Brazil as Petro-economy

November 23, 2008

Ever since the announcement of the discovery of Brazil’s Tupi oil field earlier this year, I haven’t really taken the time to think about the political implications of the new-found reserves. This article from the Christian Science Monitor is suggestive in that regard. Unfortunately, the piece hews to a decidedly optimistic storyline about how the income will pay for new social welfare programs. That’s all well and good, but let’s take off the rose-tinted glasses long enough to consider at least a few of the less attractive alternatives.

I share the view that Brazil’s new-found oil wealth will bring about transformative changes within the country’s economy, its state, and its society. The infusion of cash will indeed open up untold opportunities for closing Brazil’s notorious wealth gap. It will also further entrench Petrobras – already one of the largest firms in the Global South – as a worldwide energy-production leader. To the extent that these opportunities are managed effectively, Brazil will gain in influence, wealth, and international prestige.

However, to the extent that the Petrobras windfall is managed poorly and generates unanticipated spillover affects, it could easily produce a catastrophe. The sudden surge in income will likely give Petrobras executives and investors even more political clout than they already have, leading to increased opportunities for corruption (already a neverending problem in Brazilian politics), graft, and nepotism within the state. Furthermore, only an immense amount of well-channeled political goodwill can prevent the expansion of Petrobras from encroaching on the political interests of Brazil’s other burgeoning industries and its most vulnerable citizens.

This is not about simple optimism or pessimism, but rather about the realities of imbalanced petro-economies. The reasons why other oil-rich nations have such a horrendous track-record in terms of political accountability, transparency, and inequality has a lot to do with the pressures that a burgeouning state-owned energy sector tends to place on the rest of the state and private sector. Just because Brazil has enjoyed sustainable growth and social progress since the mid 1990’s does not mean that it has somehow “advanced” beyond the point at which its oil might prove more troublesome than its worth.

NYT Fail

November 14, 2008

The Grey Lady is running a series entitled, The 44th President. The picture on their landing page right now betrays some wishful thinking, however:

The 44th President?

Bailout opacity

November 11, 2008

This ain’t good:

The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

The Bloomberg story goes on to quote Barney Frank spouting a bunch of nonsense about it not being so bad if “the fed gets a haircut” on these loans, but that logic misses the forest for the trees.

Bad information about the state of the Fed’s credit offerings will only breed mistrust and doubts among the rest of the market’s participants. The Treasury is correct to assume that making this knowledge public will destabilize some firms. However, if the Treasury actually wants to improve things in the long run they will seek more transparent procedures since a market with grossly distorted information does not benefit anyone.

Kudos to The Guardian‘s Rafael Behr, he’s written a really thought-provoking story on class tensions and political preferences in British cities.

The story details how politicians and marketers are using data-mining techniques to target particular voter/consumer groups through a large data-base called Mosaic:

Mosaic sorts people into 11 categories, sub-divided into 61 types. Each is defined according to shopping preferences, age range, family structure and values. I am curious to see where I fit in, so Professor [Richard] Webber punches in my postcode. ‘E30: New Urban Colonist – Younger, high-achieving professionals, enjoying a cosmopolitan lifestyle in a gentrified urban environment.’

Professor Webber winces. He didn’t come up with the names, he explains, and would have preferred not to use a metaphor of colonisation. I can see why. It makes me sound like a yuppie conquistador, setting sail for the inner city and decimating the indigenous population with my imported gastro-pub virus. The actual categorisation is more prosaic, and precise. The computer guesses that I shop at Waitrose, where I buy organic vegetables. I am likely to be white and 25-34 years old. I probably read The Observer. New Urban Colonists make up 1.36 per cent of the population.

This is a quintessentially New Labour way of looking at social division: not as a story of competing classes, but as a patchwork of consumer segments. The Mosaic headings are reminiscent of those emblematic voters – ‘Worcester Woman’ and ‘Mondeo Man’ – who were explicitly wooed and won over by Tony Blair in the run-up to the 1997 election.

Since the Obama victory is all-but-guaranteed to spark a growth industry in electoral social-networking tools, I wonder how the new tools will transform the uneasy class alliances that underly British politics today.

Brace yourselves for a flurry of promises and diplomatic hand-waving as the world prepares for this weekend’s global financial summit.

The NYT reports that the G20 wants a bigger say in the global economy. Problem is, the global financial summit is not designed to achieve far-reaching structural changes of the sort G20 leaders such as Brazilian President Luiz Inácio Lula da Silva are seeking.

The European Network on Debt and Development suggests that Europe will bring lofty ambitions to the table as well, but precious little in the way of concrete mechanisms or meaningful procedural reforms to affect change.

My sense? Prepare for disappointment. As Aldo Caliari points out, the timing and form of President Bush’s economic summit is designed to undermine ongoing negotiations at Doha and avoid the transparent and multilateral approach of the United Nations. As such, the whole affair is looking depressingly similar to the original Bretton Woods meetings of 1944. Until the U.S. and Europe show the political maturity to surrender some authority and embrace a truly multilateral process we will get a lot of fluffy proclamations but few substantive changes.

Don’t get me wrong, I suspect that there will be some impressive sounding stuff that comes out of this weekend’s meetings. I have no reason to believe, however, that it will be anything like the kind of democratic, equitable sorts of reforms to global trade and finance that the world so deeply needs.

Sunday apology

November 9, 2008

I’ve been devoting my writing time to finishing a short article during the last few days.

That doesn’t totally justify my lack of posting, but it does explain it…

campaign as soap opera

November 7, 2008

I’m slogging my way through Newsweek’s lengthy seven-part series on the presidential campaigns.

Lots of little tidbits and illustrative quotes make these pieces an entertaining read, but the most striking thing is the editors’ attempt to cast the candidates into made-for-TV character molds.