Looking for a job where you barely have to turn up for work, get paid about 27 times the minimum wage and can retire early on the handsome pension benefits? If the answer is “Yes”, why not try Brazil’s Congress?One recent recruit – whose name must be withheld to protect the guilty – tells of how she passed the tough course to qualify as an analyst in Congress in Brasília and arrived at her post, ready and enthusiastic, to start work. Her conditions were hardly onerous: she was required to work eight hours a day for R$19,000 ($8,500) a month. But even this was too much in the eyes of her manager, who told her to stop embarrassing her co-workers and go home after only four hours – like they did.
Tales of public servants abusing their positions at taxpayer expense are hardly confined to Brazil. But as Latin America’s biggest country gears up for presidential elections in October, the topic of big and wasteful government, while the subject of grumbles, barely features in the general debate.
It should. As Brazil’s economy slows and the country casts around for ways to boost flagging productivity levels, the reason for its lack of competitiveness is glaringly obvious to anyone who cares to look: the bloated public sector.
Brazil’s government does only one thing very well – raising taxes. In 1999, consolidated government revenues were 31.7 per cent of gross domestic product, according to data from the Organisation for Economic Co-Operation and Development. By 2005, this had risen to 34.9 per cent and by 2012 to 38.9 per cent. The latter compares with an average for the OECD group of developed nations of 36.2 per cent.
The problem for Brazilian productivity is that unlike the big-spending but more efficient OECD countries, public expenditure out of Brasília seems to deliver little bang for its buck. The country is ranked 124th out of 148 nations in the World Economic Forum’s competitiveness index for government efficiency.
One reason for the seemingly endless expansion in the girth of the Brazilian state may be the young multi-party political system. Since few parties are interested in being in opposition, governing becomes a matter of assembling vast and unwieldy coalitions.
Each of these partners must be allotted their own ministries. President Dilma Rousseff’s cabinet has 39 ministers. Last year, she even created a new ministerial level position, the secretariat for small and medium enterprises. While she still has some way to go to match Sri Lanka, which at last count had 93 ministers, her cabinet is about twice the size of the OECD average and nearly double what it was when her predecessor, Luiz Inácio Lula da Silva, took power in 2003.
One of Ms Rousseff’s main rivals in presidential elections, Eduardo Campos, has promised to tackle this practice in Brasília of carving up the state between the political parties. But it is hard to see him fulfilling this pledge. In a system built on pork, your coalition partners’ loyalty must be bought – particularly when, as in the case of Mr Campos, you do not have the support of a big party in Congress.
Perhaps one of the reasons Brazilian voters seem resigned to accepting this system is that it fits with an overall culture of rent-seeking that developed particularly in the 20th century. Under this model – described in a paper titled “Democracy and Growth in Brazil” by Marcos de Barros Lisboa, of Insper business school in São Paulo, and Zeina Abdel Latif, of Gibraltar Consulting – the Brazilian state has routinely awarded benefits and privileges ranging from subsidised loans to trade protection for various interest groups.
So far, the government is in denial about its obesity problem. With Brazil struggling to meet its fiscal targets, finance minister Guido Mantega recently announced more tax increases.
Perhaps he would do better to summon some of the highly paid young analysts in Congress to crunch some numbers for him on how to reduce the size of the state and prevent it from crowding out private enterprise in the Brazilian economy.
Hold on – they have all gone home already. And it is not even lunchtime.
Fonte: Financial Times – 07/05/2014
