Brazil's Grim Future

Brazil is in bad shape. Despite decades of strong economic growth prior to 1980, its economy has been stagnant for decades. Over the past forty years, the country has seen it all: hyperinflation, the confiscation of private assets, and internal and external debt default. Two (out of only five) elected Presidents have been impeached, and two have been imprisoned, along with three house speakers. Brazil has seen the largest criminal despoliation of state resources in the western world, which triggered the sharpest recession the country has ever registered.

Could such a poor record follow merely from bad electoral choices? It doesn’t appear possible. Widespread failures such as we see in Brazil suggest fundamental problems at the level of institutional design. A consideration of Brazil in light of the theory and history of republicanism reveals serious conceptual flaws in the design and organization of the branches of government, of the electoral process, and in relations between the members of the federation.

Looking over western history since classical antiquity, we can see that democratic republics are intrinsically unstable. The Greek philosophers knew that they could degenerate into the “tyranny of the majority,” and Aristotle never hid his reservations about the almost pure Athenian democracy, preferring the more balanced regimes of Sparta and Carthage. The Romans built upon the Greeks’ experience and introduced many improvements, such as the division of power between two elected consuls, and the popular assembly to counterbalance the senate. Nevertheless, the Roman Republic would eventually succumb to the ambition of its populist politicians. They expanded the franchise, first to other Italian peoples, and then more broadly to tributary nations, looking to enlarge their own support. They were motivated to do so because the massive territorial expansion extended the scope of their own leadership, enabling them to arm their own factions, offer the new franchisees “bread and circuses,” and build strong personal balance sheets.

This story reverberated for centuries. It suggested a natural size limit for successful republics. This was respected throughout the middle and modern ages by the Italian city-states. In the late 18th century, when republican ideas were flourishing again in the west, the distant failure of Rome was still remembered. The American framers’ endeavor was met with wide skepticism both in Europe and in America, precisely because the fledgling American republic was so large. Nevertheless, the fathers were highly knowledgeable in classical history, and very much aware that they needed to go beyond the abstract ideas of Montesquieu and Locke. They needed to devise practical safeguards, if their project were to resist the pressures of time, along with populism and the specter of the tyranny of the majority. Bicameralism, the Electoral College, and a Senate designed for unlimited debate—borrowed from Cato the Younger’s idea to moderate policy cyclicality—were among the most important of these devices.

So far, these safeguards have been effective in shielding the American regime from attacks that have threatened to undermine it since the early 20th century. The United States has enjoyed the most political continuity of any modern nation, despite having been born only yesterday, on a civilizational timeline. It remains to be seen, however, whether America will resist the more recent challenges to its structure, such as the facilitated enfranchisement of illegal immigrants, or the continual expansion of entitlement programs, which reduce ever-greater segments of the population to a state of dependency. In contemporary America, we see troubling echoes of Roman decadence. The challenges of large republics remain a reality today, and the US regime would likely have degenerated long ago, but for the prudent safeguards established by the American Founders.

Brazil has continental dimensions, equivalent to those of the United States. This, as we have seen, creates important challenges to a republic. Unfortunately, Brazilian statesmen never dedicated enough thought to these questions.

Although it is also the offspring of western civilization, the Brazilian republic (like other Latin American republics) was not, like the Greek cities, spontaneously established. Neither was it carefully designed by statesmen who had cautiously studied the flaws of republics, and the methods that might improve them.

When the Brazilian monarchy fell to its own weaknesses in 1889, a republic was declared, and the leaders of the new regime grabbed some ideas from the American and French constitutions to write Brazil’s own. Unlike America, Brazil was never a federation. As in the old monarchy, the country’s provinces were never given the option of joining or leaving the new regime.

Brazil has continental dimensions, equivalent to those of the United States. This, as we have seen, creates important challenges to a republic. Unfortunately, Brazilian statesmen never dedicated enough thought to these questions, either at the launch of the regime, or at any later time across the subsequent 132 years. They should have discussed federalism, checks and balances, and electoral rules. None of these issues received the attention they deserved.

To safeguard the integrity of a republic, there must be proportionality between the population and the number of representatives each state is allotted in the House. In the United States, this principle has consistently been observed. In Brazil, it has always been neglected as a second-tier issue. Even though written rules establish a soft proportionality, the ratios have rarely been enforced throughout the years, and distortions have grown over time. Today, the three most populous states are home to 40% of the country’s population, but hold only 32% of the House’s seats. The three least populous states have 1% of the population, and 5% of the seats. Also, unreasonably for a geographically large republic, house districts were never created, or even seriously considered, within Brazilian states. Instead, representatives are elected through a complicated statewide proportional partisan scheme. Generally, fewer than 10% of total representatives are selected by the voters they are meant to represent. Following expensive, statewide electoral campaigns, representatives end up financially indebted, and lacking a direct bond to their electors. These conditions make them vulnerable to capture by various interest groups.

In Brazil, high-ranking officials maintain, since colonial times and to this day, the right to be judged by the Supreme Court–the so-called privileged forum. No other modern state retains such a comprehensive mechanism for differentiating the political class from the rest of the population. The origins of this institution can be traced to the “Ordenações Manuelinas,” the law code edited by King Manuel I of Portugal in the early 16th century. It encourages patrimonialism and engenders a sense of impunity in politicians. These two features have long been embedded into the social fabric of the country. In recent years, it has become increasingly clear that this system also undermines the separation of branches of government, because it nullifies the constitutionally provisioned limitation of the power of the Supreme Court by the Senate. It is difficult for the Senate to check the courts when so many senators have judicial liabilities.

We see a particularly egregious example of this in the rehabilitation of former President Lula, who has been convicted by multiple courts, for several corruption-related crimes. Unsurprisingly, Lula is already pre-campaigning for the presidential bid in 2022. To many people, this would look outrageous, but it is widely regarded as acceptable within Brazilian society.

Brazil, like many of its Latin American peers, has multiple characteristics that leave it highly vulnerable to populist movements: extensive territory, weak rule of law, and resources and economic activity sufficient to sustain a rent-seeking political class. Perhaps most importantly, a large fraction of its population depends on state entitlements for survival.

Venezuela and Argentina have already gone far enough down this road to be effectively lost. There is no real hope of rehabilitation. Chile has just begun this same journey, and seems to be moving faster than its neighbors. Colombia may soon opt for a similar path.

For decades, the Brazilian economy grew quickly, due to its young population, its low initial capital stock, and plentiful natural resources. With so many advantages, Brazil enjoyed long prosperity, even without a prudently-designed political system. Sadly, those days are long gone.

The current political situation in Brazil can be summarized as follows. The legislature, lacking any real accountability to voters, is well fed by a publicly financed electoral fund, and by special individual claims to the federal budget. The supreme court interferes constantly with the other branches, and invalidates the trials of condemned criminals at its own political discretion. It is, in practice, not accountable to any other form of authority. Meanwhile, the president is elected through popular vote by an impoverished population, which is increasingly dependent on state entitlements. Elections have become a festival of empty promises, lies, and electoral embezzlements. Presidential four-year terms become a succession of corruption scandals and fiscal deterioration. Social programs continue to grow, becoming increasingly unsustainable.

In the face of this dismal reality, Brazilian elites pretend not to see the fundamental flaws of their political system. They continue preaching on the “necessary reforms which can put Brazil back on track,” touting the benefits of tax and administrative reform, and hoping that a centrist, politically skillful candidate might win the presidential bid and “solve it all”.

Unless a profound political reform takes place, it seems likely the country’s dysfunctions will continue to worsen. At a minimum, such reform would need to institute House districts, establish strict proportionality between states’ population and allotted House seats, and extinguish the “privileged forum” for high officials. None of these issues, except to some extent the latter, have ever been the object of any serious legislative effort. It is hard to have much optimism at this point.

Under such severely crippled governance, the economy will probably see sharper and longer recessions, which will fuel more populism, eventually creating the conditions for a disorganized rupture.