Aécio's guru, Malan, attacks Dilma's economy.

247 - Senator Aécio Neves' economic team is slowly starting to rehearse its discourse. This Sunday, former minister Pedro Malan, one of the advisors to the Aécio team, harshly criticized the economic model of the Dilma government. He specifically questioned the rules of the electricity sector, which he said would inhibit future investments, and the alleged inefficiency of Petrobras – according to him, the only company in the world that loses money when it sells gasoline. Malan also questioned the Manichean nature of the public debate and the division of analysts into schools of thought that, he says, have lost their meaning. Read below his article originally published in Estado de S. Paulo:

Time will tell. Or not. 

PEDRO S. MALAN

Coincidence or not, the symbolism is significant: the federal government chose two September 7ths (2009 and 2012), our Independence Days, to announce important changes to the concession regimes in the oil and electricity sectors.

In the case of oil, as I noted in a previous article, "let's leave aside a fundamental question: was it really necessary to completely change the 1997 Petroleum Law just to increase the government's share in the pre-salt reserves?" (Something that the concession regime, adapted, would already allow, experts say, through an increase in the "special participation" for the new fields.) But the relevant issue, after the controversial decision to change the regime, became the viability of investments for the undertaking, especially with Petrobras having to assume the position of operator, with at least 30% of all pre-salt fields to be explored.

Opinions aside, the facts are that the regime change delayed the process, that there haven't been any bidding processes for any area in four years, and that Petrobras, as Adriano Pires noted, is the only large company in the world that, despite oil prices exceeding US$100 a barrel, loses money when it sells gasoline (whose consumption increased by 60% from 2008 to 2012), because it pays more for the gasoline it imports than it receives for the gasoline it sells, since its prices are controlled by the majority shareholder. And this certainly affected its investment capacity. Investments that would have increased from US$174 billion (2009-2013) to US$225 billion (2010-2014 and 2011-2015) to US$236 billion (2012-2016). The Treasury would need a lot of money.

On September 7, 2012, President Dilma Rousseff announced changes to the legislation regarding the electricity sector. The federal government has the right, established by law, to renew or not the concessions of power generation companies when their contracts expire. It was known that several important concession contracts were expiring in 2015-2017. The government, seeking the meritorious objective of reducing the cost of energy, decided to propose the early renewal (for 2013) of concessions to generation and transmission companies that agreed to immediately reduce tariffs (2013) to the levels desired by the government itself.

Once again, the fundamental question, as with oil, is: will the new rules contribute to increasing investor confidence in the power generation sector? In particular, and to put it another way, will the new tariffs (20% lower), as established, allow companies to cover their operating and maintenance costs – in addition to making the investments necessary for the expansion of their businesses? Some say yes. Others say that the federal government will, sooner or later, have to capitalize the Eletrobrás power generation companies, which followed the guidance of its controlling shareholders to reduce its revenue by more than 20%. And there are new risks. The Treasury will need a lot of money...

The cases of oil and electricity are not isolated. Similar problems exist in other areas, such as ports, airports, highways, railways, high-speed trains, sanitation, and water supply. The role of the State and that of the private sector continue to be a subject of endless controversy within society itself and, certainly, within the government itself, where different positions on the subject coexist. This perhaps contributes to confirming Luís da Câmara Cascudo's joke: "Brazil has no problems, only postponed solutions."

At times like these, an effort to improve the quality of public debate is crucial. Just four observations on this matter.

First, there shouldn't be a left-wing, progressive, and developmentalist macroeconomic policy opposed to a right-wing, monetarist, conservative, and "neoliberal" macroeconomic policy. In fact, in each context there is a spectrum of macroeconomic policies that are more or less appropriate from the point of view of their intertemporal consistency. And there is a legitimate professional debate about the degree of responsibility, coherence, and credibility of a given policy.

Secondly, in my opinion, when discussing, in good faith and in practice, the effectiveness of a specific public policy in a defined area, be it education, health or security, there should not be a left-wing, or progressive, or developmentalist position in Manichean opposition to another position of the right, or fiscalist, or "neoliberal".

Third, there are clear limits to the accelerated expansion of government spending, even when justifiable as fundamental to reducing social injustices and mitigating the cyclical effects of economic crises. As Luiz Felipe de Alencastro wrote, "the idea that social justice can be achieved at the expense of state actions has reached its limit. It is necessary to seek new paths and mobilize society in an environment where market mechanisms also operate."

Fourth, it is intellectual dishonesty, as well as a lack of ethics in public debate, to attribute to individuals, and to supposed schools of thought to which they belong, the disregard for economic development and social inclusion, because this "concern" has supposedly already been appropriated and transformed into a monopoly by self-proclaimed "social-developmentalists." We recently witnessed an attempt by a party to appropriate the monopoly of ethics in politics. It led to what it led to. Facing the difficult challenges ahead would be more effective if we could waste less time, talent, and energy on false dilemmas, simplistic dichotomies, dialogues of the deaf, sermons aimed at the already converted, and meaningless labels, except for militants eager for slogans.

Brazil deserves better in terms of the quality of public debate. And I think that, despite attempts to the contrary, we are making progress.