Pitbull of interest rates asks for unemployment benefits again.

247 - According to economist Alexandre Schwartsman, the "pitbull of interest rates," defending employment is a "cliché." He suggests this in an article in Folha de S.Paulo, stating that Finance Minister Guido Mantega "cannot escape clichés even when the country faces an unprecedented situation." This is because Mantega recently stated that "the generation of formal jobs in the country is as important as, or even more important than, GDP."

Read below:

The minister and the raisins

After the failures of recent years, our Finance Minister, who calls himself a "GDP booster," seems to have given up on economic weightlifting.

Now, says the minister, "the generation of formal jobs in the country is as important as, or even more important than, GDP."

If any of the 18 readers have an epiphany upon seeing the image of a fox disdaining a succulent bunch of grapes, I ask that you not blame yourself for the cliché.

I also went through this and concluded that the problem wasn't mine, but the minister's, who can't escape clichés even when the country faces an unprecedented situation.

Or rather: it cannot escape them, especially when the country faces an unprecedented situation.

In fact, the minister – known in the international press as the predictive elf – had until recently promised accelerated GDP growth and, publicly, downplayed private sector forecasts that pointed to a performance far below what he guaranteed.

Now, finally realizing the exaggerated optimism of his "predictions," he attempts, in a far from discreet manner, a retreat—neither tactical nor strategic, just slow enough not to cause (too much) embarrassment, but fast enough not to appear provocative.

Aside from the embarrassment caused by this sad spectacle, what is worrying is the government's difficulty in understanding what has been happening, particularly the slow recovery of growth in a scenario where inflation remains high and under pressure.

This combination is the typical result of an economy facing supply-side constraints. It's important to clarify that this is not about the so-called "supply shocks" to which some still attribute (against a mountain of evidence to the contrary) the acceleration of inflation.

These limitations reflect more serious and persistent problems, such as the depletion of the available workforce, which enabled the acceleration of growth from the second half of the last decade, as well as the reduced level of investment, particularly in infrastructure.

Put another way, recent performance suggests that Brazil's capacity for sustainable growth is far lower than we had imagined.

However, if there are economists capable of understanding the problem, they are not in the Ministry of Finance, which remains stuck in the view that attributes weak growth to deficient demand.

It is for this reason that the measures taken to accelerate economic expansion focus precisely on demand, such as incentives for consumption and a considerable fiscal expansion, whether through tax breaks or increased federal spending, with an emphasis on current expenditure.

And, not surprisingly, they failed miserably in the task of bringing growth to anything close to the level the government had set as its goal at the beginning of its term.

Without the grapes of GDP growth, all that remains, therefore, are the raisins of unemployment on the list of government achievements.

Not bad for someone like me who appreciates them, but then we need to know if the feat is sustainable, or if, on the contrary, it ends up generating new problems that make its permanence unfeasible.

In this case, as I have had the opportunity to argue several times in this space, the rise in wages due to a tight labor market, at a rate far exceeding productivity growth, has been one of the main factors driving inflation.

Despite this, it is very unlikely that this issue will be addressed, especially on the eve of the election.

That being said, economic theory and historical experience suggest that this is an unsustainable situation. Attempts to keep unemployment low at the cost of high inflation only produce more inflation without sustained job gains.

Sooner or later, even raisins will turn sour, and no fabulist will be able to write a convincing story about Brazil's performance.