Brazil was considered to have the sixth largest economy in the world, both by nominal GDP and purchasing power. In 2012, its economy surpassed the United Kingdom, and Forbes ranked the country as being home to the fifth largest number of billionaires, ahead of both the UK and Japan! However, its astounding growth rate of over 5% came to a grinding halt in 2013 and 2014. In 2015, the economy began to shrink.
Brazil’s Economic Crisis
Explaining the crisis in lay man’s terms, Professor Antony P Mueller said that it was akin to a family that had large amounts of inheritance but splurged its resources indiscriminately, until one day they realized that all their wealth had been squandered away. What allowed it to get so out of hand is the government propaganda to keep the world disillusioned. In 2014, when the Worker’s Party, led by President Dilma Roussef, came into power with a narrow margin for a second consecutive term, they chose to delay the rise of fuel and electricity prices, thereby keeping the people of the country cocooned in a fake sense of security. Even the International Monetary Fund had predicted in 2013 that the country would maintain a growth rate of at least over 4 percent for each of the years up to 2018.
In contrast, the real picture was like this – in March 2015, in a bid to fight inflation, the Brazilian central bank raised interest rates to 12.75 percent, the highest in six years. Like many of the EU nations, Brazil too suffers from debilitating debt, its direct public debt being 65 percent of its GDP!
Brazil’s Political Crisis
Politically, having been a left-led country for more than a decade, the country is restless to achieve libertarianism. This is exemplified by the rising popularity of the Movimento Brasil Livre or the Free Brazil movement. While the country attained freedom from colonialism in 1822, it is now struggling to achieve freedom from socialism. On April 24, 2015, the people of the movement led a march from Praça Panamericana in Western São Paulo to Brasília, the Brazilian capital, following one of the routes that the bandeirantes took in sixteenth and seventeenth centuries. On this 1,000 km walk, they passed several towns and cities, where they attempted to spread the gospel of free market economy. When they reached the capital on May 27, they rallied for the impeachment of the President Dilma Roussef. While there are many other protest groups, the MBL is the only one that strives to deliver an ultimate solution by way of economic freedom.
Spread of Free Market Ideology in Brazil
The movement for Brazil’s freedom is being led by a nineteen year old college dropout of Japanese ancestry, Kim Kataguiri. He, along with Renan Santos, are the two young founders of the MBL, who are striving to spread the idea among the youth that if you do not support a free market economy, you are asking for dictatorship. Being conversant with the works of Milton Friedman, Ludwig won Mises and Friedrich Hayek, Kataguiri states that he refers to Margaret Thatcher for his movement and the US politician who he most relates with is Rand Paul.
Inspired by the Austrian School of Economics, the young drop outs can see what others in the country have failed to recognize in the past – that economic freedom is the only way to be fair. The movement is largely a youth movement, having started out from social media portals. As a result, the Brazilian Mises Institute is now seeing an influx of youngsters, eager to learn more about free market ideology. As more and more people join the movement, it is an exciting time indeed for Free Market economists looking at Brazil.