Lula Needs to Shrink the State’s Role in Brazil Economy to Avoid “Neo-Fascist” Accusations

 https://www-cnnbrasil-com-br.translate.goog/politica/na-abertura-do-foro-de-sao-paulo-lula-diz-que-ser-chamado-de-comunista-e-motivo-de-orgulho/?_x_tr_sl=pt&_x_tr_tl=en&_x_tr_hl=en&_x_tr_pto=sc

On June 29, CNN Brasil released a video of a recent public appearance by Brazilian President Luiz Inácio Lula da Silva during the opening of the 26^th Meeting of the Forum of São Paulo, wherein he most memorably stated that he would be “proud” to be called a “communist” and that he would be offended to be called a “Nazi, neo-fascist, or terrorist”. Putting aside the obvious fact that being accused of any of those four terms would be cause for serious offense and no pride should be held for any in the slightest, due to the drastic harm to humanity they all have done to humanity, it is the “neo-fascist” slur that deserves the most attention in the case of Brazil. Sadly, the world’s seventh largest economy does indeed have a lot of resemblance to the fascist economies of old, many features of which were instituted by the country’s former dictator and contemporary of other fascists, Getúlio Vargas. When thinking of fascism in Brazil, people tend to view only the 1964-1985 military dictatorship, as well as the recently concluded four-year term of President Jair Bolsonaro as being the closest the country has had to suffering such a regime. What they fail to consider is that due to the heavily interventionist nature of the Brazilian state in the decades after democracy was restored to the country, accusing the Brazilian economy of being “neo-fascist” would not exactly be a baseless claim.                                                                                                                                                             What is it about the Brazilian economy that most resembles those of historical fascist countries? Well, if they were known for three things, it would be their attempt to come to an eternal compromise between labor and capital, to have as autarchic an economy as possible, and to rely on state-owned industries when private companies would not play ball with the central planners’ designs for what the country should become. Brazil unfortunately started down these designs during Vargas’ Estado Novo period and remnants of such an ideology remain in the government’s economic policy to this day. It’s important to keep in mind that all of this continues after Jair Bolsonaro was said to have designs as being the next Augusto Pinochet, with a former Chicago Boy, Paulo Guedes, serving as the country’s Finance Minister from 2019 to 2023. Four years later and the left-wing paranoia idea of Brazil becoming a Friedmanite paradise has almost entirely failed to appear and interventionism continued almost unabated.                               Take relationships between capital and labor. Contrary to leftist myths, labor actually came out on top in many fascist countries and the Marxist conspiracy theory that fascism came about to protect the interests of capital from democracy is simply baseless. Brazil definitely has and continues to favor labor in this ostensible “class struggle”. Brazil’s labor laws are staggering. State-backed unions and collective bargaining predominate, there are tons of mandatory benefits that employers must provide, the standard workweek is 40 hours and the maximum with overtime is 44 hours, and employers are subject to harsh fines if they are unable to comply. All of this might have something to do with the recession level unemployment rate of 8.3% reported in May 2023 and the large informal economy that exists within the country. So, if the economy of Brazil is to renounce neo-fascist tendencies, it would have to end all government involvement in labor relations and allow employers and employees to bargain without the threat of the state. That would be the liberal ideal. It would also sadly be a political impossibility.                                                 What of an autarchic economy? Yes, Brazil does not copy North Korea’s policy of Juche and officially rejects all trade with the world and aims to be as self-sufficient as possible. Indeed, being a major agricultural exporter, that would thankfully also be politically impossible. All the same, for a member of the World Trade Organization and the General Agreement on Tariffs and Trade, Brazil has long been and remains a fairly protectionist country, and besides briefly having a viable automobile industry, has little to show for it. The Heritage Foundation’s 2023 Index of Economic Freedom reports that: “The trade-weighted average tariff rate is 10.0 percent, and more than 600 nontariff measures are in force. Foreign investment faces bureaucratic hurdles.” If this high average tariff rate were solely for revenue generation, as in the Bahamas, this might be justifiable, but given the existence of progressive income and corporate taxation, as well as myriad other federal taxes in the country, this does not seem to be the case. The protectionist nature of making foreign investment get tangled in red tape is self-evident. If Lula wants Brazil to escape a neo-fascist aura due to its protectionism, he will need to make sure tariffs are for revenue purposes only if they are to continue and welcome foreign investment with open arms. Again, it bears repeating that if even the right-wing Bolsonaro, with Naomi Klein’s infamous bogeyman of a Chicago Boy advising him could not pull this off, it seems all but certain that this will never happen.

Finally, we come to the state-owned industries making up a decent chunk of the economy part of the fascist dogma. While myths about supposed privatization in Nazi Germany and Fascist Italy abound online, the reality is that such “privatizations” were just a way to consolidate control of the economy in the hands of people loyal to the government and that outright state-owned industries were far from a rarity in fascist countries. Indeed, Mussolini’s Italy had the second-most state-owned industries in the world behind only the Soviet Union. This is because fascism is about centrally planning the economy in a way seen as for the good of the nation. Thus, private enterprise is tolerated only so long as it goes in line with the national plan. Thankfully, Brazil is nowhere near this insane. They’re not Belarus or Turkmenistan. All the same, the Brazilian state does own a variety of industries that are considered “strategic”, such as power generation, oil extraction, mining of natural resources, water supply, and telecommunications. To avoid neo-fascist accusations, it would be best for the Brazilian government to divest itself of control of these state-owned industries immediately. The companies should be sold to their employees, so as to avoid accusations of oligarchy and plutocracy, as occurred in Boris Yeltsin’s Russia. At the same time, free competition in all these industries should be allowed, so as to ensure state-protected monopolies do not replaced state-owned monopolies, as happened in the UK after much of Thatcher’s privatizations.

In short, if Lula wants Brazil’s government to throw off any possibility of being seen as neo-fascist, what needs to be done is for it to embrace fascism’s biggest opponent: liberalism. At the federal level, Brazil’s government should be limited to protecting life, liberty, and property. Allow the 26 states and the federal district of Brasilia to fill in the blanks in everything that is not the police, military, and judiciary. Brazil needs to rid itself of all regulations of labor contracts, get rid of all impediments to free trade beside possibly revenue tariffs, and needs to privatize all state-owned industries if it is to even start to throw off any associations with fascism. There are plenty more federal regulations in Brazil that would make Bernie Sanders blush. Given that Lula started this speech saying he was “proud” to be called something so awful as a “communist” shows that currently, hell seems more likely to freeze over than these reforms occurring.