"Expansionary fiscal austerity" mandated. Another reality show in the making.
ALFREDO SAAD-FILHO: This constitutional amendment, as you explained in your introduction, limits government spending in all areas by the Federal Executive, by the Legislature and the judicial system to spending this current year plus the rate of inflation for the next 20 years. This is what it is intended to do: the idea is to limit the government deficit and to provide credibility to economic policy in Brazil.
Paging the confidence fairy.
Real News Network
Brazilian President Temer Signs Constitutional Amendment Imposing 20 Years of Austerity
Sharmini Peries interviews Alfredo Saad-Filho, Professor of Political Economy at the School of Oriental and African Studies (SOAS), University of London, and formerly a senior economic affairs officer at the United Nations Conference on Trade and Development
3 comments:
One possible excuse for that deflationary "unemployment creating" policy is that politicians in some South American countries are so irresponsible that they can't be given free rein with the printing press.
That policy is a bit like Milton Friedman's monetarism (at least the version he advocated in his 1948 American Economic Review paper). Going from memory, he said something like governments are so hopeless at fine tuning economies that we might as well forget about it and just have the same annual increase in the money supply.
As Brazil's history tell us, political leadership knows how to be irresponsible both with and without the printing press. It doesn't seem to me that the printing press is the problem...
I have only superficial knowledge of Brazil, but it seems to be hat Brazil is a huge country with lots of moving parts and much asymmetry. Governing it would be a challenge even for brilliant people who know what they are doing, but like many emerging countries Brazil is beset with corruption and most leaders are pretty clueless about economics. As a result they are unable to distinguish good advice from bad.
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