12a. Brazil's Government is Falling Apart...and it's Good News? Part 1/2.
Good morning John.
It's easy for us Americans to get caught in our bubble, especially when things are as weird as they are right now, but the rest of the world continues to go on, and in Brazil that means the government kind of totally falling apart in a way that makes House of Cards look frankly boring. When I asked about it on Twitter Brazilians mostly sent me GIFs to explain how they felt, but I also got a message from a diplomat in Brazil who told me that Brazilians have a saying: "Brazil is not for beginners." But maybe by the end of this video you will no longer be a beginner, so let's go there. Brazil is a big country, 200 million people, as big as the UK, France, and Germany combined. It's also big enough to fit all of those countries inside of it three times. At least. It's extremely ethnically and economically diverse with a wide gap between the richest and the poorest. That economic gap also falls roughly on racial lines and also on political lines, with wealthy white people mostly in big cities, being mostly conservative, and poor people of native or African descent being more liberal.
Brazil has a diverse economy. Their the ninth largest producer of oil, the second largest producer of beef, the third largest producer of iron ore, and they have the world's seventh largest economy. From 1964 to 1985 they were ruled by a military dictatorship and in a "stunning turn of events" that military dictatorship had a lot of bribery and corruption in it. But in an actual not sarcastic turn of events Brazil managed to transfer from that military dictatorship to a democracy with relative ease and like sort of slowly and without very much violence.
So its worth remembering throughout this entire process that though Brazil seems very mature economically and politically, its government is only 30 years old. It's new and they haven't been doing it for very long. It's pretty remarkable. There was plenty of economic and political badness in the 1980s and 90s. But thanks to a lot of hard work and China's insatiable appetite for iron ore and hamburger, Brazil managed to get its economy on track and it's become one of the great success stories of the developing world... until the last couple years. So remember how bribery and corruption were really rampant in the old military dictatorship? Well that's a difficult thing to take out of the culture of both companies and the government. And it has not been removed in Brazil.
But over the last thirty years Brazil has become more democratically mature and, somewhat unusually for Latin America, it has a really strong independent judiciary and a really strong independent police force.
So the rock of Brazil's culture of bribery and corruption has come up against the hard place of its strong independent judiciary. And something had to break. And it has.
But before we get there, let's talk about Lula. Luiz Inácio Lula da Silva was, in the 80's a revolutionary socialist who mostly worked against the military dictatorship as a union organizer. After the dictatorship transitioned to democracy (in a very weird cool long story that I don't have time to tell you) Lula emerged as a strong political figure and the head of the newly formed workers party. And the worker's party wasn't able to gain much national traction until Lula became what some Brazilians called Lula-Lite. Still Lula. Still for the people. Still from the poorest part of the country. Still representative of that soul of Brazil. But also willing to work inside of the system, also willing to help out big corporations, who are a big part of Brazil's economy and how Brazil works. After running and losing three times, Lula was elected in 2003 and remained president until 2011, during which time he presided over some truly remarkable achievements. Including an extremely successful social program that basically paid poor families to send their children to school - a program that's credited with helping lift tens of millions of Brazilians out of poverty. Lula left office with an unprecedented 80% approval rating. His Chief of Staff, an economist who was once a guerrilla fighter against the military dictatorship and was captured by them and tortured (amazing life this woman has had and continues to have) was elected pretty much as his successor because he couldn't run for a third term. Now Lula was almost never blame free. In 2005 his government was involved in a scandal which saw members of congress being paid $12,000 a month to vote the way that Lula wanted them to vote. But Lula was never directly implicated in the scandal, though several members of his government resigned.
In Brazil it has become so common for huge scandals to fizzle out without anybody getting in trouble that they have a phrase for it. They call it "ending in pizza." And I'm not saying some Portuguese word that sounds like pizza. I'm saying pizza. Well, the days of things ending in pizza appear to be over, for a bunch of different reasons. First because of the massive scale of the scandal, and yes we're finally going to get there. Petrobras is Brazil's only oil company. Its majority owned by the government and entirely controlled by the government. It's Brazil's largest company, one of the wolds largest companies, its responsible for 10% of Brazil's GDP, and a lot its government's revenue. And it spends (as you might expect) a lot of money on construction contracts, and it's maybe always been kind of been the case that high up Petrobras employees and the government officials that appointed them (because remember is controlled by the Brazilian government) would give contracts to construction companies that overcharged the government massively, and the CEO of the construction company would pocket some of the difference, and some of the difference would come back to the politicians and the employees who, you know, helped get them the contract. It's a very common corruption thing. We have it here in the US, we call it graft. But it's basically just a company bribing a politician for a lucrative contract. And as Petrobras grew under Lula (thanks mostly to the price of oil getting really high), the amount getting kicked back grew as well, to truly massive, massive proportions.
