Welfare State and Epistemic Communities of Fiscal Austerity in Brazil: from Lula da Silva to Jair Bolsonaro (2003-2020)

Abstract

This article is based on a theoretical-conceptual framework and empirically grounded research to analyze the construction of discourse and institutional insertion of ideas from epistemic communities of fiscal austerity in Brazil, given the recent upsurge in liberal-orthodox policies and their repercussions for the welfare state. The study explores who these actors and institutions are, how they act, how they are organized, and who trains or finances them. The main objective is to unveil how the ideas in defense of fiscal constriction were formulated and disseminated, starting after the first term (2003-2006) of President Lula da Siva’s government (2003-2010), when developmentalist policies replaced the neoliberal convention. The ideas of fiscal constriction were intensified during the government of President Dilma Rousseff (2011-2016), and gained characteristics of a unified proposal, materialized in the austerity program Uma Ponte para o Futuro (2015) (a bridge to the future). After President Rousseff’s impeachment in 2016, policy-makers in the government President Michel Temer and his successor Jair Bolsonaro rapidly put forward the austerity program. The epistemic communities of fiscal austerity argue that the public policies outlined in the 1988 Brazilian Constitution are the main cause of the increase in spending on welfare, the accelerated growth of public debt, and the probable insolvency of the country.

Development Projects, Models of Capitalism, and Political Regimes in Brazil, 1988–2021

“…Shunned by Brazil’s industrialists, Rousseff dismissed the unconventional economist Guido Mantega from his post as minister of the interior and replaced him with the traditional economist Joaquim Levy in a desperate attempt to please the rentier coalition that had opposed her during her presidential campaign in 2014. After Mantega’s dismissal, she launched a bold fiscal and monetary adjustment that included cutting government spending and raising interest rates (Boschi and Pinho, 2019a; 2019b; Carvalho, 2018; Pinho, 2019; 2021; Singer, 2018). Despite this shift, many of Brazil’s unconventional economists saw Dilma Rousseff’s policies as not developmentalist enough because of their focus on private instead of public investment during a time when household debt and the acquisition of consumer durables had reached their peak.…”

“…In line with contemporary democratic political theory, Wanderley Guilherme dos Santos (2017: 180) describes the Brazilian “parliamentary coup” as a tacit agreement between officials in Brazil’s legislative and judicial systems. It involved systematically sabotaging presidential actions in order to disrupt income distribution policies and create a “coalition that would support a conservative power grab.” After Rousseff’s impeachment, Brazil went through an unprecedented process of destabilization with regard to constitutionally protected social rights, the radicalization of neoliberal reforms from the 1990s, and the resurgence of authoritarianism in the government (Boschi and Pinho, 2019a; 2019b; Fleury and Pinho, 2019; Pinho, 2021).…”

“…Jair Bolsonaro waged a radicalized electoral campaign that was based on fake news and an ambiguous political platform. He came to power with the aid of “epistemic communities in support of fiscal austerity” (Pinho, 2021)—a powerful liberal/conservative coalition composed of media oligopolies, agribusiness owners, industrialists, traditional economists, liberal organizations, and sections of the middle and upper classes that had helped impeach Dilma Rousseff. Bolsonaro awarded considerable decision-making powers to his minister of the economy, Paulo Guedes, who had a doctorate from the University of Chicago and was one of the economists who supported Augusto Pinochet’s austerity policies in Chile during the country’s military dictatorship (1973–1990).…”