Joseph argues that Marina Silva, the front runner and Socialist candidate for the Brazilian Presidency is surprising both Brazilians and investors by embracing policies of macro stability while protecting the livelihood and gains made by Brazil’s poorest ushering a new era of Latin American politics.
In the summer of 2013 demonstrations erupted in Sao Paulo and spread throughout Brazil, giving pause to investors and would-be world cup travelers. Suddenly tourists were at risk of picket line detours on their way to the lithe-bodied beaches of Rio. Investors feared that Brazil may enter a populist moment.
The roughly ten cent increase in bus fare that precipitated the demonstrations was viewed as just one manifestation of widespread mismanagement of public resources, calling into question how bus contracts were awarded in major cities and broader issues of corruption and waste in the upgrade of the country’s infrastructure.
The summer led to a much larger discourse on the country’s management under the Worker’s Party (PT), and saw Dilma’s approval ratings plummet. Predictions of a change in the presidency began, but few predicted Marina Silva, of the Socialist Party, would lead the polls three weeks ahead of the election.
Silva took over the Eduardo Campos ticket after he died in a tragic plane crash, and has captured the nation’s attention with her story of hard-earned success and humble beginnings. It’s easy to see why if you watch her on the campaign trail. But Silva is more than an inspirational story; she has successfully pulled support away from the more conservative PSDB candidate Aecio Neves, due in part to espousing orthodox economic policies.
Controversial campaign commitments made by Silva include granting full autonomy to the central bank and increasing fiscal discipline while maintaining the popular cash transfer program, Bolsa Familia. There are parallels here with the lead up to Lula’s first electoral victory, when the Real depreciated as wary investors feared he would adopt inflationary policies. But Lula appointed a well-reputed technocrat from PSDB, Henrique Meirelles, to run the central bank and pronounced his plans for inflation targeting and fiscal discipline in his famous “Letter to the Brazilian People”.
Things are different this time; investors seem more interested in a change in management and less concerned about whether a socialist party president might go on a spending spree. Brazil’s markets and currency have been moving in response to poll results, gaining when Marina gains and falling when Dilma gains. Rumors suggest PSDB would put their support and team of economic advisors behind Marina in the event she wins or forces a run-off. This may explain the investor confidence, given that it was under PDSB’s Real Plan that Brazil was able to rein in the inflation that plagued the economy in the 80s and early 90s.
What makes this all the more curious is that Marina is the Brazilian Socialist Party (PSB) candidate. One Brazilian journalist offered a campy description of the country’s political spectrum as “fifty shades of red,” yet there appears to be a consensus that Brazil should focus on increasing investment through policies aimed at tackling the nation’s abysmal productivity growth and draconian tax policies, which earned it the title of ‘most time consuming tax regime in the world’ in 2013. Consensus also appears to support the view that fiscal tightening should not include tampering with the country’s popular, redistributive cash transfer program.
There is something to be said for the historical moment—a socialist Latin American presidential candidate is advocating for macro stability to improve investment and growth. A cynical interpretation is that success requires politicians to compromise their ideals; that just because our heads of state look different does not mean that our politics will. An alternative view is that the technocratic orthodoxy on how to achieve economic stability is compelling to reasonable leaders of all political stripes, but leaders like Silva are more likely to balance growth-oriented policy with the protection of a social safety net.
If Silva does succeed, it may well be because she is willing to respond to the concerns of investors while maintaining focus on the interests of families facing the same circumstances she grew up in—a task the parties of the other leading candidates have not succeeded in achieving on their own.
This election is exciting for those who place hope in democracy’s potential for bringing the marginalized into the process of governing. Two women—both with harrowed histories, one raised in extreme poverty and the other tortured under dictatorship—are facing off for the presidency of a major nation for the first time in history. Yet, it is unlikely that any outcome in this election will result in drastic policy changes for the country, rather the hope for measured progress and an inclusive political process.
Joseph Luchenta is dual degree MBA – MPA/ID student at the Harvard Kennedy School and the Harvard Business School. He previously served as Vice President of Strategy for the New Orleans Business Alliance and a Country Director in Namibia and Mozambique for People to People Health International.