Friday, April 16,
2004
International
Brazil's da Silva
Is Victim of High Expectations
By Matt Moffett
and Geraldo Samor
RIO DE JANEIRO --
Just 16 months into a presidency that promised to remake Brazil with a tropical-style
New Deal, Luiz Inacio Lula da Silva finds himself besieged on all fronts
and with very few answers. The Brazilian president is wrestling with
an agonizingly slow economic recovery, a festering corruption scandal and
now a security crisis that has forced police to mount a military-style blitz
against drug traffickers here in the scenic hills of this tourist capital.
While the problems are virtually as old as Brazil itself, Mr. da Silva is
a victim of the high expectations he himself created with his extravagant
rhetoric and the inspiring example of his own rise from poverty to the presidency.
Mr. da Silva's election
in late 2002 "represented the biggest hope of change through democratic means
in Latin America in the past decades," says Jorge Eduardo Saavedra Durao,
president of the Brazilian Association of Non-Government Organizations.
Now, however, more
and more Brazilians are feeling let down. For the first time, Brazilian opinion
leaders are broaching the idea that Mr. da Silva won't be re-elected to
a second term in 2006. His approval ratings have lately fallen to 53%, seven
points below those of his predecessor, Fernando Henrique Cardoso, at the
same point in his presidency and 16 points below Mr. da Silva's own rating
as recently as December.
Yesterday, J.P. Morgan
added to Brazil's woes by downgrading the country's debt to marketweight from
overweight. The bank said the government "has missed an important window
of opportunity to launch a more positive reform agenda." Notes Brazilian
political pollster Ricardo Guedes: "Overall, it is not a positive picture.
People don't think Brazil will grow [much] this year, they think violence
is rising, that poverty is rising and the number of people who think incomes
will grow has diminished."
Because working-class
Brazilians feel such an emotional connection with Mr. Da Silva, they look
to him for personal accountability. Earlier this week, a 30-year-old unemployed
man set himself on fire in front of the presidential palace, saying he had
been frustrated in an effort to meet with the president.
Mr. da Silva started
promisingly last year, stemming a speculative attack on the currency with
stern monetary and fiscal policy and an aggressive package of congressional
reforms. The president has touted his success in stabilizing the economy.
"If you take the macroeconomic numbers, you will see that finances are in
order, that we are rapidly reducing distortions provoked by state spending
in a manner that no other government has managed to do in so little time,"
he said recently.
But this year his
administration seems to have been paralyzed, first by squabbling over economic
policy within Mr. da Silva's own leftist Workers Party and then by a scandal
involving an aide to chief of staff Jose Dirceu. "When you're on a soccer
team and have a good bench, you take out one and put in another, take out
two or three and shake up the team," said Jorge Bornhausen, president of the
conservative Liberal Front Party. "The president doesn't have a bench, the
government doesn't have plans and the team is weak."
Administrative disarray
has also undercut a much-ballyhooed antipoverty program that Mr. da Silva
launched to take the sting out of the rigidly orthodox economic policy.
"Lula was elected for social policies," says Maurice Costin, a director of
the Federation of Industries in Sao Paulo. "But those ministries have been
inoperative."
We're More Productive. Who Gets the Money?
By
BOB HERBERT
Published:
April 5, 2004
It's like running on a treadmill
that keeps increasing its speed. You have to go faster and faster just to
stay in place. Or, as a factory worker said many years ago, "You can work
'til you drop dead, but you won't get ahead."
American
workers have been remarkably productive in recent years, but they are getting
fewer and fewer of the benefits of this increased productivity. While the
economy, as measured by the gross domestic product, has been strong for
some time now, ordinary workers have gotten little more than the back of
the hand from employers who have pocketed an unprecedented share of the
cash from this burst of economic growth.
What
is happening is nothing short of historic. The American workers' share of
the increase in national income since November 2001, the end of the last recession,
is the lowest on record. Employers took the money and ran. This is extraordinary,
but very few people are talking about it, which tells you something about
the hold that corporate interests have on the national conversation.
The
situation is summed up in the long, unwieldy but very revealing title of a
new study from the Center for Labor Market Studies at Northeastern University:
"The Unprecedented Rising Tide of Corporate Profits and the Simultaneous Ebbing
of Labor Compensation - Gainers and Losers from the National Economic Recovery
in 2002 and 2003."
Andrew
Sum, the center's director and lead author of the study, said: "This is the
first time we've ever had a case where two years into a recovery, corporate
profits got a larger share of the growth of national income than labor did.
Normally labor gets about 65 percent and corporate profits about 15 to 18
percent. This time profits got 41 percent and labor [meaning all forms of
employee compensation, including wages, benefits, salaries and the percentage
of payroll taxes paid by employers] got 38 percent."
The
study said: "In no other recovery from a post-World War II recession did
corporate profits ever account for as much as 20 percent of the growth in
national income. And at no time did corporate profits ever increase by a
greater amount than labor compensation."
In
other words, an awful lot of American workers have been had. Fleeced. Taken
to the cleaners.
The
recent productivity gains have been widely acknowledged. But workers are not
being compensated for this. During the past two years, increases in wages
and benefits have been very weak, or nonexistent. And despite the growth of
jobs in March that had the Bush crowd dancing in the White House halls last
Friday, there has been no net increase in formal payroll employment since
the end of the recession. We have lost jobs. There are fewer payroll jobs
now than there were when the recession ended in November 2001.
So
if employers were not hiring workers, and if they were miserly when it came
to increases in wages and benefits for existing employees, what happened to
all the money from the strong economic growth?
The
study is very clear on this point. The bulk of the gains did not go to workers,
"but instead were used to boost profits, lower prices, or increase C.E.O.
compensation."
This
is a radical transformation of the way the bounty of this country has been
distributed since World War II. Workers are being treated more and more
like patrons in a rigged casino. They can't win.
Corporate
profits go up. The stock market goes up. Executive compensation skyrockets.
But workers, for the most part, remain on the treadmill.
When
you look at corporate profits versus employee compensation in this recovery,
and then compare that, as Mr. Sum and his colleagues did, with the eight previous
recoveries since World War II, it's like turning a chart upside down.
The
study found that the amount of income growth devoured by corporate profits
in this recovery is "historically unprecedented," as is the "low share ...
accruing to the nation's workers in the form of labor compensation."
I have
to laugh when I hear conservatives complaining about class warfare. They
know this terrain better than anyone. They launched the war. They're waging
it. And they're winning it.