The newest economic history manual in the square, written by a pair of professors from the São Paulo School of Economics, at Fundação Getulio Vargas, brings important news about the country's recent past.
Leonardo Weller and Thales Zamberlan Pereira (who published a book with the person responsible for this report), authors of "Entre Crises", seek to convince the reader that the simplistic contrast – still often repeated – between a golden period of economic development, which goes from the 1930s to the end of the dictatorship, on the one hand, and lost decades, since then, in which we have done little more than skate, without moving, is wrong.
The contrast needs to be nuanced, the book shows.
It is true that, if we compare the growth rates of GDP per capita and economic productivity in the two periods, there is no doubt that they advanced much further in the middle of the 20th century.
Between 1981 and 2023, GDP per capita grew by an average of less than 1% per year, while in the four decades between 1941 and 1980, income had advanced at a much faster rate of more than 4% per year. How is it possible to relativize differences of this magnitude?
Now, these numbers, as impressive as they are, don't tell the whole story. Despite the rapid growth of GDP in previous decades, in 1980 Brazilian life expectancy was 62.5 years. The same as in the United States in 1940.
This four-decade difference in the evolution of life expectancy had remained constant, in fact, since 1940, when the IBGE historical series began. Despite all the growth during the period, the country's social progress was slow.
The opposite happened in the following period. Despite productivity being sideways, Brazil managed to radically reduce poverty.
In 1984, 45% of the population lived on an income that did not allow them to purchase a food basket capable of meeting the minimum daily calorie consumption. Three decades later, in 2014, less than 10% of Brazilians were below this poverty line.
Weller and Pereira's book thus sets out to explain this apparent paradox. How was a period marked by low economic growth, encapsulated between two of the biggest crises in our history – the debt crisis, in the early 1980s, and that of the Dilma government, in the 2010s – also the time in which Brazil became another country, much less socially unequal?
Weller said he had clarity about what the book's framework should be (and the questions it should answer) shortly after the pandemic.
The economist then realized that, despite everything – the crises and low growth of Jair Bolsonaro's government –, successful public policies, such as the SUS and Bolsa Família, "had not been dismantled".
“You can see the evolution of social indices during the pandemic, and even before, during the Dilma crisis,” observed the economist.
"Even after these crises, we did not return to the horrible situation of decades before, the period before the 1990s, in social indices. What we had was a significant worsening, an increase in poverty, it is true, but we had already become another country."
The perception that a significant change had occurred during the democratic period, in the New Republic, named in the book's subtitle, put Weller's generational experience into perspective. The economist will turn 50 in 2027 (Pereira, his co-author, is a little younger, but from the same generation).
At college, attended in the 1990s, Weller recalls, it was common to hear from older professors nostalgic assessments of the period of rapid growth in the 20th century, nostalgia that in some way also encompassed the dictatorship.
"I remember a teacher saying: 'Every now and then I look at you and feel sorry. In my time, the economy was growing." This has always been a bit of a mantra of our generation, you know?", said Weller.
You didn't need to feel so sorry, that's what you can conclude from reading "Entre Crises". The relative lag between Brazil and the United States in life expectancy, which had remained at 40 years apart between 1940 and 1980, was cut in half in 2018, Weller and Pereira write.
"The Brazilian expectation was 76.3 years in 2018, just before the pandemic, equal to that of the United States in 1998, 20 years earlier."
There weren't many reasons to be proud. Yes, the country grew more between 1930 and 1980, said Weller, but it left a huge bill to be paid by those who came later.
"Brazil had consistent, incremental growth for a few decades after the war, but it was growth that bankrupted the State, it was growth that did not provide public goods, it was horrible with education, it was growth that concentrated income and left the country with an economy that makes constant growth much more difficult."
Part of the explanation for the post-1980 scenario comes from there. The type of unequal growth, without investment in human capital, which was already the mark in the period 1945-1964, was deepened during the dictatorship.
One of the legacies of this growth model was the difficulty of growing later, when the transfer of labor from the countryside to the city came to an end.
The legacy of the period was also felt in the obstacles to increasing productivity.
"Inequality, after decades of very income-concentrating growth, very creating oligopolies, of large business groups related to the State, caused us to create a 'rent-seeking' elite", summarized the economist, making reference to the gains arising from state benefits, such as subsidies and commercial protections.
Weller and Pereira's book begins with a crisis caused by the dictatorship's state dirigisme, which took external loans to maintain growth in a "forced march" and then was unable to repay them, and ends with another crisis, that of the Dilma government, caused, in Weller's summary, largely by excessive spending "on subsidies for a productively stagnant industry".
According to the economist, the fiscal deterioration in the first half of the 2010s is due to the so-called "Bolsa Empresário", a rent-seeking elite that does not increase productivity".
This rentier elite, which lives off state subsidies and protections, fed during the dictatorship and kept fat in the New Republic, helps explain the low productivity growth since 1980, says Weller.
"This elite has a political economy, it is in Congress, with its interests. This happens everywhere in the world, only in Brazil it is stronger. And it causes failed industrial policies to remain."
Even with this limitation, the democratic regime did what was expected of it: pressured by the vote, it served the majority of citizens, generating more income redistribution than in the previous period, as well as public health and education services aimed at the majority of the population.
In the story told by Weller, the apparent paradox of reconciling low economic growth and social advances is explained politically. Somehow, the New Republic managed to reconcile the interests of a rentier economic elite (which harmed the advancement of productivity) and those of the majority of the population, now with voting power, who needed to be included.
The costs of this arrangement were rising expenses and recurring deficits. The model seems to have found its limit.
“After years and years of fiscal expansion, our fiscal space has become much smaller,” says Weller. "Public debt is much higher than it was 20 years ago. So it is certainly more difficult now to distribute income with policies that generate public spending and, at the same time, have economic growth."
