Daniel Gallas: After months of suspense and substantial losses in opinion polls, the Brazil’s social-democrats have finally agreed on who will be the anti-Lula in the October election. Although São Paulo’s mayor José Serra – ex-president Fernando Henrique Cardoso’s choice – fared better in the polls, he gave up on his candidacy. His decision was announced this week, after a long battle against São Paulo state governor Geraldo Alckmin, who surprisingly one the nomination. It is now Mr. Alckmin’s responsibility to unite his party and bring the PSDB back to power.
Before his tenacious victory against Mr. Serra, Mr. Alckmin was mocked by many due to his discretion and uncharismatic nature. Revista Veja, Brazil’s leading weekly magazine, nicknamed him “the chayote popsicle”, saying that his ideas and his appeal to the electorate are as tasteless as the popular Brazilian vegetable. Journalist José Paulo Kupfer gives us a taste of the economic flavor of the Chayote Popsicle, in a review published by the Brazilian website No Mínimo.
Chayote in the economy
Like great hypothetical books such as “Sex after 80″ and “The Delicious English Cuisine”, a publication that eventually discussed the economic ideas of São Paulo state governor Geraldo Alckmin – now president Luiz Inácio da Lula’s main contestant in the presidential elections – would have to be entirely made of blank pages. At best, it would start with a foreword of self-evident statements and generalities, such as “efficiency and austerity are pivotal in order to achieve stability and growth.”
Unlike [the mayor of São Paulo city] José Serra, who had a better standing at the polls against Lula, but was beaten in an internal PSDB dispute by Geraldo Alckmin, the economy is not the governor’s stronghold. In the economic arena, he is like a “chayote popsicle”, a term used to describe his political persona. However, his victory over Mr. Serra proved that he was no political popsicle. This nickname seemed not to bother him, at least until he started his presidential campaign inside the PSDB. Mr. Alckmin always worked hard to forge an image of a competent leader and an efficient manager – a type of boss who is, if not clever enough to formulate strategies, tenacious in making them work.
Mr. Alckmin’s performance as head of São Paulo’s government does not reveal much of his thoughts on economy. Having inherited a completely reformed state from his predecessor Mario Covas, Mr. Alckmin worked hard in maintaining finances in order, without raising taxes, but also without lowering them significantly either. Coincidental or not, at the beginning of his presidential campaign, he dropped taxes on a series of basic consumption items. A rare novelty.
To cut a long story short, he did what conventional wisdom prescribed, and what the law required – although many times he could have done much more. With a degree in anesthesiology, Mr. Alckmin seems to have taken his profession’s main trait into office: that of discretion. As a politician, Mr. Alckmin achieved a remarkable feat in marketing. Many people in São Paulo think of him as a great accomplisher in office, but when asked exactly what it is that he accomplished, no one can give a straight answer.
Even after the start of his candidacy within the PSDB, in the few times that he has been called to give his opinion on economy, Mr. Alckmin evaded more meaningful questions. About inflation targets, for instance, he was reluctant to admit that, without giving up on the system, he could soften its application, extending target dates beyond the yearly basis or using different inflation rates, and not just the full rate.
Maybe this explains the financial market’s sympathy for Mr. Alckmin. A bad excuse for political analyst, the market feared Mr. Serra, who was viewed as an incorrigible interventionist, just as it did with Mr. Lula back in 2002. Mr. Alckmin is seen as the conservative man, aligned with market rules, and unsympathetic to heterodoxy in economy.
But one should not assume away such questions. The fact that, so far, Mr. Alckmin’s economic ideas are as tasteless as chayote does not mean that he has no convictions in this arena. Or that a hypothetical Alckmin government would leave theses questions to others. It would be wrong not to expect anything from his economic policy. Curiously, back in 2002, more than 50 million voters had great expectations in Lula. And, among many issues, economy was one that let down a great deal of the electorate.
Concomitant to his presidential campaign, Mr. Alckmin has been taking lessons in Brazilian economy. He has been hearing attentively to specialist such as Luiz Carlos Mendonça de Barros, Roberto Giannetti and Yoshiaki Nakano. These are highbrowed social-democrats from Fundação Getúlio Vargas (FGV), but they bear little resemblance to PUC-Rio’s economic crew that commanded the policies of president Fernando Henrique Cardoso’s government.
It is not hard to establish differences between both groups. The “carioca group” (PUC-Rio) has a financial and monetarist approach to inflation related problems. The “paulistas” (FGV), however, live in an industrial environment, and are more concerned with the expansion of the so-called “real economy”. Evidently, Mr. Alckmin is akin to the “paulistas”.
Even though both groups belong to the same party, these differences are very profound. The main item on the agenda is the interest rate and its impact in fiscal policy. Unlike Mr. Lula’s and Mr. Cardoso’s government, Mr. Alckmin’s economic advisors suggest that the monetary grip on the economy should be softened, with tightening in fiscal policy. In common folk’s language this means that they would drop interest rates to the floor and move fiscal surplus up to the skies.
