Currently, Brazil is in a moment of economic recovery after the strong impact of the Covid-19 pandemic. Now the country is looking for new ways – such as casinos – to reheat the economy and generate even more opportunities for Brazilian citizens.
Many ideas emerged in the midst of debates about new paths to be followed to strengthen the national economy, such as investment in tourism, gambling and education.
The Founding Partner and Chief Investment Officer (CIO) of Empiricus, Felipe Miranda, recently published an article on the website ‘Seu Dinheiro’ where he talks about some ideas to revive Brazil’s economy, citing the great potential of casinos for the country.
Check below the news about casinos and the economy of Brazil
Under a dose of generosity and a compliment that is certainly exaggerated, Congressman Luciano Bivar mentioned my name in the opening speech of his campaign for president last week.
With the transparency that has always permeated my relationship with the subscribers of Empiricus and the readers of this Day One, I use this space to address the matter, clarifying my involvement in the process.
A project in the economy
In an absolutely republican and constructive way, Congressman Bivar asked me to contribute ideas in favor of a liberal project in the economy and in customs.
I have always been an obsessive student of economic theory, but I define myself as a practitioner. I would never allow myself to engage in postures such as: “We need to help Brazil; so go there you”.
I could never refuse an invitation to, within my limited possibilities and with great humility, try to contribute ideas to our country, even more so in the face of a programmatic alignment in favor of a modern development model, based on market forces and with the valorization of the figure of the entrepreneur and of a speech of national union.
Ideas for a government plan
It was in this spirit that I wrote some ideas that, in my opinion, could serve as a sketch for a possible government plan.
My principle is to maintain dialogue with all spectrums and shades of society.
As a disciple of Sextus Empiricus, a staunch defender of the dialectical clash between thesis and antithesis and, at the same time, raised in the Jesuit tradition of vocation, I answered the hopeful call that if the ideas presented here could, in some way, be being debated with depth whether in the first or second round of elections, I will have already made a small contribution.
It matters much more to influence the debate. More than names or personalities, we will discuss ideas and institutions.
The sun will always be the best detergent
Under these premises, I share here what I wrote as a first draft. The sun will always be the best detergent.
I make a final clarification, perhaps unnecessary, but I prefer to err on the side of excess in this case. Although I accepted the invitation with responsibility and respect, there is not, and will not be, any party affiliation on my part.
I have an unrestricted and visceral commitment to Empiricus, Vitreo, their employees and their customers — I treat it like family; and there is no way out of our own family.
Ideas for Brazil
Here are some ideas for Brazil:
Union for modernity – The Brazilian FAS
This document aims to restore prominence to what should never have ceased to be the center of the debate: Brazil.
Faced with polarizations and ideologies that are often radicalized, the lives of Brazilians no longer receive due attention.
We will give them a project, not with naive expectations or false hopes, but with the confident humility that a better country can be built, anchored in the science and virtues that have so characterized this territory and its population.
Our Yoruba vitality combined with technical rigor and scientific spirit can — and must — be above the hate speech and division in which Brazil finds itself today. Between Flamengo people and people from Rio de Janeiro, Corinthians and Palmeiras, we are all the same people.
The program is anchored in three principles: union, modernity and freedom.
Freedom
Here, freedom is understood as a broad concept, without restrictions, because, by definition, when we imprison it in a certain spectrum, we lose the ability to be entirely free.
One side of the polarization defends economic freedom, while being reactionary in customs. The other is liberal in customs, but backward and controlling of the economy. Freedom in one field bumping into prison in another.
We must bring the two sides together, giving them what they lack and governing for all Brazilians, as the great statesmen do, without hatred for the different, heading on the path of modernity.
Freedom must be unrestricted, in Economy and in customs. It aligns with good economic and social development, but it is more than that: a value and a philosophy. The economy can be free, open and modern. People too.
The pragmatic measures, defined under the support of science and empirical evidence, could be summarized in the acronym FAS, representing Fiscal, Environmental and Social responsibilities.
Responsibility and union
There is no hierarchy among these responsibilities. They need to walk together, because only then can they be effective and sustainable in the long term, leaving a better country for the next generations and for ourselves when we get older.
We start with fiscal responsibility. There is no intention here to devalue previous works. There is no monopoly on virtue. We arrived here on the shoulders of giants and we must praise the achievements.
However, even with the good macroeconomic achievements of the last decades, we need to face the truth that we have failed to promote Brazilian fiscal consolidation, build an efficient state and give the trajectory of the national public debt a credible and convergent trajectory.
Trust and debt
If there is no confidence that a particular institution – be it a person, a company or a nation – will be able to honor its financial commitments, nothing, absolutely nothing, can be expected from it.
A State whose debt only increases scares away investors, entrepreneurs, technology and the citizens themselves, whose privileged brains, cut off from hope for a fruitful future, flee abroad.
The heavily indebted country will also not be able to take care of its environment, nor to solve its social problems. Debt cannot be repaid with more debt. Nor with words, as Shakespeare taught us.
The state and investment conditions
The material conditions for investment must be created for the State, in infrastructure, in social spending and in the preservation of the environment. Not as an intervener, entrepreneur or guide in capital allocation choices.
But a State that fulfills the essential role in a thriving capitalist economy, that is, one that respects contracts, values private property and obeys the signals of the price system.
The State creates the conditions for these three guidelines, while obstinately pursuing equality of opportunity and recognizing the social responsibility it faces.
Macroeconomic management
The essence of macroeconomic management involves recovering the canonical tripod: a system of inflation targeting, floating exchange rates and primary surplus targets, with the objective of eliminating the nominal deficit in a few years — we had this opportunity in the past, in the proposal that was nothing rudimentary; we have to take it back.
If the spending ceiling proved to be important for a period, but did not in practice stand the test of time, another fiscal anchor is immediately needed: primary surplus targets, as a state institution (not government).
The perception of a responsible State with its spending and with a credible trajectory for its public debt will attract international capital, increase the capacity for public (because there will be money for that in the future) and private investment.
The fiscal responsibility
We will migrate to a new macro equilibrium regime: the controlled fiscal puts less pressure on inflation. Interest may be lower. The capital market develops, the exchange rate is more devalued, local products gain international competitiveness, domestic industry gains share abroad.
To this Fiscal responsibility, one must necessarily add the Environmental one. This should be perceived as a business, economic and social development agenda.
The world today is experiencing a rapid and accentuated energy transition, ESG dominates the international agenda, stakeholder capitalism gains space over shareholder capitalism.
Instead of fighting this agenda with rhetoric and ideology, Brazil should embrace it, as the protagonist of this green wave, with its low-polluting energy matrix, its second-generation ethanol, its (still incipient) hydrogen capacity, its carbon credits and its Amazon.
Carbon market and ESG
The carbon market is a separate chapter. Brazil should lead efforts to strengthen carbon credit as a commodity, with a strong regulatory framework and a thriving private market, with trading on the stock exchange of this future movable asset, both in the generation, distribution and transmission of the product.
Climate change is one of the secular megatrends abroad. With our privileged position, we can embark on this business agenda and bring great economic and social development, with special emphasis on the northern region of the country, based on a sustainable business agenda for the Amazon.
In addition to the immediate and concrete effects of this effort, adopting a strong and true guideline on the environmental issue, such as a sustainable business and entrepreneurship agenda, will reposition Brazil abroad.
If today the country’s vision is that of an international pariah, leading the discussion on the energy transition and in favor of the Green Economy resumes a leading role for Brazil among emerging countries.
Window of opportunity in commodities
The time is particularly auspicious for this. There is a huge window of opportunity in front of us. We must take advantage of it, at the risk of, once again, insisting on being the country of the future, only of the future.
Commodities, many of them produced in Brazil with great comparative advantage (iron ore, soy, cellulose, sugar, etc.), are valued in the international market.
With global production chains in disarray and problems in other producing countries, we can fill a vacuum capable of boosting the generation of wealth. We can be the only reliable source for many industrial and food safety products.
Furthermore, faced with the unfortunate resumption of an arms race in the world and the insurgency of regrettable autocracies, we can be proud of being a country with a long tradition of neutrality, peace, good diplomacy, privileged geographical position (without major natural accidents or war conflicts) and , above all, a large and well-established democracy, with solid and respectable institutions.
Even a faulty democracy will be better than the best autocracy.
Social responsability
The third pillar is social responsibility. The essence of liberal values prescribes equality of opportunity. True meritocracy can only exist if everyone starts from the same starting point.
The statesman needs to recognize the historical social deficit with which we live. Hayek himself, in his original writings, argued for the need for direct distribution programs to those most in need. Hunger doesn’t wait.
In parallel, the long term will be resolved with a broad and deep investment program in Education, with partnerships with the private sector, fostering credit instruments from private companies, introducing meritocracy in the classroom and insertion in the best global teaching practices — further on, some measures for Education, central to our program, are detailed.
Without education, there is no way to meet the necessary productivity gains in Brazil, lost for more than 45 years. The supply side of the economy was abandoned with so many policies to stimulate demand. We forget to feed human capital to give us the necessary worker productivity gain.
Brazil’s development
In order to give tangibility to some of the principles described here, key topics for the development of Brazil are presented below:
Tax reform
Here we intend to pass only the central idea of the text, to be duly published when it is processed. The principles governing the reform include tax isonomy, progressiveness and tax simplification.
As a way of making the system more progressive and in line with the most modern and developed countries, an increase in the income tax rate for the ultra-rich is advocated, as a way of exempting lower strata and serving to finance broader and deeper social programs.
The proposal would also involve redefining taxes on exclusive funds, which today essentially mean tax arbitrage.
Administrative reform
It will also be detailed in due course. Focus on correcting waste with Union spending, excess privileges, super salaries, lack of meritocracy.
Need for efficiency in public management, with appropriation of modern business management methods and digitalization of the public sector.
Privatização
Extensive privatization program, with the allocation of resources already stamped ex-ante, aimed at creating a fund for Education and for programs to transfer income to the most needy.
There are no sacred cows here. We did not find developed states that own oil companies. There are only less flattering examples, such as Venezuela, China, Mexico and Russia.
The state will certainly be much more efficient managing market failures well documented in the economic literature than managing a complex oil company.
Only competition and market forces can give a company the necessary business management efficiency.
We need to move forward with the privatization of smaller state-owned companies, ports, airports, roads, railways, but also large corporations.
It makes no sense to have three big federal banks. The privatization of Banco do Brasil would give another dynamic to the entire financial system, with more competition and more efficient management, lowering spreads and tariffs.
Meanwhile, the privatization of Petrobras, with a special focus and speed on breaking the refining monopoly, would make it possible to strengthen income transfer programs, with allocation to the purchase of gas for the poorest families and a fund for investment in public education.
Cost-Brazil attack agenda
Tax, customs and bureaucracy simplification.
Valuing the figure of the entrepreneur and awareness that the central planner will always do a much worse job than an infinity of decentralized, pulverized attempts under the individual perspective of trial and error.
Thousands of small failures will be offset by the creation of a great success. Only trial and error can allow a new Google to emerge. The rules of the game must help the citizen to undertake and to try.
Opening up the economy
A broad program to open up the economy, with the integration of Brazil into global production chains, the result of which will be the appropriation of cutting-edge technology, exchange of professional experiences and reduction of inflation, through cheaper imported products.
Prioritization of Education
We need to face the inconvenient truth. Brazil is a failure in relative and absolute terms in tests involving education.
The relationships between long-term economic and social development and the education of the respective population are duly documented.
Here, we must promote a real construction of a long-term project for Brazilian Education, but that we can also reap short-term gains.
Among the proposed measures, the following are defended:
- Public-private partnerships for investment in education, with tax exemption for entrepreneurs who allocate resources to education projects;
- Replicate, with humility and pragmatism, winning projects in other cities and states (Sobral, in the case of Inteli, Porto Digital, Technology Center in Campinas);
- Promotion of private student financing (adaptation of the North American model);
- Insertion of Brazil in the best global practices, abandoning a certain closed and provincial regime and adopting the same rigor and proven methodologies that already work abroad;
- Higher class students must pay public university; this money will be used as reinvestment in the universities themselves, which will thus be able to update themselves and walk the frontier of knowledge, retain professors, etc.;
- Foster the creation and development of endowment funds, similar to those in the US and Canada; and
- Check and measure meritocracy in the classroom (better teachers and principals earn more).
Marijuana Legalization
Development of a broad market for cannabidiol with pharmacological and medicinal purposes — a high-tech and frontier industry capable of generating thousands of jobs and saving the lives of people with serious illnesses, who can be well treated with this drug, with gains proven by the science.
But also to release and legalize the recreational use of marijuana, duly regularized, taxed (taxes as high and representative as those of the tobacco industry, with high collection potential) and supervised.
A wide market of cafes, bars and restaurants is created for this purpose, also generating jobs.
The war on drugs has proved to be a major failure on a global scale.
There is enormous violence linked to trafficking and the regulation of use will allow, in addition to economic gains, important social benefits. Sociality is free.
More legalizations
Legalization of gambling and casinos, mainly as a policy for the regional development of the North and Northeast, as in the case of Nevada, USA, whose model will serve as a reference. High collection, tourist and job creation potential.
Brazil and the economy
Brazil is an essentially mixed-race country, whose origin was in the coexistence with the different.
We will have to rescue our own nature, at the same time that we walk towards development, arm in arm with science, without shame of enriching ourselves and free from prejudice.
Free from any other ties, whether ideological, statist or social.
We are all one people, united in favor of a country that, finally, can and needs to move towards modernity.
We deserve much more than the retrograde view in Economics or reactionary in customs.
This is the union for Brazil.
