Where’s the Money?

Editorial

RIO DE JANEIRO, BRAZIL – We hear constantly how well the Brazilian economy is doing, and it is hard to find any reports to the contrary. The economic growth is an amazing achievement for a country jokingly referred to in the past, as ‘the country of tomorrow – and always will be!’ By many accounts, their day has come. Sometimes though, it is hard to understand where all the money is going.

To point to a few obvious indicators of the success: oil, this is the underpinning of the country’s growth, especially Rio’s resurgence. A stable economy, strong currency and increased consumer spending (even if it is on credit). A real estate boom has ensued, again especially in Rio. 2014 World Cup. 2016 Olympics. It’s all good news.

There are some questions though, like… where is all the money going? The monthly minimum wage here is still just R$545 (US$326), paid thirteen times for an annual income of R$7,085 (US$4,384). The U.S. federal minimum wage, by comparison, is US$7.25 per hour; or US$15,080 annually.

Inflation and real estate costs have exploded, as well as continued high taxes and all this has made Rio the most expensive city in the hemisphere, and perhaps soon the world.

So, where is all the money going? It seems all reports agree that Brazilian ‘Executives’ are the highest paid in the world. The average salary for an executive in Brazil is US$600,000 per year, in a country with a minimum wage of US$4,384 per year… not to repeat myself…

Another place it may be going is in the pockets of politicians, reflecting on the news of the ex-chief of staff, Antonio Palocci, increasing his personal wealth by twenty times between 2006 and 2010. Political fortune building is not unique to Brazil in principle, just last night the U.S. Republican candidate Newt Gingrich was being raked for some misrepresented “consulting” income.

Perhaps the scale of corruption in Brazil is larger and more mainstream then some “developed” countries… perhaps not, perhaps it is just less concealed. The point is, where is the money going, and where should it go?

In the U.S. we have upper, middle and lower-class distinctions, with some gray areas in-between of course. In Brazil they have Class A through D, represented as: Classes A/B – 14.97 percent, Class C – 53.2 percent, and Classes D/E – 31.83 percent of the population.

This reinforces what most know about Brazil already, there are some very wealthy people, and a lot of very poor people. The unfortunate trend is that while Class C has been growing, they are also being hit with inflation perhaps the most, and a great example is the firefighters protests for higher wages (currently earning R$950 [US$597] per month, or R$12,350 [US$7,768] per year).

On a positive note, massive social projects and infrastructure programs are in place with the PAC plan. The Minha Casa, Minha Vida (My House, My Life) housing project is just one example, and in Rio the UPP efforts continue working to help favela communities out of poverty with basic security and the promise of social inclusion projects.

I love Brazil, and want to see it prosper and succeed and hope for a better life for all its citizens. I also love the U.S., and think the best demonstration of its success is the distribution of wealth for the population.