#courruption

With such a large base of poor, just a small improvement of purchasing power can have a big impact in GDP. But this incrementality is not limitless. It's like the poor went from being very poor to just poor.

Today Brazil is energy independent. Petrobras is a quasi-governmental agency responsible for overseeing the rich reserves of oil located just off shore. Much like the oil-rich countries of the Middle-east, Brazil is enjoying these benefits and positively adding to its GDP through this sector.

Within the past few years, the availability of credit for a wider variety of consumer goods is now available. This credit has been extended to the middle class and the poor. So there may be a false sense of purchasing power and growth (as Americans painfully know).

So in the end, it is difficult to determine the precise cause of this growth but instead it is likely a combination of these factors all working together.  

Despite all this positive economic momentum, I had many conversations with Brazilians who lamented the system of practical injustice that seems omnipresent and almost considered a Brazilian fact of life. Some of the stories I heard through my discussions:

Business Owners: Specifically Pousada owners (i.e. small inn). I heard more than one story of owners having to deal with regularly needing to offer "payments" to government officials for cooperation in the course of renovating their property. The bribe would be the easy solution to avoid the work stoppages the officials would impose with the reason being fictitious code violations. Or another approach would be for officials to highly suggest the inn owner use an "approved" contractor who in reality was a friend of the official and of course would be giving a kick-back. 

Teachers: On my first night in Rio I stayed in a neighborhood adjacent to downtown in which many thousands of teachers came out to protest the continued low wages and the abysmal financial support for the country's primary schools. At the core of their argument was why the country was willing to spend millions on infrastructure and promotion for the World Cup next year and the Olympics in 2016. The question is why not invest a fraction of this money in educating its youth? One teacher that I had the pleasure of meeting had extensive professional experience, a graduate degree, and teaches at a graduate level. She is only paid the equivalent of $30-$35K per year. For someone who lives in Rio (as she does) this wage is unacceptable. By comparison, politicians at the state and national level are paid five to ten times this much and have generous allowances for all living expenses such as housing, healthcare, education, travel, security detail, etc. 

The government seems to be remiss to address teachers' concerns citing that teachers knew that the salary was low when then decided to pursue this profession. That's a pathetic argument. Many theories abound as to why this country which has so much potential for the legitimate presence on the world stage stubbornly refuses to invest in education (or health care too for that matter). The most consistent one I heard was that is it not in the government's interest to have an educated populace. With education comes critical thinking and eventually collective advocacy for fundamental change (i.e. government reform). 

The government isn't stupid. It recognizes that it needs to give on some things in order to keep the status quo. In all likelihood the rise of the Arab Spring and the ubiquity of the internet is giving them cause for pause. That is because the concept of public protesting is not customary to Brazilianian culture but in recent years this has begun to change. So, how does the government keep its people happy (or not angry) and therefore under its control? Answer: parties and sports. 

While there is supposedly not enough money for improvement in healthcare or education, there seems to be enough money to adequately support Carnival and football (i.e. soccer) stadiums. It's classic deflection - distract the people of their woes with entertainment and things that allow them to invest their emotions in something else. 

Carnival is a two week long celebration that leads up to Ash Wednesday every year. It is the biggest event in Brazil in which there is dancing and a grand display of pageantry. Typical hallmarks are dancing, drinking, and minimal clothing. For Brazilians, the preparation for Carnival is almost year round and requires an investment of a lot of time and energy or at least mounting anticipation. When it finally arrives it turns out to be a very unifying and uniquely experiential event. So it becomes difficult to express frustration at the government when you are too busy having so much fun!

The other passion for Brazil is soccer. Allegiance to a team is a tradition that is passed down to new generations. The emotions that are invested in following a favorite team can range from euphoria to deep sorrow with tears shed. I had the opportunity to attend a soccer match at Maracanã stadium in Rio and experienced the revelry first hand. Never in my life have I witnessed such dedicated fans! The cheering and chanting during a regular Thursday night game never ended. 

The government leverages this irrational exuberance to its advantage. It dedicates funds to maintain stadiums as a demonstration of investment in Brazilian culture. One recent renovation however has proven to be controversial. The government spent $500M (US dollars) which included about 20% cost overruns to renovate Maracanã in preparation for the 2014 World Cup. In the course of this renovation they changed the seating layout, effectively eliminating space allocated for very affordable tickets. Now ticket prices are higher and prohibitively costly for many. When I was there the stadium was only filled to 15-20% capacity.