In the second launch meeting for the book “O Legado da Pandemia,” its authors debated the Brazilian market scenario with economist Zeina Latif
The second day of the series of debates for the launch of the book O Legado da Pandemia (The Legacy of the Pandemic, in a free translation) addressed the Brazilian economic scenario and the lessons learned from the crisis. Insper proposed a series of meetings in partnership with Brazilian nonprofit BRAVA. It aimed to expand access to the knowledge generated by the new publication.
Insper professor Laura Müller Machado organized the book. It counts on reflections by 26 professors and researchers who had analyzed the pandemic’s legacies and lessons for the Brazilian Public Policy. The book was made available for free in e-book format (in Portuguese). Learn more about the publication and download it here!
For this second meeting, held on March 2, we brought together the authors and panelists Prof. Marcos Lisboa, President of Insper, and Insper professors Marcos Jank, Paulo Furquim, Sérgio Lazzarini. They talked about their articles with guest economist Dr. Zeina Latif.
Zeina pointed out that when we think about legacies, our society needs to create the ability to understand everything that has happened. “Researchers and academia’s work is to help society understand the developments of the pandemic. Thus this book’s importance of contributing to the public debate”.
The economic order
The book is divided into four parts. One of its sections focuses on reflecting on the lessons the pandemic’s challenges brought into the Brazilian economic scenario. For it, four articles were written. In the debate, their authors were invited to introduce the topics about which they had reflected.
The first to address the topic of his contribution was Prof. Paulo Furquim. In his introduction, the author talked about the market-price policy in a crisis scenario. “First of all, in a situation of extreme crisis, the ideal regulation models will not work so well as in a time of normalcy. With increasing prices, production does not respond at the same speed due to the overall uncertainty. Second, an enormous room is open to populist-like interventions, for there is a massive demand from society.
Following that, Prof. Sérgio Lazzarini talked about his article in the book. It discussed the Central State’s participation in the arena of credit offer. “In this pandemic scenario, we have seen a paradoxical situation. We need less Central State, in the sense of less regulation to streamline the private offer. On the other hand, we need the opportunity to solve import problems using public resources — not necessarily through direct governmental action, but via public banks and development agencies.”
Prof. Marcos Jank addressed the pandemic’s impacts and lessons learned for agribusiness. He analyzed the ways in which the industry dealt with challenges and managed to grow, even during a time of crisis. “The agribusiness was one of the few economic sectors that managed to grow, for it is an activity that kept on operating. Besides, it has counted on other benefits, such as the devaluation of the Brazilian Real (BRL), because it has a huge part of its production targeted at exports, mainly for emerging sectors.”
Prof. Marcos Lisboa, President of Insper, was invited to talk about his article to finish the introductions. In it, he discussed the scenario of the intensifying fiscal crisis in Brazil. “A discussion that is often submerged in Brazil is the issue of science and technique to implement and design a social policy targeted at those who really need it. Perhaps this is a legacy of the pandemic: acknowledging we have a Central State that does not work well and is ineffective, given our structure. Also that, with science, we could build technical solutions to implement and improve our policies. The disregard for science has cost our healthcare system and economy too much”.
Debating with economist Dr. Zeina Latif
In the second part of the event, Prof. Laura invited economist Dr. Zeina Latif to contribute to the debate. Zeina asked questions targeted at each author regarding their book chapters. Also, she proposed new reflections on the topics discussed.
When commenting on the chapter written by Paulo Furquim, the economist said she found a less disastrous scenario than she had feared — especially in the legislative branch’s results in the face of price adjustments and control. She asked the author if he agreed with that conclusion and how much such a situation may have resulted from more mature Central State action. “The legislative branch had avoided many dangerous agendas, even though it had not been the best-case scenario,” noted Zeina.
For Furquim, there was an unbridled race towards the worst policies that we could imagine between states and companies regarding price regulation. However, he agreed with Zeina that most of those projects did not move forward, despite the threat. “There is indeed learning in looking at this perspective of institutional design in implementing these policies. However, we can also analyze what our reality might have been had the Central State been intervening in a coordinated way, with transparency and competitive concern from the beginning”.
Regarding the article written by Sérgio Lazzarini, Zeina agreed that the Central State needs to have the ability to react in the face of any crisis and that there is no recipe for this. She also brought in a reflection concerning the strategies to contain the crisis and how the author evaluates his viewpoint. “It seems, to me, that there is no public sector alone. The best strategy is to seek alliances with the private sector. That was very clear in the bailout for businesses. In it, there was a relationship with private banks to create support.”
Sérgio Lazzarini agreed with Zeina’s position when talking about the relationship between public and private credit at this moment of the pandemic. “I have been advocating for some time that the BNDES (the Brazilian Development Bank) would not necessarily need to lend money directly, but rather partner with private banks. Also, in situations of greater risk, it needs to offer credit guarantees. It is an instrument used to contain crises all over the world.”
When talking about the text produced by Marcos Jank, Dr. Latif characterized the article as a wake-up call for the Brazilian agricultural sector. “It questioned environmental and food security issues, which affect the agricultural sector. It is essential to question whether there is an awareness in the sector that there is much work to be done not to lose markets and consolidate new ones, moving Brazil’s agenda towards a more progressive direction, including diplomacy,” Zeina questioned.
Answering the guest’s questioning, Marcos Jank pointed out that it is necessary to diversify not only our export destination but also the products. “What matters the most is to understand that we have benefited from the conjuncture and must be very careful. The issue of sanitation between people and animals was not being taken care of properly, and now it gets on the agenda.”
In her last question, Zeina focused on Marcos Lisboa’s contribution regarding the Brazilian fiscal situation. For her, the author brought in crystal-clear recommendations and diagnoses about economic policy, although there is great concern that Brazil is missing the opportunity to address important issues in the fiscal debate. “I feel we now see a much greater reverberation of those economic discussions in society. Also, I question what the perception of learning about fiscal adjustment is in talks with political and business leaders”.
When closing the debate, Marcos Lisboa resumed, in his answer to Zeina, the importance of politics and its sovereignty in defining the Brazilian economy’s paths. “Politics reflects society’s choices for paths. The problem is that, in the Brazilian debate, we stop at this first part of the conversation, and the step about how to implement these policies is little-seen”.
Following that, the authors had some time to answer questions placed by the event’s audience. Watch the webinar’s full recording here: