The Center That Will Always Hold: Brazil’s Lost Decades

The Brazilian presidential election of 2022 was one of the closest—and dirtiest—elections in the country’s history. After a long and grueling campaign, former president and union leader Luiz Inácio Lula da Silva prevailed over right-wing incumbent Jair Bolsonaro by the slimmest of margins. Lula will now join Getúlio Vargas as the second president to secure a third, nonconsecutive term. Nonetheless, while Bolsonaro may have been defeated, bolsonarismo has shown itself to be a powerful force at both the state level and in the Brazilian congress.

The true victor of 2022’s elections, however, is neither the Brazilian Left nor Right but rather the singular rot at the heart of the country’s democracy: the Brazilian Center (Centrão). There is a reason, after all, why Brazil is often seen as a cautionary tale for both developed and developing countries.¹ Yet the character of establishment co-optation in Brazil is unique. The Brazilian Center can be described as such precisely because it maintains a discrete apparatus of power in the legislature and supreme court. In recent years, moreover, these institutions have been instrumental in the country’s deindustrialization and increased dependence on the export of commodities.

Of course, it’s not quite right to describe Brazil’s establishment as a sophisticated cabal of cunning senhores (gentlemen). The reality is that the Brazilian elite is a chaotic group of mostly contemptible oligarchs. Both Lula and Bolsonaro are themselves an integral part of this elite, but they are poles within a broader superstructure that often functions to ensure pres­idential failure.

The Grave of Brazilian Presidents

In Brazilian politics, the Centrão—largely a pejorative term—refers to the loose coalition of nominally centrist parties in the National Con­gress. Although Brazil formally has a presidential executive, its government increasingly operates as a quasi-parliamentary system. In practice, the president is a sort of free-wheeling prime minister, one who by design is forced to negotiate corrupt bargains with a small army of self-serving petty criminals—and sometimes actual felons.

Since the fall of the military dictatorship, Brazil has had six democratically elected presidents; of these, three were either removed from office via impeachment or sent to prison (including the current president). More telling, however, is the composition of the Brazilian legisla­ture. Typically one-third of the members of Brazil’s two chambers of congress have been either accused or convicted of crimes as common as bribery and as severe as domestic violence and murder.²

This level of political corruption is not entirely uncommon in Latin America. What makes Brazil different, however, is that no other country in the region—with the possible exception of Peru—has such fractured legislative politics. Brazil’s incoming congress will include around twen­ty-five different parties, most of which have essentially no legislative platform and are more akin to crime syndicates than representative political entities.

In the case of the Centrão parties, most have names which suggest a specific political orientation; in fact, these names are dull façades meant to disguise clientelist goals. The PP (Progressives Party), for instance, is vaguely right-wing. Avante, Podemos, União Brasil, and the MDB (Bra­zilian Democratic Movement) are all but openly opportunistic, while the PSDB (Brazilian Social Democratic Party) is avowedly right-wing and was the historical nemesis of Lula’s venerable PT (Worker’s Party).

Brazil is a place where PT congressmen can be adopted into the vacuous MDB and former heads of the PSDB can shapeshift into PT allies. But such transformations are fairly exceptional cases. More common are the scores of Centrão congressmen who switch parties every other election to secure better patronage from various national and regional bosses.³ Similarly, Brazil’s largest party, the PMDB, re­branded itself the MDB after the bribery-plagued interim presidency of Michel Temer (2016–19), Dilma Rousseff’s former vice president and the mastermind of her 2016 impeachment. Even Bolsonaro’s current party, the Liberal Party (PL), was until recently a minor Centrão party. Having bet on the president in 2022, the PL is now the standard-bearer for the Brazilian Right, winning an astounding ninety-nine seats in the Chamber of Deputies. Consequently, the PL will have far greater access to patronage in states with bolsonarista or Centrão governments.

Right and Left may alternate power at the presidential level, but downballot the picture is murkier. In the aftermath of the 2022 elections, some analysts have described the current congress as having a bolsonarista majority. This is misleading. It is true that Centrão congressmen align more closely with bolsonarismo on economics and several cultural issues than with the PT.⁴ As noted, however, the Centrão is more than willing to eschew policy commitments, provided sufficient patronage from the state. Further, though criminality may be systemic in all corners of Brazilian politics, Centrão congressmen are appreciably more corrupt on balance than steadfast right- or left-wing legislators.⁵

At the national level, reliable right- and left-wingers together com­pose around 30 to 40 percent of the Brazilian Senate and Chamber of Deputies. The rest is composed of the Centrão, which also elects a majority of Brazil’s mayors, governors, and state legislators. The politi­cal landscape is further complicated by the fact that Centrão parties opportunistically back different presidential candidates in different states.

Brazilian elections use a system of open-list proportional representation for most legislative offices. This means that each party wins a number of seats proportional to the sum of votes cast for all its candidates—so a roughly 10 percent vote share results in control over 10 percent of seats. But the party lists are “open,” meaning that seats within each party’s share are distributed, in order, to the candidates of that party with the highest vote totals; in effect, voters, not parties, rank the candidates on the party list. And because Brazilian political parties act mainly as vehicles for electoral patronage, candidates dominate the process rather than parties. As a result, Centrão politicians often omit overt party identification and make appeals to voters based on transactional grounds or personal loyalties.⁶

Bolsonaro’s almost thirty years in congress is broadly emblematic of the latter dynamic. A creature of the Centrão, Bolsonaro distinguished himself from his mostly transactional peers as a far more ideological, if heterodox, populist nostalgic for Brazil’s military dictatorship. In all, the former president spent the bulk of his congressional career within the PP (by some measures, the single most corrupt party in congress), though he flirted with stints in five other Centrão parties.⁷ Nevertheless, Bolsonaro himself was among the least corrupt members of the legis­lature; his relatively clean record and fringe, outsider status catapulted him to national prominence amid Brazil’s turbulent 2010s.⁸

Endemic Corruption

Overall, the alleged corruption of both Lula and Bolsonaro is remarkably comparable. This is only to say that there is no corroborated proof that either broke the law for monetary gain. Yet both men can be credibly accused of amassing small fortunes during their respective careers through influence peddling.⁹ Again, however, this is an improvement over much of the Brazilian political class, in which officials with criminal convictions are ubiquitous.

Though Bolsonaro and Lula can both be seen as agents of institutional corruption, Lula justifiably receives far more blame from Brazilians given the years of crisis fueled by the Lava Jato (“Car Wash”) investigations of the 2010s. Ironically, it was the PT that had installed the judges and legal reforms that enabled figures like Sergio Moro, then judge, now senator, to prosecute cases from Lava Jato.¹⁰

The introduction of plea bargaining by Dilma Rousseff in 2012 turned out to be the single most effective tool for procuring evidence in the Petrolão scandal exposed by Operation Car Wash. By negotiating sentences in exchange for information from politicians and business executives, investigators were able to unveil a vast apparatus of bribery run by construction companies like Odebrecht and OAS. The scheme itself consisted of inflating contracts with the state oil company, Petrobras, and funneling money to a slush fund used to finance the campaigns of politicians of all political stripes.¹¹

Lula’s first administration managed to secure votes from the Centrão through the use of cash bribes paid monthly to client congressmen known as the Mensalão. When the scandal broke in 2005, Lula lost key allies embroiled in the ensuing investigations, but he emerged largely unscathed and cruised to reelection in 2006. Ten years later, the unravel­ing of a successor Petrolão scheme led to Dilma Rouseff’s untimely fall at the hands of the PT’s former clients in congress, as well as Lula’s criminal conviction.

With Rousseff deposed and Lula imprisoned, the Centrão finally had their man, Michel Temer, in the Palacio do Planalto. And despite Temer’s unpopularity, another Centrão congressman, Bolsonaro, was projected to win the upcoming presi­dential election.

As president, Bolsonaro was initially less clientelist than his predecessors. Throughout the 2018 campaign and his first year in office, Bolsonaro used his outsider status to rail against corruption and the Centrão.¹² The further addition of Lava Jato judge Sergio Moro as Minister of Justice cemented his anticorruption credentials. But the saga of the Centrão’s corruption does not end here.

Predictably, Bolsonaro went on to join the ranks of other faux corruption fighters in Latin America, in this case by co-opting—or being co-opted by—the Centrão. By the middle of 2020, threats of impeachment became increasingly serious amid anger over the president’s indifference toward the Covid-19 pandemic.¹³ Facing over a dozen draft articles of impeachment, the administration desperately needed to pla­cate an unruly Centrão. Consequently, a new and more sophisticated mechanism for vote buying was necessary to secure legisla­tive support: o orçamento secreto, the so-called secret budget.

It is telling that English-language outlets have struggled to explain a scandal that may well surpass the already high bar for political corruption in Brazil.¹⁴ Indeed, the sheer bureaucratic complexity of the secret budget makes it far less comprehensible to ordinary Brazilians and far more difficult to scrutinize. Beneath the bureaucratic complexity, how­ever, Brazil essentially institutionalized overt clientelism into its budget­ary process.

In Brazil, annual budgets are composed of discretionary and man­datory spending. Among the various appropriations are typical items such as funding for government agencies, infrastructure, and social programs. Another item is $1.6 billion in mandatory spending for all 594 members of the legislature, which is directed toward investments within their constituencies by means of individual amendments. Each member of congress receives around $3 million in such spending; the destination and author of the spending, the congressman, is known.¹⁵

The secret budget is the precise opposite, consisting of funds allocat­ed to the congressional relator or comptroller. Prior to 2020, comptroller amendments were fairly banal appropriations that totaled a relatively minor sum of $4 million. But comptroller amendments lack the over­sight to which individual amendments are subject, so the Centrão saw that an expansion of the powers, scope, and funding of the relator would be a perfect instrument for graft. In 2020, Centrão parties seized the opportunity, pushing for a proposed $5.5 billion secret budget for the relator.

As he is quick to point out, Bolsonaro did in fact veto the Centrão’s 2020 bill. During the 2022 presidential campaign, he vehemently denied charges that he used the scheme to buy support: “I vetoed it—I had nothing to do with that ‘secret budget.’”¹⁶ In fact, his veto was an empty act of political theater. Supporters of the bill in the National Congress had the votes necessary to override the president’s veto, but the legisla­ture chose not to pursue an override. Instead, the administration coun­tered with a suite of three separate proposals similar in substance to the original bill, except that the initial $5.5 billion price tag was cut to $3 billion.¹⁷ Bolsonaro could tout his faux veto, but like his predecessors, he had succumbed to the Centrão.

Thus, funding for the secret budget ballooned from $4 million in 2019 to $4.5 billion in 2022. Bolsonaro also increasingly used executive appointments as a form of patronage by adding Centrão appointees to his cabinet, including Ciro Nogueira (PP), his most recent chief of staff. Notably, Nogueira’s mother, a PP senator, secured one of the highest funding totals from the secret budget in 2022—second only to the relator himself, Senator Márcio Bittar (of União Brasil).¹⁸ Predictably, Bolsonaro’s once-fervent critiques of the Centrão, along with the impeachment threat, vanished.

The Supreme Court and Brazil’s Parallel State

In September 2017, Brazilians rushed to view highlights from Lula’s legal deposition with the superstar judge and future justice minister Sergio Moro. Moro served as chief investigator, prosecutor, and judge in Lula’s rather flimsy corruption case, which involved a São Paulo apart­ment that the former president had allegedly received as a bribe. Despite a lack of hard proof that Lula in fact bought or was given—let alone ever used—the apartment, Moro condemned Lula to nine years in prison, a sentence which a regional court subsequently increased to twelve.¹⁹ Brazilian conservatives rejoiced at Lula’s downfall and praised Moro for his unflinching crusade against profligacy and corruption. Little did they know that, five years later, conservative politicians would be subjected to comparable legal abuse by the country’s highest judicial body.

Like much else in Brazilian politics, the country’s court system is an opaque patchwork of legal jurisdictions, abuses of power, and corruption. International outlets often refer simply to the “Brazilian Supreme Court,” an amalgam of Brazil’s three highest courts: the Superior Tribunal da Justiça (Superior Tribunal of Justice, STJ), the Tribunal Superior Eleitoral (Superior Electoral Tribunal, TSE), and the Supremo Tribunal Federal (Supreme Federal Tribunal, STF), the latter of which is traditionally viewed as the most important. Each of these courts has specialized competences over particular types of cases. In general, the STJ rules on matters pertaining to civilian justice, the TSE on electoral politics, and the STF on exceptional and constitutional issues. Further complicating matters, some justices (or “ministers,” as they are called in Brazil) serve concurrently on multiple high courts. Moreover, almost any legal case can be appealed to and later heard by a superior court.²⁰ As a result, the composition of the courts is pertinent to both the ideological goals and the clientelist ambitions of oligarchs and politicians.²¹

Unlike the U.S. Supreme Court, Brazil’s high courts rule on thou­sands of cases per month—in 2022, the STF alone had over twenty thousand cases on its docket²²—and the burden on the courts compounds Brazil’s judicial dysfunction. The STF is charged with ruling on each and every case, and cases can be delayed by years or decades before being decided.²³

Under Bolsonaro, the STF seemed favorable toward the Brazilian Left. Given the PT’s thirteen consecutive years in office from 2003 to 2016, seven of the STF’s eleven justices were PT appointees; the remain­ing four were appointed by the more right-wing administrations of Fernando Henrique Cardoso (PSDB, 1995–2003), Michel Temer (MDB, 2016–19), and Jair Bolsonaro (PSL, PL, 2019–23).

It seemed that Bolsonaro required just two additional appointees to wrest ideological control of the STF away from the Left. Yet appointments must be confirmed by the Brazilian Senate, the very same body dominated by the clientelist Centrão. Likewise, many of the justices of the STF—who, as noted, also serve on other courts—have shown them­selves to be practitioners of a comparable form of judicial patronage, rewarding and punishing allies or enemies based on perceived personal benefit. This is not to say that the justices are not qualified jurists, only that the line between patronage and legitimate legal interpretation is thin.²⁴

Brazil’s higher courts, like the Centrão, display a low Machiavellian cunning. For all the discord between the Bolsonaro administration and the judiciary, several rulings were unquestionably favorable to the former president throughout his term.²⁵ The supposed impartiality of the courts came into question when, for example, the STJ abruptly ended investigations of alleged financial embezzlement by one of Bolso­naro’s sons in 2019.²⁶ Despite what appeared to be an obvious attempt to curry favor with the president, Bolsonaro nonetheless escalated his crusade against the justices.

These judges, most of whom were appointed by the PT, played a significant role in the effort to topple Dilma Rousseff, protect Michel Temer, and strip Lula of his political rights just in time for the 2018 election.²⁷ No doubt surprised that the man they had helped propel to victory was not as keen on checks and balances as they expected, the courts then abruptly restored political rights to Lula, the septuagenarian red menace they had previously jailed. By 2022, the justices had openly changed sides, now waging lawfare against Bolsonaro and his allies.

Bolsonaro had long held that the high courts were corrupt. His proposed solution, however, was to pack the courts with cronies amen­able to increasing the powers of the executive.²⁸ Moreover, Bolsonaro followed the precedent set by Donald Trump and later Keiko Fujimori in Peru, claiming more than a year in advance that the 2022 election would be rigged against him by Brazil’s top electoral court, the TSE. That year, Alexandre de Moraes assumed the presidency of the TSE (serving concurrently as a justice of the STF) and drastically expanded his and the court’s powers to a point of near-autocratic control. In all but name, O Ministro de Moraes has seen the TSE evolve since 2022 into a virtual co-executive with the Brazilian presidency.

After the attempted storming of the STF by supporters of Bolsonaro in September 2021, the justices of the court became justifiably paranoid about the former army paratrooper seated in the Planalto.²⁹ Amid 2022’s extremely contentious elections, the TSE began exploiting the powers it had usurped. The court took to the systematic censorship of content it labeled “misinformation” on social media, mostly from bolsonaristas. Moraes for instance, had five people jailed without trial for social media posts deemed threatening. Now the most powerful judge in all the land, Moraes and the TSE have the de facto authority to investigate, prosecute, and decide cases unilaterally: justices can dispatch security forces to raid homes, procure and evaluate evidence, and then command those same police forces to enforce rulings dictated by the court.³⁰

Justice Alexandre de Moraes is himself instructive as an avatar for Brazil’s political class. Moraes served in a variety of legal and ministerial posts within the conservative PSDB governments of São Paulo state before heading a legal firm dedicated to defending politicians embroiled in the Lava Jato investigations. He was then elevated to minister of justice in 2016 under Michel Temer, who later placed him on the STF following the sudden (some would say suspicious) death of Justice Teori Zavascki in a plane crash.³¹ At the time of his death in 2017, Zavascki was leading investigations into the Temer administration.

As is so often the case with figures of the Brazilian establishment, Moraes lacks self-awareness; he fails to grasp that his overreach plays precisely into the hands of his opponents. In what otherwise would have been a boon for the Lula campaign, the news outlet Metrópoles pub­lished a leaked WhatsApp chain in which prominent Brazilian businessmen defended the idea of a military coup in the event of Lula’s electoral victory. One tycoon allayed fears that a military takeover would be bad for business, arguing that autocracies such as Saudi Arabia still received international investment. Another noted glibly, “[The real] coup is the supremo (STF) acting outside of the Constitution.”³² In response, Moraes and the TSE promptly authorized raids on the homes of eight of the businessmen, froze their bank accounts, and issued subpoenas for financial, telephone, and digital records. Eventually, several of the men in question were jailed. In the end, however, the draconian reaction played neatly into the hands of Bolsonaro, who railed against the abuses of the court. In another notable case, Daniel Silveira, a bolsonarista congressman, threatened the justices of the STF, singling out Moraes. The STF swiftly prosecuted Silveira and sentenced him to nine years in prison by a margin of ten to one—with one of Bolsonaro’s two appointees on the court among the ten who voted to convict—though Silveira would later receive a presidential pardon.

In the final phase of the war between the executive and the courts, Bolsonaro made a last-ditch effort to sabotage the October 2022 run-off. Noting that public transportation is free in Brazil on election day, Silvinei Vasques, the head of Brazil’s federal highway police (PRF) and an ally of Bolsonaro, ordered the stoppage of thousands of public buses carrying voters in Lula strongholds, mostly in Brazil’s northeast. The day prior, the TSE under Moraes ruled that PRF special operations could not take place on election day, a ruling Vasques ignored.³³

In the end, however, the best efforts of bolsonaristas were not enough. Lula prevailed, as was widely expected, though by a relatively narrow margin, defeating Bolsonaro by fewer than two million votes. In the ensuing forty-eight hours between Lula’s victory and Bolsonaro’s surprising, if contorted, concession, Moraes filled the void left by the incumbent president’s deliberate, temporary abdication of leadership. Bolsonaro’s most committed supporters took to the streets; bolsonaristas blocked highways and camped in front of army barracks, calling for a military takeover. Within twenty-four hours, however, Moraes managed to reassert his authority over Vasques and directed the PRF to clear highways of protestors, though agitators remained posted at Brazil’s military barracks well into the new year.³⁴ By the time Bolsonaro made a formal pronouncement, the bulk of his allies at both the state and congressional levels had already recognized Lula’s victory. In a scripted and barely two-minute address, Bolsonaro admitted defeat, called on his supporters to go home, and announced the start of a formal transition. The next day, Bolsonaro visited the STF to face Alexandre de Moraes and the other justices of the court. “Acabou,” he said.³⁵ It’s over. Or so many of us thought.

“The Three Powers”

For his part, Bolsonaro exhibited some of the most bizarre behavior of his political career after the election. By all accounts, the president was genuinely surprised and demoralized by the fact that he lost the October run-off. Between October 30 and Lula’s inauguration, the apparently depressed president largely ignored raving supporters outside the Plan­alto, offering vague allusions of hope and trust in Brazil’s armed forces.³⁶ Bolsonaro then left Brazil altogether for Orlando, Florida, on December 30, keeping a comparatively low profile and only attending a handful of events, such as CPAC, before returning to Brazil at the end of March.

The events of January 8, 2023, were all the more dumbfounding given the fact that Bolsonaro was no longer president and not even in the country. That day, thousands of bolsonaristas raided, looted, and van­dalized the seats of all three branches of power in the Brazilian capital in what can only be described as one of the most poorly conceived coup attempts in Latin American history. Inspired as bolsonaristas may have been by the events in Washington on January 6, 2021, the methods, motives, and forethought of Donald Trump and his supporters seem—astonishingly—conscientious by comparison.

Known in Brazil as the invasão dos três poderes, “invasion of the three powers [of government],” the event itself took place on a Sunday, when neither congress nor the supreme court were in session. Likewise, Lula was outside the capital at the time, raising the question of what rioters hoped to achieve by seizing empty buildings.

Unsurprisingly, a newly invigorated Alexandre de Moraes, the now-compliant STF, and the nascent Lula administration took swift action in response, pledging to punish rioters and root out the masterminds of the attack. President Lula subsequently declared a federal takeover of the capital district, and Moraes and the Ministry of Justice arrested some 1,500 rioters.³⁷

Tired as it may be to juxtapose the events of January 6 in the United States to those in Brazil on January 8, some points of contrast are worth highlighting. First and foremost, unlike in the United States, subsequent investigations into the January 8 attacks suggest a disturbing complicity between sectors of Brazil’s armed forces, rioters, and members of the Bolsonaro administration. Among the aforementioned encampments that bolsonaristas had set up since the October run-off was one outside Brasília’s army headquarters, from which the January 8 attacks were staged.³⁸ Members of the military have since reported that orders to clear bolsonarista encampments were deliberately subverted by the head of the army, General Júlio Cesar de Arruda.³⁹ And on-duty police and military forces were also observed welcoming protestors onto premises and assisting them in escaping arrest.⁴⁰

Here it is important to note that, unlike Washington, D.C., Brasília is a right-wing stronghold: Bolsonaro and Ibaneis Rocha, the Bolsonaro-allied governor of the Federal District, won close to 60 and 70 percent of the vote in 2022, respectively. Moreover, Rocha’s police chief, Anderson Torres (PL), seemingly played an integral part in the events of January 8.

Between January 2019 and March 2021, Torres served as Brasília’s secretary for public security; he was then appointed minister of justice for the Bolsonaro administration, where he served until December 31, 2022, when Bolsonaro left office. On January 2, Rocha, having just won reelection, returned Torres to his post as secretary for public security, a decidedly irregular appointment. In a move whose timing cannot but rouse suspicion in hindsight, Torres also quietly traveled to Orlando on January 7, although he claims he did not meet with Bolsonaro there.⁴¹ The STF later suspended both Torres and Rocha from office and ordered the latter’s residence searched. Authorities discovered what Torres claims was a discarded memo detailing a plan to annul the 2022 vote.⁴²

There were evidently multiple schemes contemplated that would allow Bolsonaro to return to or remain in office. A key bolsonarista senator, Marcos do Val, later revealed that another plan, discussed with Senator Daniel Silveira and a silent Bolsonaro, was to prompt Alexandre de Moraes into making compromising, recorded statements that would permit the annulment of Lula’s victory.⁴³

As best as can currently be understood, investigations into the January 8 raids suggest that businessmen favorable to bolsonarismo paid to bus in the hordes of the president’s supporters who gathered before Brasilia’s military headquarters. The plan seems to have been to have demonstrators then seize the state’s organs of power and to proclaim a state of disorder that would prompt the military to seize control of the government.⁴⁴ It remains a mystery exactly what—if any—involvement Bolsonaro himself had in these schemes. Indeed, what ultimately transpired on January 8 may well have resulted in far greater violence and institutional chaos had Bolsonaro pursued a more combative pos­ture after October 30.

Regardless, the events of January 8 catapulted the STF into extraordinary action. This might seem to bode well for the winning candidate, but the high courts remain loose cannons and could easily come into conflict with the new administration. While Bolsonaro’s conflict with the courts stemmed mainly from disputes over the election, the courts generally respected his administration’s legislative (that is, economic) priorities. Conversely, Lula and the PT are reportedly concerned that the administration’s economic agenda might suffer should they lose the favor of the courts.⁴⁵

Wicked Elites, Corruption, and Underdevelopment

As seen in the chaotic episodes of recent decades, the contours of Brazil’s political reality are marked by internecine conflict among a set of cliques hell-bent on self-preservation but prone to self-sabotage. Objectionable as the actions of bolsonaristas may have been, they do not absolve the authoritarian tendencies of Brazil’s higher courts. The sordid opportunism of actors such as the Centrão and STF is a testament to the fickle nature of a spectacularly corrupt and contemptible estab­lishment. Time and again, the Brazilian Center has acted in a manner that increasingly jeopardizes the legitimacy of Brazil’s institutions.

Often lost amid critiques of Brazilian corruption, however, is any discussion of the macroeconomic policy choices of the corrupt. Popu­lists who rail against a self-serving establishment as well as technocratic critics of government waste and “crony capitalism” offer the perennial promise that all would be well “if we could just get rid of the corruption”—Brazil being the poster child for countless articles and conferences on the subject.⁴⁶ The implication is that mass privatizations, deindustrialization, and free trade would surely have led to prosperity had it not been for the ever-irksome corruption.

Yet as beneficial as it may be to reduce corruption, Brazil’s elites are contemptible not so much for their graft but rather their policy priorities. It should, for instance, give observers pause that the comparatively less corrupt Chile, long the model for neoliberal development in the region, has likewise seen its share of stagnation, instability, and political polarization in recent years. Corrupt or not, the policy choices of the Brazilian establishment over the last three decades underlie the country’s regression from a mid-tier manufacturing power back into a glorified resource colony. There is a reason why “Brazilianization” is synonymous with economic and political decline.

The Brazilian Miracle

One way or another, effectively all of Brazil’s national champions, such as Embraer and Petrobras, owe their success to state-led industrialization policies adopted during the presidencies of Getúlio Vargas (1930–45, 1951–54) and the military dictatorship (1964–85). Today, of Brazil’s twenty largest companies, ten either are now or were once state-owned.

Getulismo, the legacy of Brazil’s greatest president, laid the foundations for national development under regimes both authoritarian and democratic, of both the Left and the Right. The quasi-fascist Estado Novo (1937–45) as well as the left-populism of Vargas’s democratic term (1951–54) promoted import-substitution industrialization in the form of tariff protection, managed trade, sectoral unionization, a state development bank (bndes), state-owned steel companies, and a state-owned oil firm (Petrobras).

What would later become the “Brazilian Miracle” was an effort decades in the making that would not have been possible without the groundwork laid by Vargas. Between 1930 and 1980, Brazil averaged 5 percent GDP growth with upwards of 10 percent growth during the 1970s. Neoclassical economists consistently deride industrial policy and state intervention as doomed to fail, but failure can be—and has been—a critical stimulus for future success.⁴⁷ Today’s national champions spent much of their early existence mired in unprofitability and myriad failures. Petrobras, for instance, was unprofitable until the 1980s. Unlike in Mexico, Brazil’s oil reserves are located offshore in deep-sea wells that were difficult to access with older technology. As a result, the firm has invested heavily in exploration-related research and development since the 1950s—a fact that distinguishes it from the far more complacent and now heavily indebted Pemex.⁴⁸ By the 2000s, Petrobras regis­tered more patents than any other Brazilian institution and is today both profitable and the country’s largest company. Similarly, long-term investments backed by the bndes in the steel and aeronautics industries resulted in the success of both Vale and Embraer.

Founded in 1969 by the Brazilian Air Force during the military dictatorship, Embraer’s initial decades were dedicated largely to national defense goals. Embraer drew on skilled personnel from the Instituto Tecnológico da Aeronáutica (Aeronautics Technical Institute) and the Centro Técnico da Aeronáutica (Center for Technical Aeronautics), both developed under Vargas and his democratic successors. Military rule likewise insulated the firm from special interests in the form of civilian politicians and ministries.⁴⁹

It should be noted here that the policy of Brazil’s right-wing military regime differed from the doctrinaire Chicago school economics of Pinochet’s Chile. It is instead more apt to compare the Brazilian military dictatorship to that of neighboring Argentina as well other developmentalist dictatorships such as Park Chung-hee’s South Korea. State protec­tion meant that Embraer could survive for many years on subsidies despite its unprofitability. Both subsidies and learning through trial and error allowed Embraer to develop its own models for regional, medium-sized jets that later turned out to be highly competitive in world markets.

Neoliberals rightly point out that privatization boosted the productivity and competitiveness of firms such as Embraer, Vale, and even Petrobras, in large part thanks to know-how gleaned from multinational competitors and investors.⁵⁰ They conveniently omit, however, that privatization was in most cases only partial and laden with strict controls on foreign ownership—to say nothing of the utter debacle of privatizations such as that of the state electricity firm, Eletrobras.

Embraer was privatized in 1994 despite howls of protest from the military and was heralded as a poster child of the free market. At the time, Embraer was widely regarded as a model of military cronyism and was sold only after multiple failed attempts. The firm’s new ownership instituted a standard shock doctrine of slashing wages, de-unionizing, outsourcing, and dismissing more than 1,700 workers—half the compa­ny’s workforce—in 1995.

Slash-and-burn tactics indeed did pare back losses after the sale.⁵¹ Nonetheless, what ultimately saved Embraer and catapulted it to domi­nance was its pre-privatization venture into the market for regional jets, a niche market at the time but one which would later explode in the late 1990s. By 2008, Embraer led Brazil in manufactured exports, exporting 95 percent of its production; it also led the world market for unit sales of regional aircraft and was more profitable than its Canadian competitor, Bombardier.⁵²

In hindsight, however, it is clear that Embraer’s success derived not just from military rule but also from strict controls on private and foreign ownership. The government (that is, the military) retained a minimum mandated ownership of 7 percent and possessed golden shares granting it veto power over major ownership changes. Additionally, the state stipulated that foreign ownership could not exceed 40 percent. Had the military yielded to market radicals, there is little reason to believe that Embraer would have survived as a Brazilian company.⁵³

The story of Brazilian Steel is similar, although the process of privatization was smoother. Buoyed by state backing from the military and bndes, steel output expanded steadily in Brazil beginning in the 1940s. It was not until the 1980s, however, that the country’s steel firms became highly productive and competitive internationally.

Following the Collor administration’s privatization of state steel firms, Brazil was a world leader in the total value of state assets sold. Ironically, the bndes itself was charged with managing the firms’ sales. Between 1991 and 1993, the government sold off its eight steel firms to Brazilian buyers. By the mid-1990s, the now privatized firms were more profitable, more productive, and producing more exports. A rapid process of consolidation birthed a cartel of four large, mostly profitable firms by the 2000s, which is now dominated by Vale and CSN.⁵⁴

The bndes itself is another success for the state; having escaped privatization, the state bank was a key source of financing for both public and private sectors in Brazil. In the 2000s, its lending portfolio doubled from 2 percent to over 4 percent of GDP by 2010, outpacing lending by the World Bank and Inter-American Development Bank⁵⁵—although by that point the bulk of its investments went toward supporting small businesses, as well as agribusiness and other extractive sectors.⁵⁶

Where privatization utterly failed was in the electricity sector. Time and again, efforts geared toward increasing competition in a sector prone to natural monopolies have resulted in higher prices and, ironically, greater regulation. In Brazil, as was also the case with energy reform in Mexico, “increasing the role of the private sector” was more of a euphemism for increasing the profits of the private sector.⁵⁷

Founded in 1962 under João Goulart, the state firm Eletrobras was a largely successful utility that succeeded in lowering electricity prices for ordinary Brazilians to rates below the global average by the early 1990s. Beginning in 1995, the Brazilian government privatized the electricity sector, allowing for competition in the generation and distribution of power. The results were immediate: prices rose 15 percent in 1996 and increased another 200 percent by 2006. Today, some estimates rank average rates in Brazil as the second highest in the world; the bndes itself has described privatization as a failure.⁵⁸

The folly of both market dogmatism and socialist central planning is insisting on a rigid dichotomy of state versus market. As in East Asia, Brazilian industrial policy proved successful when state involvement effectively channeled or complemented market incentives and vice versa. On the other hand, much as vertical state development in the field of semiconductors has floundered in mercantilist China, it is likewise important to note that horizontal market efforts in the electricity sector failed in Brazil.⁵⁹ East Asian efforts directed at developing high-value sectors—whether smartphones, semiconductors, or AI—were decades-long af­fairs buoyed by the concerted vision of dedicated industrial strategy. Likewise, the strength of Brazil’s twenty-first-century high-value sec­tors stems almost exclusively from the industrial policy of a bygone era now eclipsed by the corrosive temptation of extractive commodities.

In 2022, approximately 36 percent of Brazilian exports consisted of manufactured goods, with the rest composed mainly of raw materials and services. It is true that much of what counts as Brazilian manufacturing consists of processed foods, steel, and other goods just a cut above the status of raw materials. Nevertheless, around half of its manufacturing exports consist of high-value products such as automobile components, military equipment, and finished aircraft.⁶⁰ By com­parison, Chile’s share of manufacturing exports is nominally higher at 38 percent, but this figure is deceptive: these exports are composed almost entirely of processed food, chemicals, metals, and forestry products.⁶¹

From 1930 to 1990, essentially all of Latin America pursued policies of import-substitution industrialization (ISI).⁶² What made Brazil differ­ent was that it prioritized high-value sectors in manufacturing during this period rather than merely the industrialization of mining and agri­cultural sectors. Since the “neoliberal turn,” however, Brazil’s deindustrialization has been significantly worse than regional peers. From a high of 34 percent of GDP in 1984, Brazil’s value-added manufacturing has declined to under 10 percent today.⁶³ As the Economist put it, “No other country has seen manufacturing as a share of GDP vanish so fast.”⁶⁴

The Populist Left Co-opted

At the time of Lula’s first inauguration in 2003, amid Latin America’s “Pink Tide,” there was some expectation in leftist and academic circles that the era of neoliberalism in Brazil was over. Lula was Brazil’s first overtly leftist president in almost half a century and the first since the restoration of democracy. As a former leader of the Greater São Paulo Metallurgy Union, many believed that the new president would priori­tize heavy industry and state-led development. But it was not to be. Under ISI policies, the state’s successes in specific industries had been the result of long-term efforts to advance key goals. Instead, under Lula, the state was now committed to promoting low-value industries coupled with subsidizing consumption for the masses.

The abandonment of ISI in favor of deregulation, trade liberalization, and mass privatization meant, in practice, an economic strategy geared toward supplying commodities to a booming China. The 2000s saw bndes promote the growth of agribusiness and the construction sector both at home and abroad, a policy that later led to the downfall not only of the PT but also of several other governments in the hemisphere.⁶⁵ The success of agribusiness under Lula is especially ironic given the fact that the industry is among those most hostile to the Brazilian Left.

Lula made peace with the establishment in part because he deemed it necessary to secure victory in his fourth attempt at the presidency. Once he was in in office, however, the establishment’s overwhelming control of congress no doubt crushed whatever dreams the administration may have had of a paradigm shift. The PT instead resigned itself to marginal redistributive efforts through cash transfer programs, such as Bolsa Família and Minha Casa, Minha Vida. Lula likes to tout that thirty million Brazilians were lifted out of poverty by these social programs, but this was largely an effect of the commodities boom, and most of those thirty million were re-impoverished in the wake of the subsequent commodities bust.

The PT’s greatest (and perhaps sole unambiguous) success derived instead from its stewardship of the booming agricultural sector. The value of Brazil’s agricultural exports quintupled from $20 billion in 2002 to over $100 billion in 2014.⁶⁶ What made this growth remarkable, however, was that it took place as deforestation (a phenomenon largely related to the clearing of land for industrial agriculture) fell 83 percent, from around twenty-seven thousand square kilometers in 2004 to less than five thousand in 2012. This feat was largely the result of the pragmatic regulation of land use by the PT through fortified state agencies such as the National Indigenous People Foundation (funai), the National Institute for Colonization and Agrarian Reform (incra), and the Brazilian Institute of the Environment and Renewable Natural Resources (ibama).⁶⁷

To this day, Lula’s two terms in office are highly regarded by international investors as the model for “responsible government” by a leftist Latin American administration. No major new privatizations occurred, but Lula retained orthodox monetary policies, expanded trade, and made no efforts to renationalize former state industries.⁶⁸

By the time the Centrão resolved to remove Lula’s successor, the relatively more statist Dilma Rousseff, from office, however, the estab­lishment consensus was that liberalization had not gone far enough. The solution to the crisis in Brazil sparked by the commodities bust and the collapse of its construction companies, according to this view, was to deregulate labor and set off a new wave of privatizations. With one of their own, Michel Temer, finally back in the presidency, the Centrão succeeded in dismantling Brazil’s corporatist labor relations. The Temer administration authorized limitless outsourcing, including of businesses’ core functions—a boon to consulting firms and digital service companies like Uber.⁶⁹ In a move meant to shore up the deficit, Temer also passed a constitutional cap on social spending that surprised even financial mar­kets for its austerity.⁷⁰

The libertarian dream was nearly complete as the unpopular Temer spent his remaining political capital on privatizing oilfields and airports and attempting to privatize the pension system in favor of one modeled on that of the more market-friendly Chile.⁷¹ This latter effort failed, however, leaving a series of unfinished measures to be addressed by the next administration.

The Populist Right Co-opted

If ever there was a figure on the right who might have broken with neoliberal orthodoxies, it would have been someone like Bolsonaro. As a former army paratrooper during the military dictatorship, Bolsonaro is famously nostalgic for both the regime’s accomplishments and its worst abuses, both state-led development and the torture and disappearance of thousands of dissidents.⁷²

Prior to assuming the presidency, Bolsonaro was among the fiercest critics of laissez-faire economics and the Brazilian center-right, and he spoke out vigorously against real and perceived slights by the PSDB against the military. In congress, he voted consistently against both successful and unsuccessful privatizations, viewing them as efforts to dismantle the legacy of his beloved armed forces.

It is in this context that observers should evaluate the former presi­dent’s initial support for fellow paratrooper, Hugo Chávez, following the latter’s election in Venezuela in 1999.⁷³ Likewise, Bolsonaro was an early supporter of Lula’s first administration, speaking in favor of programs such as Bolsa Família and denouncing the PSDB’s 2002 candidate, José Serra, as “a man who for 38 years lobbied on behalf of bankers, stole from the people for his benefactors and now steals for FHC [President Fernando Henrique Cardoso].”⁷⁴

As late as January 2018, Bolsonaro decried Temer’s efforts to push through a Chilean-style pension reform stating that he was unwilling to “proletarianize the country . . . [just] because financial markets demand [it].”⁷⁵ Not fourteen months later, his administration passed the very same pension reform to the raging applause of the business sector and Americas Quarterly.⁷⁶

Bolsonaro the president was ultimately much more like FHC than the military dictator, Emilio Médici. His close alliance with the business sector, embodied by University of Chicago–educated economist and finance minister Paulo Guedes, ensured largely orthodox neoliberal economics. The man who once called for FHC’s execution by firing squad for the mass privatization of state industries now proclaimed humbly that he “[did] not understand economics.”⁷⁷ This meant that on matters concerning the economy, the president deferred entirely to the “grown-ups in the room.”⁷⁸

The ultimate disgrace came ten days into Bolsonaro’s presidency, when the state approved Boeing’s acquisition of Embraer’s commercial and defense divisions, which had previously stalled under Temer. Despite his reservations, the president was evidently assuaged by coun­sel from a military finally receptive to the free market dogma of the Latin American Right.⁷⁹ Boeing would control 80 percent and 49 percent of Embraer’s commercial and defense divisions, respectively; the former would drop the Embraer name and be known as Boeing Brasil–Commercial.⁸⁰

And so it was that the former army paratrooper sold off the mili­tary’s greatest accomplishment—to say nothing of the fact his administration also cut retirement benefits for the military.⁸¹ In his final months in office, Bolsonaro even went so far as to put Eletrobras on the chopping block: on June 14, 2022, the state reduced its stake in the firm from 69 percent to 40 percent, promising Brazilians a delusional 7 percent reduction in electric bills.⁸² Around that time, Bolsonaro added a humorous addendum to his knowledge of economics. Standing beside his finance minister, the president joked, “We’re the perfect couple. Paulo Guedes understands as much about politics as I do about economics.” In the end, Bolsonaro’s only claim to ideological heterodoxy on the right was an expansion of Bolsa Família in light of the Covid-19 pandemic—to the chagrin of Guedes.⁸³ The country Bolsonaro leaves behind to his successor resembles less the rising industrial titan of the president’s military youth but rather Brazil’s nineteenth-century past as a resource colony captured by a rural, rentier, slaveholding aristocracy—what today is the country’s agribusiness elite.

The Amazon Is Ours

Among the presumed reasons for Bolsonaro’s exile in the United States are the innumerable investigations of alleged wrongdoing during his presidency. And while most of the accusations against him are sham­bolic—disseminating disinformation in WhatsApp groups or committing “genocide” by way of his Covid-19 policies—far more significant are allegations that the administration condoned widespread criminality and environmental negligence in the Amazon.

Among Bolsonaro’s first acts once in office in 2019 was to slash the budget of ibama by 25 percent.⁸⁴ By 2021, ibama registered its lowest budget of the past twenty years. Moreover, of the 302 environmental crime raids carried out between 2016 and 2021, just 2 percent targeted illegal seizures of public lands. Total rates of deforestation doubled during Bolsonaro’s presidency, rising to almost fourteen thousand square kilometers in 2022, up from around seven thousand in 2018.⁸⁵

Of course, Bolsonaro himself is fond of noting that deforestation during his presidency is still lower than that of any period prior to 2005. Indeed, Lula’s first term also saw rates that were nearly double those under Bolsonaro—although, as noted, deforestation fell 80 percent to reach the lowest levels in modern Brazilian history by the end of Lula’s second term.

Moreover, Bolsonaro condoned not just mass deforestation but also widespread environmental crime in the Amazon, including illegal mining and the illegal seizure of public lands. With the recent reprioritization of environmental concerns under Lula, headlines out of the Amazon have highlighted crimes that were largely ignored or were even enabled by the previous administration.

One such case was the illegal sale of lands totaling 190 hectares between the states of Amazônas and Rondônia to the Iberian forestry firm Agrocortex in December 2022. Since the days of the military dictatorship, Brazilian law has significantly restricted the sale of land to foreigners. Under Bolsonaro, incra authorized the sale under the pretext that a Brazilian maintained a 51 percent majority ownership of the lands. Under Lula, incra quickly annulled the sale as part of a broader crackdown.⁸⁶

More egregious still was the mass poisoning of indigenous inhabitants of the Yanomami reservation in the northern state of Roraima. At least ninety-nine Yanomami children age five or younger are thought to have died from malnutrition and mercury poisoning in 2022. In total, it’s estimated that close to six hundred Yanomami children died between 2019 and 2023 due to mercury runoff from illegal mining operations that were ignored by the Bolsonaro administration despite numerous legal complaints.⁸⁷

These and worse atrocities were once commonplace during the military dictatorship that routinely ignored environmental crime as well as the damage wrought by the construction of megaprojects such as the Itaipu Dam—a joint effort built with the help of Stroessner’s Paraguay that destroyed Guairá Falls, formerly the largest waterfall on earth by water volume.⁸⁸ In this sense, Bolsonaro retains a sensibility toward the environment derived from the military regime: the environment exists to be exploited, whatever the cost. For all his nostalgia for the dictatorship, Bolsonaro retains few of that regime’s admirable qualities—pragmatism in political economy, state support for innovation and industrialization—and embraces essentially all of its worst tendencies, including authoritarianism and wonton disregard for the environment.

Lula 3: Signals and Noise

On the night of his election victory, Lula gave a rousing speech in which he sounded a nationalist note: “We are not interested in commercial agreements that condemn our country to the eternal role of exporting primary products. We are going to reindustrialize Brazil.”⁸⁹ The presi­dent offered additional token references to reindustrialization during his inauguration, mostly in relation to developing green technologies, as well as vague overtures of fostering innovation and public-private partnerships geared toward courting the business community.⁹⁰ Unsur­prisingly, the president’s first months in office have been largely uneventful on this and other fronts, though a deal with China to cooperate on semiconductors was announced in April.⁹¹

It is true, as Lula’s defenders will argue, that the first hundred days of a new administration in Brazil tend to feature few legislative accomplishments, given that the legislature does not convene until February and Carnaval slows the pace of both business and politics. Further, the events of January 8 justifiably occupied much of the administration’s attention in its first months. Nonetheless, the reality is that Lula faces increasing pressure from congress to acquiesce to a new version of the “secret budget” after the STF struck down the mechanism in its most recent form in early 2023. Even prior to assuming office, the president-elect rapidly shored up relations with the presidents of the Senate (Rodrigo Pacheco, PSD) and Chamber of Deputies (Arthur Lira, PP), supporting the reelection of both Centrão chiefs as presidents of their chambers. Once more the administration will need to devise a new mechanism for seducing the Centrão should it wish to pass legislation. It thus far remains to be seen what clientelist instruments will be used—or may already be in use.

Instead, the president has prioritized areas in which the executive has broader authority, such as foreign policy and defending the Amazon. On the former, Lula has taken to extensive international travel in his advocacy for a negotiated solution to the war in Ukraine. As for the latter, the administration has directed an aggressive crackdown in the Amazon, including establishing a no-fly zone and deploying military troops against illegal miners in the Yanomami reservation.⁹²

Similarly, since the Temer administration’s 2017 labor reform, conditions akin to forced labor have surged throughout the country as firms jumped at the chance to boost margins by outsourcing hard labor—a phenomenon the new government has promised to combat. On February 22, some two hundred agricultural workers at a winery in Bento Gonçalves, Rio Grande do Sul, were rescued by a special opera­tion after reporting beatings, electric shocks, and fourteen-hour work­days to which they were subjected by their employer, Fénix, a service provider for three of Brazil’s largest winery firms.⁹³ The Ministry of Labor and Employment claims that over nine hundred workers in conditions of virtual slavery have been rescued so far in 2023. Tellingly, however, the administration seems to have already dropped its commitment to repeal the 2017 labor reform.⁹⁴

Even as Lula has flexed his leftist credentials and prompted hysteria in Europe and Washington over his posture toward China and Ukraine, the administration’s proposed fiscal rule for 2024 surprised markets for its budgetary prudence.⁹⁵ A key test of Lula’s political acumen will be whether he chooses to pursue the stated goal of renationalizing Eletrobras—a tough sell in congress, and one made all the more difficult by a clause stipulating a $19 billion fine in the event it occurs.⁹⁶ Though the finance ministry’s fiscal rule seems to have assuaged fears of reckless spending, the president was previously reported to have “spooked” investors with his anger toward the central bank for raising interest rates to an obscene 14 percent, the highest in the world.⁹⁷ Similarly, a March poll of Brazilian financial executives from eighty-two investment firms found that a comical 98 percent disagreed with the government’s eco­nomic policies.⁹⁸

The task ahead for Lula is immense, amid global economic uncertainty and severe domestic fracturing. Despite his victory, both the presi­dent and the Brazilian Left are still thoroughly discredited. The socially progressive PT is itself increasingly unrepresentative of the broader public in a country currently undergoing an evangelical “great awakening.”⁹⁹ Yet his most arduous task will be both to confront and to transform the Brazilian Center.

The Realignment That Never Comes

Conservatives in the United States note rightly that the Democratic Party exercises overwhelming power in almost every meaningful institution in country: the media, big business, education, the federal bureaucracy, film, etc. Leftists, in turn, counter correctly that macroeconomic policy systematically favors the wealthy in accordance with an Overton window cultivated by conservatives since the 1960s.¹⁰⁰

The picture in Brazil, however, is hazier. With the exception of academia, some federal agencies, and arguably the military and business sector, it is the Center rather than Right or Left that dominates Brazil’s political, economic, and cultural institutions: the high courts, the legisla­ture, the media, big business (shared with the Right), and the federal bureaucracy (shared with Left and Right). Brazil’s corporate and consolidated media apparatus, for instance, skews socially progressive and fiscally conservative, but remains fantastically opportunistic in its scrutiny of left-wing and right-wing parties alike.¹⁰¹

Commonsense reforms such as closing party lists and enacting party electoral thresholds would help depersonalize the clientelist nature of Brazilian legislative politics and cut down on the number of purely criminal syndicates in congress. Over time, this should also reform the higher courts (though their authoritarian character may endure). Even these measures, however, are still glaringly insufficient. Right, Left, and Center must be compelled to collaborate on a shared, fruitful economic vision: reclaiming Brazil’s now-forgone industrial past. But doing this requires a suitable political vessel.

A transformative populist is not one who simply rides waves of discontent into office. A transformative populist, like any transformative politician or movement, is one who compels his detractors to embrace parts of his agenda. Donald Trump and Jair Bolsonaro are similar in many ways. They both, for instance, embrace a kind of emotive election denialism—essentially a belief that the election was (or will be) stolen because my feelings say so. Both populists are likewise skilled at main­taining an enduring unpopularity with majorities of the public in their respective countries.¹⁰²

For all its failings, however, the largely conventional Republican administration of Donald Trump prompted its opponents to embrace realism on China and efforts, albeit still limited, to revitalize America’s industrial base.¹⁰³ Bolsonaro did nothing of the sort: his conservative traditionalism did little to change the fact that the Brazil of today is macroeconomically analogous to the Brazil of 1890.¹⁰⁴ What industry remains in contemporary Brazil cannot compensate for the fact that 80 percent of its exports and 50 percent of value-added GDP are in raw materials or low-value manufactured goods. In practice, all o país do futuro, “the country of the future,” has to show for itself are higher yields in soybeans and spectacular losses at the World Cup.

Neoliberals now shamelessly concede that market fundamentalism did not bring the growth that was promised. It is true, they say, that growth rates have remained stagnant since the 1990s—though they still refuse to recognize that growth under ISI was double that of the current period. They argue instead that the fault lies with misguided governments that pursued extractive economies over the service sector, as if one did not complement the other. Evidently, in this view, development in Latin America will occur only if the region forges its own unprofit­able, service-oriented tech companies. In the unlikely event that elites even consider the long-term pursuit of high-value, own-brand manufacturing, they believe the specter of automation all but ensures failure.¹⁰⁵ Near-shoring in Latin America may be acceptable and even necessary so long as the region confines itself to the mere assembly of manufactured goods (as seen in Mexico). Countries like Brazil should instead take solace in token national champions like Embraer, and should leave the tribulations and rewards of strategic industries to states endowed with God-given comparative advantage.

Developmental economists are ultimately correct that the relative success of the Asian Tigers derives from a variety of accountability mechanisms that are lacking in Brazil and much of Latin America, such as capable state bureaucracies and sponsorship reciprocity (allocating subsidies in response to performance).¹⁰⁶ Future designs for industrial policy must learn from the example of successful peers if they are to bear fruit. States like Taiwan, South Korea, and China continually and conscientiously cultivated both existing and novel sectors for the future.¹⁰⁷ But when it comes to Brazil, development cannot occur so long as elites are captured by a deranged and self-destructive groupthink. At some point, development is a choice.

Should he choose to do so, Lula would do well to follow in the footsteps of his forefather, Getúlio Vargas, and forge a new industrial consensus. The stranglehold of the neoliberal Center over Brazil and its institutions can and must be reformed. For the time being, Brazilians can only hope—perhaps naïvely—that a third-term Lula has learned the right lessons from his time in the political wilderness.

This article originally appeared in American Affairs Volume VII, Number 2 (Summer 2023): 59–83.

Notes