recovery plan, Temer and
Meirelles would inadvertently end up giving prestige to the irresponsibility
that so disorganized the country. Brazilians, in the majority, are still unable
to think in the cold, patient manner of Nordic countries.
All economic measures mentioned to date by Meirelles and Temer deserve
approval, because they are logical. It is unnecessary to go into them all.
However, there lacks one in particular that I suggest below, which would be
very powerful in attracting the trillions of dollars that float hesitantly,
like a golden mist hovering over the planet, searching for the most lucrative
point to touch the ground. Brazil could make the most of this moment, rather
unattractive in global terms, for solid investments. Think of the United Arab
Emirates, Singapore and even the European Union and the USA, where the money
invested generates returns with a certain degree of certainty, although it
could generate even greater returns if it were invested in Brazil, if there
were also greater certainty and a fiscal bonus not granted by other countries,
if I am not mistaken.
The European Union is moving slowly, almost at a standstill. It is not a
good place to invest. The USA is attracting investments again, but not to the
same extent as previously. The same is occurring in the case of China and
Japan. South America is seen with complete distrust. Africa – not even
considered in terms of investment. But what is the reason for this lack of
confidence in Brazil? The very real possibility of a Brazilian government,
irrespective of political leaning, not keeping its promises in order to attract
investments. With good reason, large individual and company fortunes,
throughout the world, are wary of investing in Brazil. They could lose the
investment, despite being well managed. In the wide world, just asking for
investments is not enough to attract them. In black and white, there is a need
to offer some kind of advantage.
As this article is already too long, I will explain – without legal and
quantitative details – exactly what my suggestion entails: Brazil, after not
very prolonged studies of percentages, would publish a law, or constitutional
amendment – focusing on the international community – stating that any foreign
persons (physical or legal) inclined to invest in this country, in industry or
commerce, in excess of several hundreds of millions or billions of dollars,
will pay a lower rate of Income Tax, “y” percent – perhaps a generic 10% - for
“x” years (ten, fifteen, for example), as Vladimir Putin did a few years ago.
In this consultable legal standard, it would also be stated that the
aforementioned fiscal incentive, at a lower rate when compared with First World
countries, would only exist if the investment were located in the northern and
northeastern regions of Brazil. It would stimulate construction of factories in
these regions, generating immediate jobs (at least in the construction
industry) and, subsequently, probable income. In all certainty, this offer of
work in the northeastern region of the country, for example, would encourage
the return of “nordestinos”
(northeasterners) to their regions of origin, which they only left due to local
unemployment and low rates of pay. Thousands of northeasterners and northerners
would prefer to return home, instead of remaining in “favelas” (shanty towns) in the south and southeast of Brazil,
alarmed at the violence involved in wars between drug traffickers or between
bandits and the police. Living in the southeastern region is no longer a
guarantee of employment.
The proposed law would also be able to create a variation, with the
advantage of lower taxation, allowing foreign investment to be made in other
regions of Brazil, although with a lesser degree of reduction of income tax,
given that the greatest stimulus should be directed to the poorest regions. It
may be, for example, that the United Arab Emirates would like to invest in
Brazil, but only in São Paulo. What is of interest here is that there is a
large-scale influx of investments, in excess of half a billion or one billion
dollars, for example. All the quantitative details would have to be duly
studied.
One could say – there are always those against such an idea – that such a
reduced rate of income tax would be unjust for the notional investor. It would
not be, because what is of interest to Brazil is its ability to attract foreign
capital, new wealth. Extending this fiscal incentive to national companies
would result in a decrease in tax levies – a problem. But this is an issue that
will also be able to be examined by Meirelles and his team. It should be
remembered that simply initiating the construction of factories already means
an increased in the number of jobs and spending on the part of those employed
on the high street, with an increase in tax levies.
It is an undeniable fact that, without a special, original Brazilian
fiscal incentive, guaranteed by law or constitutional amendment – and even by
treaties, if necessary – not much of “golden mist” mentioned above will run the
risk of touching ground in Brazil as long as the current state of affairs
continues. Brazil is in a hurry. Principally before 2018. If necessary, prepare
international treaties, as something that would enhance the peace of mind of
future investors, after all, there are more than enough jurists to consult. I
would recommend Prof. Francisco Rezek. I write this without his
authorization.
Besides the possible law, it is essential to mention that any judicial
demands related to this “invitation-law” would be processed and judged by an
international court, or a court chosen by the parties involved, considering
that the laxness of our justice system (the result of inadequate legislation)
would weaken the aforementioned incentive.
I have no idea whether Meirelles – already up to his eyes in resolving
problems – would at least have just a quick peek at this suggestion, made by a
layman. But, if he does, his recognized capability will allow him to create a
further remedy for attracting investments that will shorten the time necessary
to repair our economy. You can be sure; nobody risks their investing their
money in something that is uncertain.
I will close here. It is impossible to read more than this, in a single
text, on the internet. I hope that a divine hand makes the miracle happen of
allowing these inexperienced lines to end up in the hands of Temer or
Meirelles, who represent the well-intentioned hope of all Brazilians of good
will.
(09-10-2016)
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