ECONOMIC ANALYSIS DANGER 6

SURVEY OF BRAZIL PART 6  END

VI- CONCLUSION: BRAZILIAN NATION’S DUTIES

1-Lesson for western countries:

Governments in western countries tend to believe the continuous requests from Corporations to limit salaries, taxes and social contributions when they state that they are the source of their economic troubles.

Brazil demonstrated that despite a quasi free workforce, Corporations complain also of the too heavy wages and social contributions. This underlines that these requests are more linked to the absence of Ethics in Corporations and Economic systems in general than to real economic imperatives for survival.

The problem of corporations is also often a matter of lack of managerial competence and greediness regarding profit margins. In Brazil the consequences of it, are high prices and poverty in a context of big discrepancy of revenue repartition.

2-Recommandations to BRAZIL

Brazil is now practically free of the past huge external debt burden, has stabilized its currency and has a positive trade balance. Its balance of payments enabled it to accumulate substantial international Reserves (more than one year of imports). Brazil will probably benefit of additional oil revenues and must start now a real development benefiting to its whole population in line with a more careful respect of Human Rights.

A real substance should be given to GDP in order to be tangible for the whole population.

The European conception of Human Rights is a good guideline since it includes clearly the right of people to welfare. This access to welfare would be eased by a better organization of the current Federation including a stronger federal power.

Brazil means 200 million of people, whose rights are above the prerogatives of the numerous States, which affect the Nation Governance’s efficiency and then the lot of citizens.

The solution to poverty and to its related disorders is not the increase of Police forces as it is projected for Olympic Games security, but the elimination of high poverty.

Brazilian people should not be anymore squeezed between low revenues and high prices.

The Authorities participate to maintain poverty despite few improvements by determining an insufficient minimum wage to survive and by imposing a complex and heavy system of indirect taxes which penalize the poorest people in priority.

Optimal application of resources is a duty of Government in front of the People and the current organization deprives the Federal authority of the necessary tools.

The authority should not listen to corporate requests for reducing social contributions and limiting minimum wage since Capitalism is only an economic process which excludes all moral considerations.

Brazilian corporations benefit of almost free workforce and are not sufficiently competitive as this would be easily achieved by any western company, which make high profits with much higher wages expenses. The reason might originate in a managerial incompetence and in an insufficient reinvestment of too high profit margins. 

National authority should control more stringently the level of profit margin, the reinvestment to cover capital expenditures and final prices determination process in a real competitive market. Competition does not seem efficient enough to reduce prices.

Size of local corporations should increase in line with country. This policy may be expected from a renovated powerful executive federal authority, which should also make necessary steps to finish with the underground economy.

Substantial increase of minimum wage and higher “DIRECT” taxation should be applied to reduce the Gini Index to a decent level. Authorities should not surrender in front of blackmail of Rich people who may threaten to transfer their money abroad. 

Low level of wage which does not permit survival could be named “Slavery”. On top of this legal slavery, the real slavery still exists in Brazil: 6 000 slaves were freed by the Police in 2007. Slavery is in the roots of Brazil and it is time to clean this dark aspect of Historical traditions.

Poverty and Favelas are everywhere in Brazil and generate insecurity which is also a signal for an urgent solution. Brazil ranks number 3 in the world for criminality with 55 000 murders per annum. This affects also Tourism, which might be a much bigger resource for Brazil, when foreign countries will stop to feel oblige to discourage their citizens to travel to Brazil.