Voters in Brazil have a chance to re-elect their socialist Workers’ Party president. Or they can choose a surprise alternative from the Brazilian Social Democracy Party, as Bloomberg Businessweek reports.
The Social Democrats sense an opportunity to win by complementing their free-market philosophy with support for social spending. [Aecio] Neves has said he would bring inflation from 6.5 percent back down to 4.5 percent within three years, cut the number of ministries and government spending, boost investment in the economy to 24 percent of gross domestic product from 18 percent, and maintain funding for Bolsa Família, Lula’s popular program of cash transfers to the poor.
As governor of Minas Gerais, Brazil’s second-most populous state, Neves balanced the state’s accounts and almost doubled public investment through 2008, according to the World Bank.
Free-market philosophy? Good. Reducing inflation? Good. Cutting the number of government ministries and government spending? Good. Boosting “investment in the economy”? Not so much.
It sounds as if Mr. Neves and his colleagues have consumed some Keynesian Kool-Aid. Perhaps they should study the impact of increasing economic freedom instead.