Mercadante: Temer will worsen the economic crisis.

One of Dilma Rousseff's closest ministers during her time in the Planalto Palace, Aloizio Mercadante remains one of her most present aides at the Avorada Palace, where the president is mobilizing in resistance to the coup d'état that removed her from office without demonstrating that she had committed a crime of responsibility. Last Thursday, two days after Finance Minister Henrique Meirelles announced a proposed constitutional amendment that would attempt to limit government spending based on the previous year's inflation, Dilma and Mercadante went to the president's Facebook page to discuss the possible consequences of this initiative on social media, especially among young people. Following this, Aloizio Mercadante gave this interview to Brasil 247:

247 – The United States has legislation similar to the proposal Henrique Meirelles presented on Tuesday, in an attempt to impose a limit on government spending based on the previous year's inflation. Because of the debt ceiling, every year the White House under Barack Obama has been forced to negotiate its spending with Congress, which has a Republican majority, placing American society under the threat of paralyzing all types of spending, laying off employees, suspending essential services – chaos. Do you see any similarities in these cases?

MERCADANTE – The ideological inspiration is the same, of course. We're talking about a vision of a minimal state, formulated and defended by the Republican Party since the Ronald Reagan years, and which has now been adopted by the economic team of Michel Temer's interim government. The difference is that Brazil is not the world's largest economy and is experiencing a historically more difficult situation. Due to factors that no one needs to discuss here, our private sector does not possess the same dynamism or the same strength to offer services in the same quantity and with the same quality as seen in the United States. In other words: applying a similar recipe of state intervention will yield even worse results for the majority of the population. 

247 – For example...

MERCADANTE – Let's start with the basics: health and education. These are areas whose deficiencies no authority has the right to question, and which require a real increase in investment to address the most urgent needs. When you decide, in advance, to freeze investments based on past inflation, you are saying that your spending will have to be reduced. In a country that needs long-term, broad, and permanent investments, this means we are giving up on solving all the important deficiencies of the Brazilian state. To complicate matters, we are talking about a proposed constitutional amendment, not an ordinary law, a budget adjustment project that is approved one year but can be revised the following year. Meirelles himself has already said that this is not a temporary program, but a permanent one. With this program, Michel Temer's government is saying that its priority is to keep the accounts balanced, above all else, regardless of the consequences for the lives of people and families.  

247 – In a video that circulated on social media, you spoke of Disorder and Regression, to emphasize that the plan contradicted the orientation of our flag, which speaks of Order and Progress. Why?

MERCADANTE – It's clear that, as an economist, I disagree with the assumptions of Meirelles' proposal. I believe that Brazil's essential problem remains advancing development, creating jobs, expanding the domestic market, and reducing inequality. I do believe in the role of the market economy, but I am convinced that the State has an essential function in this task. The assumptions of the interim government's proposal are different. They involve an absolute belief in the market's capacity to solve our problems. Even admitting that the State lacks resources, Meirelles doesn't even consider raising taxes, charging more from those who can afford to pay more and who currently pay very little, or nothing at all, as is the case with families who pocket profits and dividends. This would be a positive change for a country with our level of inequality. Even those who share a similar viewpoint to the Finance Minister have expressed many doubts.

247 – What do you mean?

MERCADANTE – In an estimate published by Valor Econômico the day after the announcement, it was discovered that the plan will only achieve the expected results, with a near-zero deficit, in 2025. In other words, we are talking about a proposed solution to the most serious economic problems that asks Brazilians to endure nine years of sacrifices for a plan that might perhaps succeed. If we were talking about some kind of planned economy with a strong state presence, this might even make sense – at least doctrinally. But we are talking about this from a radical market economy perspective. Imagine everything that can and will happen in the world and in Brazil over the next decade. Think of China, Europe, the United States. In Brazil, we will have gone through two presidential elections – if the current calendar is maintained – and we will have a third election on the horizon. 

247 – From an educational standpoint, what is the immediate outlook?

MERCADANTE – Today, one in four eight-year-old children – when all should be literate – cannot read correctly. One in three cannot write properly. One in two does not master basic mathematical operations. This is our real world, which limits the growth of these people and, of course, directly affects our development possibilities. There is no way to confront this historical legacy, which is passed down from father to son, and then to grandson, without an intervention commensurate with the problem. Acting in the opposite direction, the interim Finance Minister admits to cuts in essential areas, and it is scandalous that this is said so casually, as if it were just a number, when it should be a cause for outrage. In 1994, when it took a similar initiative, creating the Emergency Social Fund, the Fernando Henrique Cardoso government said it intended to protect social investments, even though it was seeking an agreement to reduce mandatory spending under the Constitution. This is proof that the country's political environment has changed.

247 – What is the overall assessment of this experience?

MERCADANTE – It was a predictable tragedy, since education had accumulated a shortfall of R$ 50 billion, a loss that disrupted the ministry's spending and was only corrected, even then with difficulty, during Lula's government, after the economy recovered from the crisis of Fernando Henrique's second term. The penury was so great during the PSDB government that an absurd decree was signed, prohibiting the opening of new technical schools at any level of administration, a measure that needs no further comment in a country where the demand for technical professionals has always been greater than the supply.

247 – We know that, over time, this has changed. How?

MERCADANTE – Technical schools numbered 140 when Lula took office. They reached 354 by the end of his second term. In 2014, already under Dilma's government, they reached 562. Fourteen years ago, we had 70,000 students enrolled in vocational courses. Today there are 700,000. And of course, this was only possible because the decision was made to increase spending on education, as recognized by anyone capable of abandoning preconceived ideas to engage in a calm discussion about reality. 

247 – What are the big numbers?

MERCADANTE – In 2002, the education budget reached R$ 18 billion. In 2013, it hit R$ 90,8 billion, or four times more. These resources allowed for changes that not everyone notices, but which occurred at various levels. The minimum wage for teachers was raised by 47% above inflation. It was also possible to strengthen teacher training courses in secondary and primary education, in a country where most teachers in important areas, such as Physics, do not even have specific training in the area they teach. PROUNI, a creation of the Lula government, began with 95,000 enrollments in 2005. It had already reached more than one million eight years later. A 2014 survey of the 481.720 students who participated in ENAD showed that 35% of them were the first in their family to access higher education. It is a great advance, which should make us very proud, but let's not be fooled. There is still a long way to go. If today we have 2 million university students, there is a shortage of 7 million places for young people who could pursue higher education but cannot find available spots.

247 – We're talking about the number of places available, which has increased considerably. But what about the quality of education?

MERCADANTE – Quality, we know, involves a general maturation process. Education is a holistic process that only works when it goes hand in hand. Better primary school teachers will produce better high school students, who will have classes with more prepared teachers so that they arrive at universities, where they will graduate with a better foundation than the previous generation. We are in the middle of a journey, with advances recognized by any serious institution, and which cannot be interrupted. 

247 – Could you give examples of quality improvement?

MERCADANTE – I believe that, through the Science Without Borders program, we are creating the first generation of Brazilians with a large number of brilliant minds trained in the best centers of study, research, and innovation on the planet. Few countries in the world have an advanced training program with this importance and ambition. Our progress in technical education is also visible. The performance of Brazilians in the Knowledge Olympics continues to improve. Our delegation came in 15th place in 2005, when it participated in these Olympics for the first time. In 2009 we came in sixth place, in 2013 we came in fifth, and in 2015 our delegation came in first place, ahead of countries like South Korea, China, Taiwan, Switzerland, Japan, and England. No one needs to exaggerate this result, wanting to see a perfect world in which all problems have been solved. It's not like that. In any case, we are talking about an Olympics. But it is clear that this performance shows an environment of progress and improvement. 

247 – How was this possible?   

MERCADANTE – To put it clearly, the greatest responsibility lies with the Brazilian citizen. It is they who work every day to build a better country for themselves and their children. This is the essential point. But I think that, beyond that, we need to recognize that some authorities have done their part. The first important initiatives were taken by Lula. Others, by Dilma, in the same vein. In 2011, the first year of her presidency, Dilma made a decision that is not always acknowledged. She resolved that her government would never limit itself to fulfilling the constitutional obligation of spending 18% of net tax revenue on education. She always did more. In the first year of her term, she spent 18,9%. In 2012, this total had already risen to 25,6%, and in 2014 it reached 23,1%. This represented, in that year alone, an expenditure of R$ 12 billion more than the mandatory total. In total, over five years, Dilma invested R$ 54 billion above the constitutional mandate. 

247 – With the inevitable cuts, what should happen?

MERCADANTE – With austerity measures, the interim government will worsen the economic crisis instead of offering a prospect of relief. That's the first point. Secondly, the continued loss of income will lead middle-class children to public schools. It will also cause them to abandon private health insurance plans and use the public healthcare system (SUS). Thus, in a context of lost revenue, there will be an increase in demand. We can imagine the result. 

247 – You recorded a video where you said that, instead of Order and Progress, the motto of Michel Temer's interim government should be Disorder and Regression. Is that correct?

MERCADANTE – I was talking about the cuts in spending on health, education, and social benefits. But it's a larger, serious phenomenon that's present in a good part of the interim government. To give an example: it's important to reflect on what happened to the protest of the entire society, and not just the women's movement, when it was discovered that there wasn't a single woman in the interim government's cabinet. In no country in the world has a newly arrived government, which in theory would have a lot of prestige to show off, spent six days inviting respectable figures from culture, the arts, politics, and feminism, and received declared, public refusals, ending up in the situation of that guy who invites a girl to dance at a party and gets rejected, as they used to say when President Michel Temer was young and frequented teenage dances. There were six refusals, which is a record. This isn't something that happens in a provisional government, but in an improvised government. 

247 – What does this problem have to do with Disorder and Regression?

MERCADANTE – This shows a huge disconnect between their actions and reality. Only a government that sees the world through the rearview mirror of a car, and still thinks it's living in a country that's been left behind, with conservative customs and traditions mixed with prejudice, can't understand the importance of the changes that have occurred in recent decades, many since 2003. This is even more striking when you remember that the interim president was vice-president during two terms of our government. Only a perspective stuck in the past can't see that Brazilian women have changed positions, advanced in their rights, and cannot be excluded from a ministry, just as they cannot be left out of Congress or a position of responsibility in a large private company. This applies to the Dilma, Lula, and Temer governments, to a large bank, a large commercial group, a publishing house. It's not acceptable, understand? It's no longer possible. It's not a matter of right or left. It's more than that. Because only a prejudiced viewpoint can imagine that it's impossible to find a qualified woman to form a cabinet. It is also incomprehensible that there is no Black minister. We are talking about segments of the population that, socially, make up the majority. To imagine that they have no place in a ministry is to assume, from the outset, that this is a government that represents the social minority that has governed the country for 500 years. It is bad for everyone and hinders the solution of serious and urgent problems. 

247 – What do you mean?

MERCADANTE – A terrible, unacceptable case, such as the tragedy of this rape that occurred in Rio de Janeiro, in which 30 men are accused of attacking a 16-year-old girl, confirms that no government, of any ideology, can dispense with feminine sensitivity. When he was Secretary of Public Security in São Paulo, Michel Temer participated in the creation of the Women's Police Station, a long-standing demand of the feminist movement. In that universe considered especially masculine, even more so thirty years ago, the work was conducted by a female police chief. 

247 – Everyone has a friend who can't be accused of being sexist or racist but is capable of saying that, in a specific case, they couldn't find a woman or a black person for a position considered important...

MERCADANTE – Let's talk about real situations. Anyone who can remember the list of ministers in the Temer government should make a mental effort and answer some simple questions for themselves: do all ministers hold their positions because they are very well prepared? Do they all have complete mastery of the subjects of their ministries, which, incidentally, have become even more complex and difficult now that a minister will have the duty of managing? Are we perhaps facing a ministry of notables, perhaps special citizens, privileged minds capable of formulating answers to the difficult problems that Brazil faces? Just asking these questions is enough to understand what is really at stake.