My Thoughts on Yesterday’s Voting

My thoughts on the impeachment proceeding and yesterday’s voting:

The left has consistently accused those in favor of impeachment of launching a “coup” and their leaders of “treason”. These claims of “coup” and the labeling of “traitors” are extremely troubling. If the left refuses to accept what is happening as anything but lawful and legitimate it can lead to a real breakdown in peaceful and mostly orderly protests and civic actions.

Is it a coup? No. The impeachment proceeding has progressed under the letter of the law and was explicitly approved by the Supreme Court. In order to be impeached Dilma needed to commit a crime, which she did when she authorized illegal loans from state-owned banks to finance the treasury.

Is it fair? Yes. In this case, two wrongs make one right. As Dilma’s partner in both her 2010 and 2014 tickets, the current VP, Michel Temer, is just as guilty of the crimes which she is accused of. Like Dilma, he signed off on these illegal loans. The speaker of the lower house, Cunha is a ‘gangster’ and is a target of Operation Carwash. Removing Dilma can be seen only as a first step. Temer and Cunha will come next. Cunha has become highly unpopular with many members of congress and was tolerated only to move the impeachment process forward.

Was yesterday’s voting a positive development? Yes. The streets want Dilma’s head on a platter and the lower house approving impeachment satisfies the large majority of voters, which is what democracy is all about.

In my opinion the most crucial issue is little discussed. The current political crisis is caused by structural problems with the institutions and “the current rules of the game” The institutional framework of the 1988 constitution created several inherent causes of instability. These are maybe the two major ones:

  1. The insanely fragmented party system caused by the lack of an election threshold to hold a seat in congress amongst other causes has given Brazil a lower house with an absurd 25 political parties. For the president to rule, a coalition with numerous parties needs to be created. These are often unstable, given the fragmentation, and prevent any president from passing reforms that would change a system that these parties benefit from. This is arguably the root of Brazil’s most recent corruption scandals, as to form coalitions appointed political positions (control of ministries, state owned companies etc…) are award to parties’ member of the coalition, often with the implication that these parties will use their appointed offices to siphon off public money for their political campaigns and their own pockets. Operation Carwarsh has unequivocally shown this.
  2. The lack of representability caused by the lack of congressional districts. Congressmen are elected through an opaque and outlandish method where whole states act as districts and any candidate winning a minimum number of votes (total votes divided by that state’s number of representatives in the lower house) will gain a seat. However if one gains more votes than the minimum required, those are redistributed to an open party list. A person votes for an individual but often someone else on that candidates party also gets elected. The common person does not understand this process and has been left frustrated by a legislature that does not represent his wishes.

I don’t think yesterday deserves to be celebrated. Brazil is still in a major economic slump and has become bitterly polarized. I can only hope that the senate moves quickly to finalize this issue and the president (whoever it is at the end….) get back to the work of actually governing.

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Emerging Markets Insights

a blog by Frontier Strategy Group

longandvariable

A blog on macroeconomics and public policy by Tony Yates.

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