By the Blouin News Business staff

Brazil’s economic problems, according to the protesters

by in Americas.

Students hold signs during a protest of what is now called the 'Tropical Spring' against corruption and price hikes, at National Congress in Brasilia, on June 20, 2013. Photo: Reuters

Students hold signs during a protest at National Congress in Brasilia, on June 20, 2013. Photo: Reuters

Mre than a million protesters have taken to the streets across Brazil this week to show their frustration with their government and the country’s economy. Beyond slow growth and rising costs of living, they are furious about poor public services, police corruption and the money being poured into new stadiums for international sport-related events — money, they say, that could be better used to improve health and education.

The demonstrators, who have marched throughout 12 state capitals and counting, show no signs of dissipating as rapidly as they emerged. Though the protests erupted as a reaction to a rise in bus fares in Brazil’s biggest cities, this is a protest of the middle class — a byproduct of the Brazil’s economic and social transformation over the past decade.

The world’s sixth largest economy has built a growing  – and praised – middle class, drawing 35 million people in to it out of poverty over the past decade. As time has gone by, Brazil’s middle class has developed a degree of confidence that’s driven its members to realize that they are the engine of the country’s economy, as in any nation. It has also taught them the middle-class habit of demanding more from government than simply the chance to become better off.

Perversely, many of the youths who are protesting in the streets don’t use the public transport. Mostly they own cars nowadays.  Yet for all their first-time discretionary income, many still have relatively low incomes by developed-country standards, low enough to feel the pinch of high inflation and rising interest rates.

The costs of health insurance and schooling are high, making both as inaccessible for thousands of the new middle class as they have long been for the large segment of the population that remains poor. Amid slower growth and rising prices the feel-good factor of their new position is fading. Income inequality, a long standing problem in a country where it has been among the most acute in the world, is returning as an issue of discontent.

After ten years of policies to tackle poverty — not without some success — the government’s reaction to its recent economic setbacks is to focus on the country’s international image rather than on the basic needs of its people and on tackling the politically difficult structural economic reforms the country still needs. Brazil will spend more than $26 billion building stadiums and other facilites for its two upcoming major sporting events.

Hosting the 2014 World Cup and the 2016 Olympics were supposed to be Brazil’s gala celebration of its arrival as a high-level, politically influential power in the international economy. The red carpet has already started to be laid out, and won’t be rolled up. The protesters may say they are disgruntled with the poor state of public services, now being cut as government debt grows, but it is highly unlikely that the international events will be canceled.

The demonstrations have also cast a shadow over the expected reelection of Dilma Rousseff in next year’s presidential election. She came to power in 2011 with the clear goal of continuing the policies of her predecessor and mentor, Luiz Inácio Lula da Silva, to stimulate growth and reduce income inequality by hiking public spending and the minimum wage. But her consumption-over-inflation policies has driven inflation to 6.5%, the upper end of the official target range, while growth has slowed, and inadequate investment in infrastructure to ease the structural bottlenecks in the economy constrain long-term growth prospects.

On June 21 Rousseff appeared in a nationally broadcast 10-minute address. She pledged her administration would improve public services and initiate a series of reforms such as a new plan to benefit public transport or allocating oil royalties in education. Those, and others, are long-term reforms. They should be clearly outlined and presented to Brazilians, another part of what they claim. In the past President Rousseff has vowed to bring down inflation, a long-standing and unfulfilled promise. She’s going to have to be more explicit and compelling if she is to calm the protesters. Besides, the world is looking even more attentive now. The future of Brazil as a global power is unfolding.