Brazil- The perfect example of the failure of the left.

Brazil- The perfect example of the failure of the left.

Dilma Roussef’s accumulation of debt has led to Brazil’s debt being downgraded to junk status. Days later, Joaquim Levy, the finance minister, resigned, and effectively gave up, amid the chaos. Brazil was once a booming upcoming Latin American economy. Now, their economy is predicted to shrink by 3% in 2016, a lot less than in 2015.

The public debt is at 70% of the GDP. Public debt is huge! Mrs Roussef spent huge amounts of money on higher pensions to grab the votes of the elderly, expanding social security and spending unwisely and inefficiently, and 90% of public spending is protected from spending cuts. The fiscal deficit has swelled from 2% since 2010 to 10% in 2015. This has led to high interest rates at 7% of the GDP. Inflation is rampant, at 10.5% every year, due to mismanagement by the central bank. The minimum benefit is the minimum wage, and the minimum wage has risen by 90% (accounting inflation) in the last few years. People in Brazil, throughout their lifetime, on average, retire 10 years before the average OECD country. Brazil pays 12% more than Japan to pensioner, despite Japan’s older population.

It takes on average 2600 hours a year to comply with the Brazilian tax code. The average in Latin America is 356 hours. Outdated labour laws mean it is difficult to fire incompetent employees, which goes some way to explaining why Brazil has the fourth lowest productivity rate in the OECD.

Now what are they forced to implement? An austerity programme of course, and a much more painful one due to their excessive commitment to Keynesian economics. Now they want to inflate their way out of the crisis, meaning the Brazilian population will be tremendously hurt. Their purchasing power will decrease, and their money will be worth less.
Everyone will be poorer.

Do I need to say anymore?