How Brazil has reduced income inequality: a Q&A
Teresa Campello is Brazil’s social-development minister and an architect of the country’s program to eradicate extreme poverty, called Bolsa Familia, or Family Allowance. In an interview, she tells how it works.
McClatchy Washington Bureau
WASHINGTON — Brazil is confronting numerous challenges this year, from international investors fleeing developing nations to the slowing economy in China — a major trade partner — to local protests over Brazil’s preparations to host the World Cup in June.
None of that fazes Tereza Campello. She’s Brazil’s social-development minister and an architect of the country’s much-praised decadelong program to eradicate extreme poverty, called Bolsa Familia, or Family Allowance. The cash-transfer program pays the rural and urban poor small sums in exchange for their keeping kids in school and receiving government health services. Dropout rates and infant mortality have declined sharply as a consequence.
Campello is part of a small group that converted a leftist party into Brazil’s mainstream Workers Party, which has won the past three presidential elections. She met with McClatchy recently, and evidence of her status was clear when she interrupted an interview briefly to take a call on her cellphone. It was Dilma Rousseff, Brazil’s president.
Campello fielded a wide range of questions about South America’s largest economy. Here are her answers, edited from the original Portuguese for brevity.
Q: Here in the United States, income inequality is a big issue. In Brazil, you’ve narrowed this gap?
A: The reduction of income inequality that’s existed forever in Brazil happened in a short period. Ten years is not sufficient to eliminate 500 years of inequality, but we will not need 500 years for this to occur. (As one example, she cited Brazil’s minimum wage, which has increased 72 percent above the rate of inflation since spring 2002.)
Q: Is economic growth the reason for this narrowing of the income gap?
A: Brazil grew in some periods at very high rates: the 1960s, the sugar-cane cycle, the gold cycle, the coffee cycle. We had growth at scandalous rates, and never in our history managed to grow and lower inequality. This had never been done, and it did not happen because of growth. Reducing inequality requires political decisions.
Q: Investors have been leaving Brazil and other emerging markets. Is this going to force budget cuts, particularly on social programs?
A: We have made a strong decision that social areas will not be cut. I think the message that Brazil brings to the world is that notwithstanding an international crisis, the option of cutting social spending and reducing protection (for the poorest) never led us to growth. ... A decision to cut spending on the poorest, in our opinion, only leads us deeper into problems. It is not a sustainable decision, or one for the short term either.
Q: So your Bolsa Familia program is safe?
A: Look, do you know how much Bolsa Familia costs? It’s 0.46 percent of GDP. (Campello offered the numbers that for every dollar the program spends, it boosts economic activity by $1.78.) Cutting the spending will only hurt our collective internal market. What would the benefit be? To the contrary, this spending is a boost to (national) income. It has a better distribution within national territory.
Q: A lot’s been said about China’s slowdown. Brazil exports a lot there. Are you worried?
A: China’s slowdown is not a problem for Brazil; it’s global. I don’t think it’s a question for the Brazilian government. The transformation that happened in Brazil over this (10-year) period happened despite that the world was in crisis, while there were opportunities elsewhere.
Q: What was behind last year’s nationwide anti-government demonstrations over spending to host the World Cup?
A: People went to the streets for completely different reasons. When you asked each one of them what their motives were, they gave varied reasons. There was disinformation — and errors in our government communication. People thought the government was using treasury revenues or their own (tax) contributions for the building of stadiums. That is not true. These stadiums, most are private. They are getting financing. They did not take revenue away from health and education for stadiums.
Q: But isn’t the Cup, and later the 2016 Olympics, forcing Brazil to spend?
A: The cool thing that the Cup will leave for Brazil is a legacy ... for urban transport, urban mobility, airports and ports. We will have finished the Cup having made investments in areas of which everyone has complained (for years). ... The Cup, truthfully, is a motive for getting these things done.