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Speaker 1: Brought to you by Stage Summit Live, the virtual conference

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Speaker 1: that provides all the highlights of Stage Summit from the

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Speaker 1: convenience of your desk. Celebrity entrepreneurs in saple workshops absolutely

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Speaker 1: free register at Stage Summit livestream dot com. If you

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Speaker 1: think about the push that helped ring to power the

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Speaker 1: Workers Party, right, it was all push or push Bush Bush,

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Speaker 1: then not the Munich sense. No no, no, Hi, and

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Speaker 1: welcome back to Bloomberg Benchmark, a show about the global economy.

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Speaker 1: It's Thursday, August four. I'm Dan Moss, executive editor for

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Speaker 1: Economics of Bloomberg in New York. I'm joined today in

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Speaker 1: the studio by my co host Kate Smith. Kate, a

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Speaker 1: few of us need reminding that this year's US election

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Speaker 1: is playing out like no other. Just when we thought

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Speaker 1: we'd heard it all, slave reinjected itself. Michelle Obama reminded

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Speaker 1: us that slaves built the White House, and do remember

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Speaker 1: she was immediately sniped out by Bill O'Reilly, who opined

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Speaker 1: that the slaves were at least a well fared well.

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Speaker 1: We figured out that since slavery and all that it

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Speaker 1: connotes have popped up on the national stage, it might

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Speaker 1: be an idea to look at just how much of

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Speaker 1: a relationships slavery and everything connected to it has with

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Speaker 1: international economics. And yes, I know we mentioned Brazil just

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Speaker 1: last week, but with the Olympics due to start this month,

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Speaker 1: what better region to focus on, or rather stay in

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Speaker 1: than Latin America and DAN It's of course important to

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Speaker 1: note that at the outside of this we're not just

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Speaker 1: talking about slavery here. You know, most of the world's

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Speaker 1: nation they practiced in forest unpaid work at some point

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Speaker 1: in their history, and including of course here in the US.

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Speaker 1: But the difference, and I think here's really the heart

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Speaker 1: of the matter, is that some nations clung so long

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Speaker 1: to their plantation based economies that they never developed the

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Speaker 1: institutions to make that leap into the industrial societies. Here

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Speaker 1: to help us unpack that is Viviani Rodriguez. She's probably

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Speaker 1: better qualified than any person here at Bloomberg in New

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Speaker 1: York to walk us through this and help you untangle this.

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Speaker 1: Viv you are the managing editor for Latin American Economics

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Speaker 1: and Government, and you are Brazilian yourself. Yes, I was

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Speaker 1: born in Brazil then raised here, but absolutely born there.

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Speaker 1: And you've also worked in Argentina. Yes, so I spent

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Speaker 1: some time in Argentina, some time in Mexico. So when

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Speaker 1: it comes to that in America, I've been fair to say,

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Speaker 1: I've been all over the place south of the Rio

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Speaker 1: Grande there. So what's the link between traditional agricultural economies

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Speaker 1: and the political and economic upheavals that have dominated headlines

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Speaker 1: in Latin America. What's the starting point here? How should

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Speaker 1: we begin to in this Well, it's a very fascinating topic.

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Speaker 1: And and as you said, a lot of people just

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Speaker 1: go back twenty thirty years to try to explain a

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Speaker 1: lot of the problems and the struggles in places like

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Speaker 1: Latin America. Right when you think about Brazil, and if

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Speaker 1: we are willing to go back further, right, and if

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Speaker 1: we go a hundred years ago, a little over a

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Speaker 1: hundred years ago, Brazil was a country that abolished slavery

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Speaker 1: in eight eight I mean, you actually started phasing out

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Speaker 1: slavery in eighteen seventy one. So it's not too far

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Speaker 1: away from the whole war here of the Civil War

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Speaker 1: in the United States. But it did it a little

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Speaker 1: bit haphazardly in the sense that it was not a

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Speaker 1: it was mass scale slavery. It wasn't like in the

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Speaker 1: United States, concentrated in a only like in the southern

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Speaker 1: part of the country here in the United States, and

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Speaker 1: we didn't have a lot of policies really trying to Okay,

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Speaker 1: we're going to end the plantation system and make this

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Speaker 1: a modern industrialized based economy. Right, So basically what Brazil

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Speaker 1: did at the time was just a replaced wave labor

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Speaker 1: with very low immigrant labor coming mainly from Italy, and

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Speaker 1: that persisted in Brazil I would say for thirty or

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Speaker 1: forty years from Italy. Well a lot of yes, Italian immigrants.

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Speaker 1: So basically what we had is massive waves of immigration

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Speaker 1: in the way portion of nineteenth century in Brazil, and

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Speaker 1: until I would say nineties, the country did not really

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Speaker 1: thought about the process much in trying to make Brazil

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Speaker 1: a viable industrialized economy. Now, to be fair, Brazil is

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Speaker 1: by no means the only commodity dependent place on Earth.

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Speaker 1: Australia where I'm from, has certainly had its share of

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Speaker 1: vulnerabilities linked to commodity prices. This New Zealand, uh, the

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Speaker 1: South Africa, there's Norway. What's unique here? Well, first, I mean,

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Speaker 1: we have different cultures, we have different You know, the

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Speaker 1: model in which Brazil was colonized was very different than

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Speaker 1: some of the tries that you mentioned, right. I mean

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Speaker 1: a big difference between United States and Brazil, of course,

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Speaker 1: was that for maybe two hundred years, three hundred years

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Speaker 1: that the Portuguese who colonized Brazil, they set up the plantations,

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Speaker 1: they set up the farms, but they didn't really populated

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Speaker 1: the country, right. I mean, the owners of these farms

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Speaker 1: stayed back in Portugal, and only like Portugal really like

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Speaker 1: moved to Brazil. The court moved to Brazil in eighteen

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Speaker 1: or weight when they were fleeting fleeing from Napoleon up

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Speaker 1: and that ended up contributing to the independence of Brazil

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Speaker 1: and eight tight. I mean, this this podcast is really

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Speaker 1: great because we're talking a lot of history in Brazil.

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Speaker 1: But the reality is, I mean, Brazil for many years, right,

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Speaker 1: and for many decades remained heavily dependent on an agrie

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Speaker 1: business model. We did have big bursts of trying to

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Speaker 1: promote industrialization in the country, namely after nineteen thirties when

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Speaker 1: you started bringing the auto industries still industries, heavy electric machinery,

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Speaker 1: right Amina, And that's how zil Is started to diversify

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Speaker 1: and start of being one giant farm, right producing cane

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Speaker 1: and coffee and actually most of the products that produces

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Speaker 1: today except for soy, I mean, and trying to become

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Speaker 1: an industrial powerhouse. It managed to fulfill part of that,

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Speaker 1: right if you think about it, I mean Brazil. You know,

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Speaker 1: the industry industrial GDP in Brazil accounts for close to

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Speaker 1: ten percent of the country's GDP uh. The auto industry

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Speaker 1: is gigantic steel mining, all of that, right. But the

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Speaker 1: reality is, and this is what very interesting we and

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Speaker 1: more recent to Brazil history into some of the Latin

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Speaker 1: American other Latin American countries too, We ended up having

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Speaker 1: and being plagued by military dictatorships in the nineties, sixties

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Speaker 1: and so on and so forth. And that really it's

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Speaker 1: when it took the turn for the wars. Here Kate

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Speaker 1: is dying to ask you a follow up on the

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Speaker 1: military I am. I'm fascinated by the connection between military

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Speaker 1: coups and their economy. So how is that played out

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Speaker 1: in Brazil? I mean, this is a content. Actually, the

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Speaker 1: entire continent of South America, I mean, the continent seems

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Speaker 1: to be plagued by military cups. I mean I'm thinking

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Speaker 1: back to the eighties and most of those governments were

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Speaker 1: under under army rule at that time. So why has

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Speaker 1: Latin in particular had such a struggle with this, Well,

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Speaker 1: let's try to just qualify it a little bit more.

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Speaker 1: When we're talking the big Latin American dictatorships were mainly

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Speaker 1: talking Argentina, Chile and Brazil, right, and and and it

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Speaker 1: and it comes. I mean they were in the making

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Speaker 1: for I would say maybe decades, right, But you have

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Speaker 1: to come back and think the sixties, think about the

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Speaker 1: Cold War. The world was really divided into you know,

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Speaker 1: liberalism of the US centric policies and the Red menace

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Speaker 1: in a certain way, right, uh. And these countries were

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Speaker 1: countries that were very influenced. I would say that in America,

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Speaker 1: you know by the what happened in Cuba in nineteen nine,

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Speaker 1: Czech Rivara, you know, it was born in Argentina. So

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Speaker 1: the so there was a plus the income in equal quality, right,

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Speaker 1: and again getting back to the slavery point here, Brazil

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Speaker 1: is a country that struggled to make the transition and

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Speaker 1: had a good chunk of its population disenfranchised from the

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Speaker 1: get go, right, and this income in equality, so that

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Speaker 1: the whole. The socialist approach, right, was always very very

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Speaker 1: tempting for a good large portion of society. And what happens,

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Speaker 1: obviously is that in nineteen sixty four we ended up

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Speaker 1: having a military coup in Brazil and we ended up

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Speaker 1: becoming under military dictatorship until actually officially right now, link

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Speaker 1: this to the economic structure for US. Okay, did the

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Speaker 1: imposition of military rule effectively freeze economic development? Not that

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Speaker 1: it frees economic development, but it took only to one side.

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Speaker 1: I mean, armies are usually I mean they take over,

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Speaker 1: but they're not the best managers, right, especially in a

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Speaker 1: large economy like Brazil. So it's all about let's build infrastructure,

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Speaker 1: let's employ people, let's build a lot of dams. Let's

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Speaker 1: controlled economy. These five year plans think a little bit

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Speaker 1: Soviet Union style, right. So they're very good in these

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Speaker 1: gigantic plants and aspirations on paper. But the reality of

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Speaker 1: not having an industry that supplies all this modernization, investment

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Speaker 1: in technology, so on and so forth, what you create

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Speaker 1: its giant inefficiencies throughout the economy. So what it happens

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Speaker 1: is that Brazil, especially after the oil chalks of the nineties,

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Speaker 1: seventies and everything started coming to the eighties really really

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Speaker 1: in very bad financial check. And what was it about

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Speaker 1: the economic development of these countries that brought the military

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Speaker 1: into the political system in the first place. Again, I

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Speaker 1: hate to hark on about this, but they're not the

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Speaker 1: only commodity dependent economies. They weren't the only economies caught

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Speaker 1: in the Cold War. What happened here, Well, let's talk

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Speaker 1: first again qualified a little bit. Let's talk about Brazil

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Speaker 1: different than Argentina and Chile too to many degrees here,

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Speaker 1: but we actually enjoyed a certain degree of financial and

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Speaker 1: even economic stability. The early sixties in Brazil were considered

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Speaker 1: a period of stability and and of growth. It was

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Speaker 1: more a political ideological sense of crisis that actually precipitated

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Speaker 1: the crisis. I'm sorry that the military coup than actually

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Speaker 1: an economic crisis. Right. Different, And now we're jumping back

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Speaker 1: to just what happened next last year. I mean, the

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Speaker 1: fact that Brazil's economy is in real bad shape contributed

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Speaker 1: a lot to the impeachment of President Rusaph. We're gonna

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Speaker 1: have a word from our sponsor, and then Kate's going

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Speaker 1: to come back and ask about polarization. In Brazil, how

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Speaker 1: it's affecting the economy today, and how it's rooted viv

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Speaker 1: in what you just talked about brought to you by

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Speaker 1: Stage Summit Live, the virtual conference that provides all the

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Speaker 1: highlights of Stage Summit from the convenience of your desk.

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Speaker 1: Celebrity entrepreneurs, Incifle workshops absolutely free registered at Stage Summit

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Speaker 1: livestream dot com. I think the natural question for me, now,

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Speaker 1: what as I'm hearing this is, I mean, how racially

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Speaker 1: polarized is Brazil. I mean, if you spend a lot

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Speaker 1: of time in Brazil, now, I mean, can you can

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Speaker 1: you give us a little bit of like boots on

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Speaker 1: the ground color of what it's like. Yes, So it's

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Speaker 1: it's a very interesting thing about Brazil. Right. So the

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Speaker 1: first census of Brazil, which was in eighteen seventy I

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Speaker 1: believe or seventy five. You know, we gotta be a

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Speaker 1: little I'm not a story and so maybe the dates

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Speaker 1: are not precise, but basically divided the population only in

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Speaker 1: two classes, right, slaves and non slaves, and it found

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Speaker 1: out that fifteen percent of the population, this is at

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Speaker 1: the end of the nineteenth century. Uh, we're comprised of slaves,

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Speaker 1: and by and large slaves meant, you know, black slaves

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Speaker 1: brought to Brazil against their will from Africa. What happened

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Speaker 1: is this that for a considerable portion of the twentieth century, Brazil,

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Speaker 1: you know, and in the census showed that people always

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Speaker 1: qualified themselves somehow as mixed race, right, or even white.

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Speaker 1: Coming to two thousand and ten, we've seen quite an

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Speaker 1: interesting shift here for the first time in Brazil, you know,

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Speaker 1: recent history. The census um showed that close to fifty

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Speaker 1: one of the population in Brazil and we're talking about

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Speaker 1: two hundred million people the overall population to find themselves

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Speaker 1: as either black or mixed race. And that is actually

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Speaker 1: a gigantic shift in Brazil because this means that they

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Speaker 1: are the majority. And then for the first time, Brazil

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Speaker 1: is beginning to accept itself as a country that is

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Speaker 1: non predominantly white, and and that is a novelty. It

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Speaker 1: was it was its big I think for Brazil to

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Speaker 1: see itself and admit to itself into the world. That

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Speaker 1: that's how it is so link that to the deepest

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Speaker 1: recession on record that Brazil is suffering now and the

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Speaker 1: impeachment of the president. Well that's not I'm not sure

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Speaker 1: if this is the reason why we had the biggest

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Speaker 1: recession in Brazil. But a little bit like in United States.

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Speaker 1: I mean, income inequality is good to the lowest. The

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Speaker 1: poorest strata of society in Brazil is predominantly black and

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Speaker 1: mixed race, right, I mean the black portion of the

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Speaker 1: society is the one that is the disenfranchised. Unemployment is higher,

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Speaker 1: they have less access to um healthcare bank accounts. So

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Speaker 1: you know, all kinds of studies show that, right, if

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Speaker 1: you think a little bit about impeachment. But before, if

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Speaker 1: you think about the push that helped bring to power

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Speaker 1: the Worker's Party, right, it was all push or push push, push,

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Speaker 1: then not the Munich sense, No, no, no, the push

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Speaker 1: that we're talking about the military, Yes, that brought to

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Speaker 1: part of the Workers Party. It's obviously, you know, their

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Speaker 1: platform has always been to try to address income inequality

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Speaker 1: in the country, and they catered a lot to the

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Speaker 1: north and northeastern part of Brazil where you know, a

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Speaker 1: lot of you know, havey predominantly poverty and higher unemployment rate.

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Speaker 1: So with all of the things we've discussed, they've created

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Speaker 1: this kind of political and economic culture of you know, grab,

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Speaker 1: what's mind while I'm in the office, because God knows

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Speaker 1: how long I'll be there. I mean, how does that

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Speaker 1: kind of attitude in in government and politics? Also? I mean,

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Speaker 1: like Dan has been saying this entire episode, connect that

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Speaker 1: for us, what's the connection to that and the economy

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Speaker 1: and why they're in this huge recession. Well, the recession

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Speaker 1: can be explained by many factors. I'm not to be honest,

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Speaker 1: I'm not sure that demographics is the biggest determinant of

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Speaker 1: Brazil's economic recession. But obviously, when you have large countries

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Speaker 1: with large populations, where there's a lot of wealth concentration, right,

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Speaker 1: I mean, you are prone to to your less I

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Speaker 1: mean your ability to withstand shocks. And this comes to

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Speaker 1: the commodities and maybe the parallel those tradias and the

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Speaker 1: labor market issue. I mean, these are more fractured society

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Speaker 1: is therefore again the ability to withstand a shock or

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Speaker 1: a downturn. I mean it's it's severely diminished, right, because

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Speaker 1: then you quickly disenfranchise an even larger portion of the

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Speaker 1: society that loses their job, that loses the credit cards,

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Speaker 1: that losers the access to everything, and you task the

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Speaker 1: system that cannot absorb that loss anyway. Right, So if

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Speaker 1: you think about Brazil, think about how that the middle

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Speaker 1: class miracle boom that took place in the last in

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Speaker 1: the beginning of the two thousand's quickly almost evaporated in

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Speaker 1: just a matter of years, in the sense that the

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Speaker 1: minute people have started losing their jobs, I mean, the

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Speaker 1: entire system crumbled. So one of the legacies of slavery

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Speaker 1: and that plantations structure, which you said earlier continued and

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Speaker 1: after slavery was abolished, is that you have a huge

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Speaker 1: group of people in Brazil disenfranchised yet have not benefited from,

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Speaker 1: say a civil rights movement, and that partially explains the

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Speaker 1: polarization today. Well, it's fair to say that unit Brazil

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Speaker 1: has struggled to complete that transition civil rights. No, you're right,

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Speaker 1: not in the sense that we had here in the

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Speaker 1: United States. There was not something as organized or perhaps

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Speaker 1: even so dramatic as in the United States, complete different histories.

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Speaker 1: But again, I mean it's always in Brazil things are

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Speaker 1: almost like soft right in a certain way. That's why

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Speaker 1: hence the what we saw at the census with people

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Speaker 1: themselves qualifying themselves as of black or mixed race, uh origin.

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Speaker 1: It's very key to a nation. Now, first you need

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Speaker 1: to know who you are before you can start demanding

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Speaker 1: the right things from your own government. To begin with

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Speaker 1: proper representation, right, I mean it's not a question that

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Speaker 1: in still I mean until very recently, mixed race, black

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Speaker 1: you were underrepresented and even women underrepresented in government. This

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Speaker 1: new interim president, Timor was seriously criticized by naming an

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Speaker 1: entire cabinet comprised of white men after he took over.

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Speaker 1: So no, Lauretta Lynch, no Condi Rice, nothing like this,

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Speaker 1: I mean not as much, not not in the way

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Speaker 1: we should Brazil should. For a country out that side,

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Speaker 1: we had one or two, We had one chief justice

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Speaker 1: in Brazil. Uh, you know a couple of years ago.

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Speaker 1: We have a minister here and there, a lot of

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Speaker 1: I would say sports figures, popular coach of figures, artists, right,

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Speaker 1: but we we are far far from having a black

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Speaker 1: or mixed race president, even though I think that would

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Speaker 1: be a you know something that Brazil has to aspire to.

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Speaker 1: Let's sum out for a moment, because the kind of

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Speaker 1: the issues that you're talking about right now are fascinating,

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Speaker 1: not only because they intrinsically are, but I mean, you

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Speaker 1: could swap out Brazil for so many other countries, um

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Speaker 1: specifically in Latin I'm like, we're talking about right now,

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Speaker 1: So what I mean when from what you've seen, I mean, what,

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Speaker 1: what are some of the lessons that other countries in

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Speaker 1: the region can take from Brazil to avoid falling in

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Speaker 1: these footsteps? Well, I mean, first, when you say lessons

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Speaker 1: about that's preventing from, for example, getting into a big

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Speaker 1: crisis that we're seeing right there, I mean, obviously we

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Speaker 1: have models in Latin America that a assign a lot

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Speaker 1: of power to the presidents, and the presidentialism is very uh,

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Speaker 1: you know, one person can have a lot of sway

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Speaker 1: in these economies, right. I think, for example, what's happening

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Speaker 1: in in Venezuela, Right, Okay, that could be the factory

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Speaker 1: that you know, people discussed if it is actually a

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Speaker 1: democracy or not, especially at this stage. But you have

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Speaker 1: systems that create and and and concentrate a lot of

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Speaker 1: power into one single person to begin with. And then

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Speaker 1: this is just on the political side, but economically speaking again,

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Speaker 1: I mean, you know, we have to try these regions

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Speaker 1: have to try to go transcend the agribusiness one clients

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Speaker 1: type of model, right, education. It's a big deathit throughout

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Speaker 1: that in America. Try to impose societies and again I

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Speaker 1: mean have societists that are more equally distributed, you know,

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Speaker 1: better representation, better income distribution, so on and so forth.

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Speaker 1: I mean Brazil that it's a it's a good example

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Speaker 1: of how actually quickly everything can evaporate if you don't

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Speaker 1: promote real, stable reforms in the base of the country. So,

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Speaker 1: given this persistent political and economic lopsidedness that you've described,

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Speaker 1: let's look into the future for a second. So is

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Speaker 1: this whole democracy thing just a fat in Latin America. No,

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Speaker 1: I don't think so. I mean, especially coming from a

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Speaker 1: if you look at these three countries where you know,

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Speaker 1: experienced longer and you know, Chiley, Argentina and Brazil, I

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Speaker 1: mean you have now a generation of people who were

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Speaker 1: born and are beginning to come of age and even vote,

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Speaker 1: you know, that grew up under a democracy. These people

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Speaker 1: will not return to a non democratic state, you know,

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Speaker 1: I mean, Brazil will not allowed that to happen. Society

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Speaker 1: is not such that will You know, the press is

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Speaker 1: free processes, due course, I mean, yes, there's been questions

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Speaker 1: about the whole process and the legality of the process

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Speaker 1: in Brazil regarding President Roussef, but it was oversown by

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Speaker 1: the Supreme Court. So on. We did exchange some emails

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Speaker 1: the evening of the attempted Turkish coup. You sure about this? Well? Obviously,

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Speaker 1: once you if someone seizes an opportunity to put the

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Speaker 1: tanks rolling on the streets, especially if in a situation

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Speaker 1: of a severe unrest, right, it's always tempting, you know

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Speaker 1: how it is. Once once the tanks are out there,

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Speaker 1: it's kind of hard to put them back, right, Uh.

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Speaker 1: And then obviously everybody wants to prevent a situation. But

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Speaker 1: I mean, society is in in places like Brazil or

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Speaker 1: nowhere near what they were in. Well, Viv, thanks for

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Speaker 1: joining us. You're doing a terrific job running economic and

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Speaker 1: government coverage in Latin America. Benchmark will be back next week,

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Speaker 1: not about Brazil, and until then, you can find us

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Speaker 1: on the Bloomberg terminal, Bloomberg dot com, as well as iTunes,

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Speaker 1: pocket Cast, and Stitcher. While you're there, take a minute

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Speaker 1: to rate and review the show so more listeners can

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Speaker 1: find us and let us know what you thought of

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Speaker 1: the show. You can talk to us and follow us

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Speaker 1: at Daniel Moss, d c at by Kate Smith and

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Speaker 1: Viv underscore Rod Do they get that right? You did?

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Speaker 1: Thanks so much for joining us. Thank you. Brought to

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Speaker 1: you by stage themmit Live, the virtual conference that provides

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