The crisis in Brazil

Spending a week in Brazil in the middle of this crisis is really interesting.  There is so much going on and so many layers.  As an academic told me today, there are quite a few actors following their own agenda and nobody thinking about the national needs and priorities.  You have:

• An unpopular president in the midst of a serious corruption scandal that she probably knew about.
• A former president coming back to the government for different reasons (some more justified than others).
• A judge who is behaving in the worst possible way: spying on the President of the Republic and then publicising conversations is unprecedented.

The lack of social trust is particularly striking: nobody is willing to give others the benefit of the doubt or respect the institutional framework.  As a result, you have the left warning against a coup, a judge behaving unethically in his thirst for glory and the press adding fuel to fire.

A very interesting aspect of the last few days is the characteristics of the demonstrators.  I realise that there were millions in the street and that Dilma's opposition goes beyond class lines.  Nevertheless, it was clear walking in the Avenida Paulista and watching TV that a large share of the people in the demonstration are part of the upper middle class.  They may have two agendas (anti-PT and anti-corruption).  One is obviously much more positive than the other.  In fact, I wonder if we can place a  the preferences of this group and others in the following two axis:

	Pro-redistribution	Anti-redistribution
Highly concerned with corruption	“Idealised” middle class	Upper middle class
Less concerned with corruption	Non-organised poor	Traditional elite

My hypothesis would be that the current protests are driven by the upper middle class, who has no interest in redistribution and will vote against it.  Moreover, I wonder how big and how mobilised the "idealised" middle class (which is the one we tend to imagine appearing and contributing to democracy and equity) is and whether they will play any role in upcoming months.  In fact, a deeper crisis of the PT could further weakened the chances of having that kind of middle class in the future... or not?

Three key steps in policymaking

I had a great conversation with people from IPEA today (more on social policy trajectories later) and one thing became clear.  When thinking about policymaking, I think we should consider three different steps:

1. Agreeing in the objectives we want to achieve (e.g. universal social policy).

2. Agreeing in the existence of different trajectories to achieve that result but also on the right one in each specific case.

3. Identifying the KEY constraint (binding constraint in the terminology that Rodrik and others introduced about growth a while back) and begin by trying to overcome it.

These steps are probably very clear in the policymaking academic literature... but they are too many times missing in real life debates!  In fact most often there is lack of clarity about objectives and instruments and, more importantly, about the best way to start.