The Brazilian Saga

You can read hundreds of news stories and dozens of books about Brazil's global rise as an economic powerhouse, but I've read few books that come close to putting in such sharp perspective how far the country has come as with Saga brasileira, by one of Brazil's most famous economy reporters, Miriam Leitão. There's a possibility you have opinions on Leitão, but either way, it's worth putting them aside for the sake of the book. While I think it could potentially be interesting for Brazilians, especially for econ nerds and those who were born after the worst of the economic crises, it may not be that much of a revelation. But for foreigners who work with Brazil, live in Brazil, or have any sort of interest or stake in Brazil, you really should read this book.

First, just be warned that it is heavy on lots of economic nitty gritty details, though fortunately there are interesting narratives in between. The other thing to know is that there were occasionally times where on one shoulder, there was a little Alex Castro, rolling his eyes and muttering "Classe média sofre," and on the other, a little Reinaldo Azevedo, yelling in all caps "QUE PAÍS É ESSE?!" Because there are some parts where, for example, the author tells anecdotes about families who suffered from the country's economic woes that you don't feel terribly sympathetic to, such as a couple who couldn't take their honeymoon in Bariloche and instead had to take it in Brazil--a story she mentions not once, but twice. This is a book written by someone of privilege for people of privilege, and that's very clear, so you just have to take it in stride. But there are also some shocking tales, such as grocery stores running out of stock during they hyperinflation years, or of just how disorganized the country's federal financial institutions used to be, that are quite eye-opening. And the last thing to keep in mind is that as far as non-fiction goes it's not the greatest; the narrative doesn't always seem to be coherent and sometimes skips around a bit, but this is the type of book you can read gradually in little chunks. (Also, it's in Portuguese, and I don't think there's an English translation available.)

The moral of the story is that Brazil's economic rise stems from finally succeeding in creating a stable currency, a long-fought battle after years of hyperinflation and 8 different currencies since the 1940s, as well as the battle for economic coherence and reforms in the federal government. Leitão touches on other important factors as well, including a drop in fertility and the creation of key social programs. She also puts Brazil's rise in historic perspective, demonstrating that it was a much longer process than commonly belived and that the country experienced other consumer booms in the recent past. But it really is worth dedicating a book to the fight for a country's currency, a fascinating and sobering tale that really is foreign to those of us who haven't experienced hyperinflation.

For Americans in particular, the concept of money is something practically sacred; despite the 2008 crisis and other economic busts, it's pretty much unthinkable to imagine using anything else other than the dollar. But in my lifetime, Brazil has gone through six currencies, from the cruzeiro (1970-1986), to the cruzado (1986-1989), to the cruzado novo (1989-1990), back to the cruzeiro (1990-1993), to the cruzeiro real (1993-1994), and finally, to the real. The story of how Brazil "won" its currency and beat hyperinflation, as well as the brilliant plan to make the switch to the real, really is an incredible saga.

It's hard to imagine what it was like during the time of triple-digit inflation, but Leitão gives you a pretty good perspective. Housewives would have to use price tables to figure out the values of food at the supermarket, which during some periods changed daily. In 1993, the minimum wage was initially set at 4,693,800 in cruzeiro real, but was the equivalent of US$64. Because inflation rose so quickly, "people lost the notion of the connection between the value and the price," Leitão explains. She recalls buying a VCR for 470,000 cruzados in 1988 and buying another VCR for 18,000 cruzeiro real in 1993, and of having credit card bills of over 1 million in 1985. "We lived in the Middle Ages," one businessman remembers. Meanwhile, a bank manager who was arrested when her branch ran out of cash in 1990 commented to Leitão, "Brazil hasn't had a war? It has, yes--a psychological war. We all participated in the war of the economy."

Leitão closes the book quite beautifully, explaining that it's not only important to remember and reflect on Brazil's economic past, but to learn from how Brazil treats its history. "Brazil has a strange tendency to erase the brightest colors of its history, as if it needed sepia tones to recognize itself as [having] a cordial people. But our merit is another: to overcome our traumas, even when they are difficult and painful." She warns that one of the real enemies is complacency, and that it was a mistake to accept rising levels of inflation, just as it is a mistake to accept corruption today. "We lost the notion of value and price in the economy during hyperinflation, like today we are losing the notion of values and preserving the quality of our democracy. We are not condemned to clientelism...nor to corruption."

Because there's so much to discuss from the book beyond hyperinflation, I'll come back to it later in separate posts about specific topics about Brazil's transformation.

Comments

[Rodrigo]

Awesome review, probably I'll read this book now (I was avoiding to do it 'till now becouse i really don't like Leitoa :)

[Alexandra]

I remember those days. We used to go to the groceries for the entire month the day my dad got paid because if you bought food every week, the prices would go up. I have vivid memories of my brothers and I pushing one of the 3-4 huge grocery carts of food that we would buy.

I also remember one of my first job, at a video rental store in 1993. At the time, inflation was about 40% a month. My boss would spread out the different and rental prices would go up 20% every two weeks. The biggest deal in the store was to pre-pay 10-30 movie rentals so that you wouldn't have to pay higher prices.

And then the real came. And the first day we had the actual currency in our hands was a bit heady. I remember my mom sent the maid to the grocery store to half a kilo of tomatoes. My dad gave her one coin, worth 25 cents. She looked at it and asked if that would be enough. My dad explained that tomatoes were 40 cents/kilo; that was more than enough for half a kilo. She might even be given some change. It was surreal to those of us who grew up in an age in which coins had no value.

[Steve]

I also lived in Brazil during the hyper-inflation days. I didn't really experience it like the Brazilians did because I was paid in dollars into my US bank account while teaching in an American school. We used to see clerks in the store with full time jobs doing nothing but changing prices. We tried to buy the cheaper stuff before they stamped the new price on it.

My friend bought a Ford Corcel brand new in 1981 or 82 (I can't remember) and by 1984 a tank of gas cost more than he paid for the car.

The day I bought my car I paid US$900.00 too much for it by selling my dollars in the morning instead of the afternoon because the value of the dollar went up in the afternoon. I had been waiting but got impatient - very American, but you couldn't always tell when the jumps would take place. You waited for gas to go up, or an announcement that it was going up, then everything else followed.

My now father-in-law was self employed and whenever he received money he tried to buy anything of value as fast as he could (a TV, VCR, Camera, a pallet of blue jeans), anything he could resell later. Stuff was worth way more than money.

I have many stories like this. My apartment lease was a little over US$125.00 per month at the beginning of the lease (across the road from Praia do Futuro in Fortazeza - already a good spot). By the end of the lease I was only paying about US$45.00 per month.

Brazilians have always learned to "work around" the government. That's one of the reasons I believe they're finally thriving in what is still one of the most heavily regulated economies on the planet.

[Bill]

Is this book translated into English? Really interested in reading about this...