Luiz Gonzaga Belluzzo - As "Fraturas" do Pós Abolição X Desenvolvimento

Added: 2026-05-28

[00:00:01]Good evening everyone. Good evening everyone.

[00:00:04]Good evening everyone. Thursday nights are always joyful, and tonight the joy is doubled because I'm hosting Professor Luís Gonzaga Belusa at Café Preto. I don't even have the right clothes for this, to receive one of the country's leading economists, who is an emeritus professor at the Faculty of Economics at Unicamp, and the founder of FACAMP. He is also the founder of Carta Capital magazine in partnership with the late Minucarta and was president of Palmeiras. He was a president of Palmeiras who helped organize and contribute to the organization of the institution so that it could make the leap it did, and we Corinthians fans are always chasing after Palmeiras, usually without being able to catch up.

[00:00:59]Well, it's a pleasure to welcome Professor Luiz Gonzaga Beluso here today.

[00:01:04]Good evening, Professor Beluso. Make yourself at home.

[00:01:08]Good evening, Bishop. I'm here and available to receive your suggestions and questions, right?

[00:01:20]Because, as you said, it's a chat, right?

[00:01:24]Let's have a chat. So, I wanted to greet everyone, all of you, and everyone who is here and having the patience to put up with me, to tolerate me, right?

[00:01:37]So, uh, it's a joy.

[00:01:42]Come on, everyone. I told you all here about the course at FESP, uh, professor, help me with the name, please, if I get it wrong, it's a course uh about the economic and social development of Brazil in the 20th century, which was news brought by Professor Eusébe Jorge [clearing his throat] when he gave us an interview here, and I did a short live stream, I made a short video inviting everyone to take this course. Those who didn't go ended up missing out on an opportunity. It was there that I met Professor Beluso in person and had the opportunity to speak briefly with him and Professor Luciano Coutinho. And that's how the invitation for this interview came about. The question posed by the program is the problem of Brazilian development in the face of the fractures brought about by the post-abolition period. We've talked a bit here on the program about this post-abolition period, about various mechanisms created to marginalize the population of formerly enslaved people and, obviously, their descendants.

[00:03:00]Yes, so that's another aspect of this process that we're going to discuss here today.

[00:03:07]Professor Beluso, you are a thinker, and not only a thinker, but also a worker for Brazilian development. So, how do you perceive the participation of this marginalized population, or this overpopulation, in Brazil's development process? Well, people usually think about these populations.

[00:03:40]Look, uh, right now I think that question has been raised, hasn't it? It's set. So much so that we are discussing this issue of the marginalization of an important segment of the population, which is the black population, right? So this marginalization, it still corresponds, I would say, to the slave-owning worldview that the Brazilian elite holds.

[00:04:18]about black people. So much so that you have, uh, prejudice, uh, the words, right, are aggressive towards black people, etc. But that's because the spirit of slavery hasn't faded, hasn't faded, hasn't ended. We have here, visibly in this society, an attempt to bring back the issue of slavery, right? And this is now becoming very, very clear.

[00:05:03]And I always remember our Sérgio Boarque de Holanda, right?

[00:05:14]He spoke about the persistence of the slave-owning spirit in Brazilian society. This is very, very internalized in the wealthier strata, in the Brazilian elite, white, etc., because it's something that's deep in the soul, as Freud would say, in the unconscious, right? When the issue comes up, or when you enter into a relationship with a Black person, etc., others actually reject you, etc. So, that didn't happen.

[00:05:56]That didn't happen. And it's there, isn't it? And a development program should contain or foresee a definitive incorporation of the black population into society. That's the question.

[00:06:19]We need to integrate them into society and give them respectability, right?

[00:06:28]What I see is that we are still a little far from achieving that desire, right? A little far, because you have the roots of slavery and, in fact, the anti-popular ideology that characterizes the Brazilian elite.

[00:06:58]So, professor, we've been seeing, in an almost violent way, a demand from the market to curb public spending. We saw what's called the spending cap, right? That was the measure that put the Brazilian state in a straitjacket, although, if I'm not mistaken, the payment of the public debt was excluded from that measure, and then the fiscal mess that came to patch up this spending cap. I mean, the question I'm asking is this, professor. To the extent that this demand comes from the market, and that often the traditional media, the mainstream media, becomes the voice of this market, it is not exactly the marginalized population, it is the Black, Indigenous, and LGBTQI populations who are also there demanding and needing rights. I mean, it 's not about restricting the Brazilian state to the elites who have been running the country since 1500.

[00:08:25]This question is very important because, let's say, a conviction has been consolidated here, and this comes from way back.

[00:08:40]The conviction has solidified that, uh, I 'll start with what I think is basic, that the state actually has to behave in a way that is absent from the market, right? The state cannot go against market trends. All of this has its roots, right, in the emergence of political economy with Adam Smith, and even more so with Ricardo, and now it has transformed into such a devastating belief, hasn't it? Because if we, you mentioned the press, uh, if we really look closely at the editorials of Folha, Estadão, and Globo, right, the majority of the editorials, uh, I have several here, uh, archived, the editorials, in fact, talk about the problem of spending.

[00:09:49]of the expense. So, public spending, I don't know what, can't spend. It's clear that the measure taken by the Temer government was immediately overturned, right? It was demolished, it was demolished, but that spirit still prevails in the mainstream press and also, I would say, in the culture of a part of the population, right, who also believe in and confuse public spending and the state with their own home.

[00:10:37]I can't spend more than I have, right? But then you escape a configuration that is important to the economy of capitalist society, which is the income circuit.

[00:10:57]Why is the income circuit important?

[00:11:03]You have to turn it off here. Why is it important for us to talk about the income circuit? Because that's what constitutes capitalism. Spending creates income; there is no income without spending.

[00:11:16]From whom do you receive your income?

[00:11:20]You receive it from someone, right?

[00:11:22]Yes. They 're spending money, are n't they? And what he's spending, let's say, what supplies his income, he also depends on the income of others. Oh my God in heaven.

[00:11:36]That's what we talked about regarding technology at the beginning of the program, right?

[00:11:40]Yeah, I'm busy doing a live stream here.

[00:11:45]Technology helps a lot, but it also demands a lot from us.

[00:11:51]Yes. Exactly.

[00:11:54]Exactly. So, what we [clearing throat] are observing now is the consolidation of this view that the state cannot spend. I had a debate today at Nocif on GGN.

[00:12:11]GGN, it's to address this issue, right, of planning.

[00:12:19]So, let's go back a little.

[00:12:21]The Brazilian economy industrialized and advanced primarily in the second half of the 20th century, thanks to projects embedded in what was known as Brazilian developmentalism.

[00:12:44]This included Getúlio, and Celso Cunhaque in a very special way, because he was responsible for industrialization, for the advancement of Brazilian industrialization.

[00:12:59]And let's say that even after the coup d'état, the PAEG (Program of Economic Action of the Government), the development plan, and later the second PND (National Development Plan), didn't abandon this way of dealing with the economy, right? So what exactly did Getúlio create? Let's remember, he created Petrobras, right?

[00:13:30]He created the BNDS, right?

[00:13:36]So, he was also part of Vale do Rio Doce, right?

[00:13:39]There is?

[00:13:40]He was also involved with Vale do Rio Doce.

[00:13:42]It was him. It was, it was. All of this contributed to the problem. Everything from Eletrobras, for example, yes.

[00:13:50]Which is privatized today, right?

[00:13:53]Even in this regression, as we are observing with Sabesp, right? Privatization is disastrous because it 's a public service, intended to serve the population, and not to make money abusively, as Sabesp is doing today, besides not being able to behave in a technically acceptable way, right?

[00:14:24]How much did the privatization of Sabesp cost? That was during Tarcissio's administration.

[00:14:29]It seems like it was 3 billion, right?

[00:14:32]Yes, 3 billion. But they sold it for a really cheap price, you know? Very cheap. They gave it to them, right? They gave, they gave, they practically gave. And now we're in this precarious situation from the point of view of controlling water and sewage, etc., right? It should have expanded throughout the entire economy, right? And that's how we ended up, right?

[00:15:09]Because this privatization greatly delayed a broader program. Look, the outskirts of the city, the outskirts of the city have problems with sanitation. This is very serious, because I saw the other day that there are several regions of São Paulo that are without water and sewage systems.

[00:15:32]Yes, especially lacking in certain areas, but the lack of water is also a perennial problem, right?

[00:15:41]Very, very, very much so, and that's exactly right, it actually suggests that this is a very unequal economy, doesn't it? Because if you walk around here in the gardens, you don't have this problem of water shortage, nor the sanitation problem.

[00:16:08]So this is already an indicator, an indication of inequality in Brazil. You can even look at inequality from this perspective, that is, from the lack of essential public services for the majority of the population.

[00:16:26]Yes, unfortunately the state faces difficulties because of this ideology. I believe it's not a lack of resources. Later on, I'll ask you about this issue of state funding, but this ideology prevents the state from providing this service as it should.

[00:16:47]Exactly. The problem is actually ideological. I put it in quotation marks because we all have ideology, but it's actually a conservative ideology, right? Very conservative.

[00:17:02]We can call this ideology neoliberal.

[00:17:09]Neoliberal? Yes. You completed what I was saying better.

[00:17:14]No, because it's a question I have. That's a fact, I have it.

[00:17:17]Neoliberalism is neoliberalism. And so this construction begins by ignoring this theoretical construction of conventional economics. She starts by ignoring how this capitalist system works, right? I mean, they, actually, I always joke that they, the rich in Brazil and their ilk, they are against capitalism because they don't want it to work, to function, right? So what are they ignoring?

[00:18:02]They actually ignore the fact that a monetary system wouldn't exist, for example, if it weren't for the emergence of central banks, such as the Bank of England in 1694.

[00:18:18]Right? It was there that the capacity for action of governments, both treasuries and central banks, was built. The first central bank, as you know, was the Bank of England, right? The Bank of England, regarding the management of public debt, which is another problem they are going to have, is going to have a default. There will be a default.

[00:18:50]How can you default on a debt? There has never been a default on public debt in the national currency. You only experienced default when you had debt in foreign currency. Let's remember the crisis of 1980, the late 70s, early 80s.

[00:19:13]That was a debt crisis, but because you weren't issuing the currency in which it was denominated, the dollar was denominated, right?

[00:19:29]It was denominated in a foreign currency, the dollar in this case.

[00:19:34]But, in other words, professor, if I understand correctly, if a country has a public debt, however large it may be, if it's in national currency, that country won't go bankrupt because of it.

[00:19:50]The problem arises if that debt is in foreign currency. And that?

[00:19:55]Yes. That's what happened in the external debt crisis. That's what I experienced, because I was in government in '86, '87.

[00:20:04]And then you had the problem of being unable to manage that debt because it was harming the functioning of the Brazilian economy. So much so that we had brutal inflation in, I don't know if you remember, which started in the 80s and ended with the Real Plan.

[00:20:32]Plano Real.

[00:20:33]But before that, there were many attempts, and if I remember correctly, the peak of inflation reached 80-something percent per month.

[00:20:41]80% on the eve of the Real Plan.

[00:20:44]per month, 80% per month, on the eve of the Real Plan. That's right. The royal plan was important. Now let's look at the situation just after the external debt crisis, right?

[00:21:07]We had a flight from the national currency, which is what determined the hyperinflation.

[00:21:13]flight from, then flight from the currency that is made explicit in price indexing, etc. What did indexing do? She prevented this inflationary process from becoming very dangerous because she... what was indexation? Indexing wealth, the monetary wealth of the rich. Now that 's indexing, right? A correction of demand deposits, etc., of financial assets, but the rest of the population did n't have a say in this story, right? So, we need to look at what these characteristics of a capitalist monetary and financial economy are, because the way economic policies today, and in other times as well, have dealt with this in a very inadequate way.

[00:22:23]And what do they say about the public debt? They say there will be a default, but there won't be a default, right, on Brazil's internal debt. And besides that, there's something else.

[00:22:37]This monetary and financial system, it could not operate without having the backing of public debt. Because if you look at an auction of public debt that the treasury holds from time to time, the demand exceeds what is being offered. Why does it exceed the limit? Because for financial institutions to have a minimum level of security, they need to possess assets.

[00:23:10]Why? Because public debt is a security asset of the economy. This was created over the years within capitalism. So, for example, what is the US public debt today? That's roughly 140% of GDP.

[00:23:28]So, they don't have the means to default, they wouldn't even be able to destroy the dollar as a reserve currency.

[00:23:39]Yes. So, our public debt is around 80% of GDP.

[00:23:44]80. Yes, because then the conversation goes like this: you have to [clearing throat] you can't count repurchase agreements as public debt, because they are instruments for regulating the liquidity of the private sector, but they are included in public debt. And, by the way, there's another problem you should consider: net debt.

[00:24:14]minus the assets you own.

[00:24:17]Yes.

[00:24:17]Uh, for example, our reserves of 350 -odd resources, reserves worth billions of dollars, right?

[00:24:29]In dollars. And that. That's 354 billion dollars. That's something like around 1,300, more or less. That. Exactly.

[00:24:43]Exactly. So this is an anchor, right? You have it, and it's indispensable for the capitalist financial system to function.

[00:24:59]Yes, it is a last resort asset.

[00:25:02]So, and in fact, these people who keep arguing about spending and saying that we need to stop spending, remember Temer's spending.

[00:25:18]And even Paulo Guedes continued with this nonsense, but unfortunately he had to contend with the pandemic, right? And then he had to let go.

[00:25:32]And the Lula government, uh, Haddad's government, actually, created the fiscal framework, which was a kind of relaxation of what had been done before, right? The spending cap, right, is much more efficient than the spending cap, because the assumptions and [clearing throat] the way of managing public debt and spending was contained. Regarding the fiscal framework, it actually reduced the spending cap, but it maintained the rules that control spending. Why do you say that's Haddad's fault? No, it's not Haddad's fault. I always, if you'll allow me, make a metaphor between the economic policy of Lula's third term and a football game.

[00:26:48]Yes.

[00:26:49]What game is it? The government is trying to overcome the resistance of the financial markets, it's just dodging the issue to see if it can lessen the power of that resistance. So he just sits there throwing one ball here, another ball there.

[00:27:13]But it's really difficult to penetrate that defensive wall, isn't it? So, the retracement is what constitutes the power of the financial markets. Because people treat the financial market as if it were something purely technical, and it's not.

[00:27:32]Markets have power, they really do, right? And it has the power to affect and influence economic policies. I would even say that we have another constraint for a development plan, as we were intending to discuss.

[00:27:59]Well, we have the inconvenience, I would say, of financial openness.

[00:28:14]Yes, this is a very important point to discuss today regarding the conditions of economic policy.

[00:28:19]Why do I say this? This is because, with the financial liberalization that followed the Real Plan, domestic monetary policy became highly dependent on the inflow and outflow of capital.

[00:28:36]Yes. When he enters, you have a comfortable situation, but he comes and goes.

[00:28:43]Now you have derivatives, etc., of exchange rates and interest rates, which also somewhat influence expectations in the private sector, right?

[00:28:56]So, what we need to be clear about is that this financial opening was celebrated, and by many people, including those who earned in reais converted to dollars, etc., right?

[00:29:12]Then came the problem when the dollar reached R$4, right?

[00:29:16]Yes, exactly.

[00:29:19]So, what you have here is that you can't conceive of the monetary system without this international dimension, because in the post-war period, after the Second World War, at the Bretton Woods meeting, right, the shocks that the European and American economies had experienced in the 1920s, right?

[00:29:54]For example, Kees considered them a product; he has an article where he talks about speculation and gambling, right?

[00:30:06]Uh, what does that represent? This means that you will be at the mercy of capital flows, just like you were back in the 1920s.

[00:30:19]Yes, this episode is repeating itself.

[00:30:22]What did Kees propose?

[00:30:24]He proposed a ban on the movement of capital. That's why he created the World Bank.

[00:30:31]Why did he create the World Bank?

[00:30:33]Because then you had funding that was very much anchored in the productive sector or in society, in the financing of society, with projects that would be presented there, etc. But the banks, the World Bank, unfortunately went downhill. But the important thing is for us to know that, even at that point, nobody remembers that, right? Even back then you had a problem with capital flows. This is one of the major issues that studies on inequality should consider, which is the structure of financial markets today, right? Then people say: "Ah, but the concentration of wealth is disproportionate, not only here, but in the United States. Financial wealth, right?

[00:31:34]Because 1% of the population has much more than the remaining 99%. That's the truth, isn't it?

[00:31:47]This is a brutal concentration of income, of wealth, which must be considered in any development program, because I'll have to make a point here, because capitalism has this structure.

[00:32:05]When people talk about financialization, right, capitalism has always been financialized since, I was talking about the 17th century, since the 17th century it has been financialized, right? No, even before the institution of the Bank in England, the kings and the like, they used financing from large banks, such as Rockefeller, B.F., and other private banks, right?

[00:32:53]Incidentally, there's an article in a book by a great French historian, who deals with the 17th century, with the evolution of the monetary system.

[00:33:11]He shows that, in the period..." But it's a concentration of power; banks financed kings, they financed kingdoms, right?

[00:33:29][clearing throat] So finance was already there, and with capitalism it perfected and advanced.

[00:33:39]What we are observing today is a very clear dominance of the power of financial markets. Let 's not forget that after the 1929 crisis in the United States, which spread throughout the world, Russell was elected in 1933 and had to face a very strong, violent depression.

[00:34:15]And in that depression, the unemployment rate reached 17%.

[00:34:23]So what did Russell do?

[00:34:27]Everything that is not approved by the conventional view.

[00:34:33]He created a planning structure for the American economy, right, in the New Deal, right? In his speeches, he emphasized the need to address the most financially vulnerable people, to recover their jobs. And he did that.

[00:34:58]Of course, there was an interruption there, but during the war, right? This became widespread during the Second World War because the American economy became immersed in the production of... Armaments, etc., and it provided jobs for men and women, right? It didn't have to be with weapons, but in the case of war, yes.

[00:35:21]And this mobilized many people in the United States, right?

[00:35:34]We have very interesting accounts, books, etc., about the New Deal and the political dimension of the New Deal, coordinating the economy, the political dimension that coordinated the economy.

[00:35:53]So, today we have the opposite, yes, it is the economy and finance that condition government decisions. When people say that Lula should have done this or that, I'll go back to that metaphor I made about the football game. The problem is that economists in general suppress power, power relations within society.

[00:36:22]And by suppressing them, they formulate these banalities that we are used to, as if it were simply signing a piece of paper, right?

[00:36:31]Exactly. And that's not actually the case.

[00:36:35]Professor, let me stop by the chat because I want to ask you another question later, but first I want to greet our people who are here eagerly. Okay. K Carol is saying goodnight, wishing everyone success. Johnny X is saying: "Goodnight, black coffee community." Mônica Vondalume is saying goodnight to everyone, as is Iolanda Vilela, and Marlúcia, who is also a member of this channel, is saying: "Goodnight, fellow member of the community." Good evening, Professor Luís Peluso, good evening, my black coffee quilombo." Sorai is Dalgisa dos Passos Quintinano Cruz. She's arriving here saying good evening, as is Débora Fabiana. Débora Fabiana is a member of the channel; she's the one who made that beautiful video I sent you with that photo you made available.

[00:37:30]And here are two questions. John X is saying the following: "Professor Beluso, the left proposes a new industrialization of the country." "What is this critical view of limiting state spending, and how can this process be made possible?"

[00:37:52]This is a question before I move on to you.

[00:37:56]Adão Oliveira, the founder of MNU, and Johnny X, who is also a member of this channel, are saying the following: the myth of defaulting on public debt is not rooted in the European Enlightenment families seeing themselves as colonizers of Brazil and identifying as liberals without the tax obligations that prevailed in Europe. In other words, he 's saying that this view, this fear of defaulting on debt, is still related to the slave-owning roots that you mentioned at the beginning of your speech.

[00:38:35]And Johnny X is asking this question about a possible reindustrialization.

[00:38:41]And I'll add to Johnny X's question : would a possible reindustrialization of the 20th century, with all the difficulties that this may represent, have the capacity to integrate the historically excluded part of the population?

[00:39:05]And would this be possible with this vision of..." Market-centric?

[00:39:08]No, with that market-centric view, it wouldn't be possible. You would have to completely revolutionize the ways economic policy is managed.

[00:39:19]So, let's talk about something that's happening now: artificial intelligence.

[00:39:28]It's going to destroy a lot of jobs, yes, everyone's discussing that, right?

[00:39:34]So, there's a point we need to be clear about. Capitalism can no longer satisfy the desires of the less fortunate. It can't anymore. The way it is, it's concentrating wealth. I was giving the example of the United States. It concentrates income, it concentrates wealth, and it destroys jobs.

[00:40:00]There was a certain Karl Marx who wrote * Capital*, and he says that labor will become a miserable basis for the accumulation of capital due to the destruction caused by the technological sector, right? Yes.

[00:40:24]That comes from way back. He saw it already, right? When he analyzed what he called the system of machines and the academic ingredients that ended up concentrating on the production of scientific and technological knowledge, right? What he called general Intellect.

[00:40:48]So this is present, and if there isn't action, it will become increasingly imperative to take action to protect the people who will be displaced and who will be left without jobs.

[00:41:05]But nowadays, if you say this, three editorials from Estadão (a major Brazilian newspaper), besides Folha (another major Brazilian newspaper), will come out saying that this is economic irrationality.

[00:41:17]It's a difficult battle with this, with this, with this Brazilian establishment, with this Brazilian elite.

[00:41:27]So, going back to the issue of industrialization, it's very clear that this reindustrialization will only happen with planning, as has already been done here in Brazil, planning in order to establish the State's capacity to coordinate the economy, because if it's left to chance, to the market, it won't happen.

[00:42:01]I understand. In other words, we need to overcome the resistance, we need to overcome the market, we need to overcome... Now, professor, I wanted to introduce, I have two more things I can't fail to mention to you. One of them is the following.

[00:42:17]At the time you created Carta Capital along with Menucarta, in the 1960s... 90, and as I told you, I always read it, back when it was still bi-weekly. We were in the Black movement, I was the coordinator of the Black Consciousness Center at USP, and we were thinking about reparations, we were, in short, calculating and thinking about how the Brazilian State could make reparations.

[00:42:41][clearing throat] Today there's a different vision of reparations, there's even a proposed constitutional amendment (PEC) reported by Congressman Orlando Silva, which talks about reparations, right? That is, the Brazilian state needs to repair the harm it did not only to the African population that was brought to Brazil, but also to their descendants. There are international calculations that say Europe owes trillions in reparations.

[00:43:11]But thinking here in terms of Brazil, one way would be to build reparations, whether in terms of PEC 27, which aims to provide public resources for these reparations, or another way to make reparations. Is there enough money for that? This could be, considering the issue you mentioned, that the more resources you generate, the more you collect? This could be a salvation for the economy. Brazilian?

[00:43:41]Exactly. You touched on an important point, which is that social and general policies need to be improved, right? They need to be accompanied by a change in order to, in fact, serve the less fortunate and, indeed, the entire population, because the economy has become an adversary of the people, of the people, an adversary of the people.

[00:44:17]So, who can correct this? It 's not the market; it won't be able to, nor will it intend to.

[00:44:24]The state needs to have programs alongside reindustrialization with a policy of income, income formation, incorporation, and the creation of new forms of work.

[00:44:42]I always insist on the need that, in the face of technological advances that will destroy more jobs, you have to create them. The state has an obligation to create jobs, I would say, in culture, in sports, in other dimensions of social life, that are contemplated with very important remunerations for people's lives, right? For life. So, we need to think about these projects that I I consider them important.

[00:45:30]And I was reading a book today by an American named Han Minsky, who is a very, very important economist, who deals with financial markets. I was reading his book today, and he says exactly what I'm saying. It's necessary, in fact, to create job opportunities or activities—more activities than jobs in the sense of paid work— that respect this project, respect this project of valuing human life. That's what we're talking about, right? Yes.

[00:46:16]Valuing human life, or placing human life at the center of concerns and planning. That's what's happening. It's a dehumanization of societies because of these impositions of capitalism, of technological progress. It's not that the technological project can even help free up people's time, but this freeing up of time is done in a somewhat cunning way. They are putting people on the margins, marginalizing people. This is very clear today.

[00:47:06]And I don't know if you I agree, but it's so obvious that it's frightening that the so-called dominant classes continue to bet on this model of society. This will eventually collapse.

[00:47:23]Then I remember Professor Milton Santos, uh, with two quotes. One, he said that the popular classes don't have a voice to demand rights, and the classes that do have a voice to demand rights don't want rights; they want privilege.

[00:47:37]That's it.

[00:47:38]And the other was that Brazil isn't exactly a democracy, right? A market democracy.

[00:47:45]That's it.

[00:47:46]Because a democracy has citizenship at its center. And in the Brazilian case, what 's at the center of democracy is the market. Do you agree with that? I completely agree. That's right.

[00:48:02]Uh, in fact, democracy here, uh, the way it's constituted, right?

[00:48:12]And I always like to give examples of other experiences, right? Let's take, for example, the Chinese experience, right? People say that China is a dictatorship. That's a lie, because in fact, the collective bodies operate in all instances of Chinese life.

[00:48:33]Yes.

[00:48:34]China has more or less uh 80 million Party members. Chinese Communists, and they hold meetings all the time to discuss economic plans, etc. And people say it's a dictatorship, but it's not a dictatorship of any kind, it's another way of incorporating people into the social and economic system, right? Just to say that salaries in China have grown by 30% in the last 20 years.

[00:49:14]Look, that's a phenomenon, right?

[00:49:19]Phenomenon.

[00:49:20]Actually, I said third, not 30%.

[00:49:23]It rose three times more than the previous period. Three times.

[00:49:28]Yes.

[00:49:29]Salaries went up.

[00:49:30]While here in Brazil there are journalists pressing, I won't name the journalist, to say that to increase the minimum wage you have to decouple retirement benefits.

[00:49:40]Oh, that's true. You certainly know what I'm talking about. I know, I know perfectly well, right? Haddad said: "But, Haddad said, but where was that done?" No, nobody did it. He said: "So that's it."

[00:49:53]Yes, professor, I wanted to ask you something else important. 30 years ago, no, 40, right?

[00:50:05]40, 40 years ago, we had the Cruzado Plan here in Brazil, and you were one of the main architects of the Cruzado Plan.

[00:50:14]I wanted to say something about this plan. I know that a lot of people speak badly of packages in general and so on, I don't know which packages we had, like the Colo plan, for example, left people in dire straits.

[00:50:29]You'd go into the supermarket, and there wasn't a single person there, not one, right? And so other plans, the cross-plan, and people may have criticism. I lived through the Cruzado Plan, no, I didn't just read about the Cruzado Plan, I lived it. I worked in receiving merchandise at a supermarket, so you have an idea, [laughs] at the time, so I was in the eye of the storm there, the Cruzado Plan was a plan that specifically targeted the poorest people.

[00:50:59]Ah, but certainly correct.

[00:51:01]Sir, the architects of this plan, would you do anything differently if you had to do it today?

[00:51:09]Yes, I think that there, as I mentioned, we had a price freeze, right, which would have to be gradually weakened or reduced, but the central issue is the following: the external debt crisis engendered this inflation, this Brazilian hyperinflation. During the external debt crisis, there was an outflow of Cruzeiros, which was the currency, the Cruzeiro was the national currency, right? That's why I gave the example of indexing and everything. Indexation was a process of monitoring inflation, the damage that inflation was causing, but it wasn't for everyone. But I met someone, and I went to Morumbi during that period, I watched a football game, and a gentleman approached me to say: "Look, I am very grateful to the Cruzado Plan because I was able to live decently, I was able to buy my car."

[00:52:30]I said yes, I managed to buy my car. I said, "That's great."

[00:52:34]You have it, I'll never forget that episode, right, when he came. This, as you were saying, simply exposes the effect of the Cruzado Plan on the less fortunate population.

[00:52:51]Undoubtedly.

[00:52:53]Undoubtedly. Now, the problem that ultimately brought the Prado plan to an end, was it more a problem with the plan itself or with interference? I mean, I don't really like the term " political interference" because it all gets lumped together, right?

[00:53:11]Yes.

[00:53:12]But [clearing throat] the management of the president at the time, Sanei, was more important to the end of the plan than any weakness the plan might have had.

[00:53:23]Yes, the tensions in the price system were very, very strong, right?

[00:53:31]In reality, we didn't have the necessary tools to contain the decisive factor for hyperinflation, which was the flight from the national currency.

[00:53:42]Yes.

[00:53:43]So you were thinking, right, what was this flight from the national currency causing? One price increase after another, right? And one after another. Why? Because inflation is actually a process, right? It's a process. In this case, the inflationary process was very intense, and this caused price adjustments. And it's natural that this would happen, the price adjustments, because companies couldn't survive, and neither could people, without, in fact, a minimum level of service, right?

[00:54:23]Yes.

[00:54:24]So, uh, that lasted from '80 -'82 onwards until the Real Plan. But what helped? What helped the royal plan?

[00:54:40]93 90 94.

[00:54:44]94 was already an election, right? I think 93 already had RV.

[00:54:50]Yes, I had the RV, but the actual plan wasn't there. It was in '94. [clearing throat] But then you see how a bit of subtlety is needed to understand how this capitalist monetary, financial economy works.

[00:55:15]At that time, John Kenneth Galbr came to Brazil. Do you remember him? I don't remember.

[00:55:23]John Kennedy Galbrits, who is an important, progressive American economist, was an advisor to Roseld, and he came to Brazil and I was invited to have a conversation with him.

[00:55:38]And while I was talking to him, he said, "It seems like nobody here realized that there was a financial crisis in the United States and in Europe, right?"

[00:55:51]And then I realized that this crisis moved capital towards Brazil, because things were very cheap here due to hyperinflation.

[00:56:07]In dollars they were incredibly cheap.

[00:56:09]So we built up reserves of $40 billion, which rose to $70 billion by the end of the 1990s, then began to plummet. But why is this important? Because that's how you were able to anchor the real to the dollar, to the dollar reserves. You were able to do it, right? Yes, this did have its advantages, let's say, with the fall in inflation, which is what harms and damages the lives of the poorest people, right? Inflation.

[00:56:52]But at the same time, in the administration of the plan, we experienced a terrible process of deindustrialization. Do you remember what the Selic rate was back then?

[00:57:10]It was very tall, wasn't it?

[00:57:12]7.5%.

[00:57:13]It was 7.5%.

[00:57:15]Real, not nominal. That's true.

[00:57:18]And at the same time, you had a tremendous appreciation of the real, right? And these two things helped push the economy toward deindustrialization.

[00:57:30]Deindustrialization, then, is in a way a child of reality. I wouldn't say that. I would say that the Real (Brazilian currency) played a very important role in deindustrialization, would n't you agree? But even during the years of hyperinflation, there was a tendency towards deindustrialization.

[00:57:53]In the case of the real, it accelerated this process. He accelerated that process, yes. given the state's inability to deal with it. Actually, the Real Plan was what brought about financial liberalization, right? After years in which Brazil, even according to IMF articles, could have capital controls, etc. Then things went downhill, didn't they? It's always like this.

[00:58:27]I understood. Well, speaking of the Selic rate, well, the government is making a mistake, or rather, speaking in a more popular way, but the Selic rate being so high also ends up taking money out of the worker's pocket and transferring money to investors, right? So, uh, and, and, and inflation isn't necessarily combated, uh, by increasing the CD rate. I'm not stating anything, I'm asking, because I know absolutely nothing about this.

[00:59:07]Could you soften that rate a little? It would be desirable, but let me say, as long as you have open capital markets, it's something that's sometimes difficult to explain, when you have open capital markets, you have a relationship between the American interest rate and the Brazilian interest rate.

[00:59:34]So, uh, that is, I wrote in an article called "coupon," talking about exchange rate coupons, not a coupon.

[00:59:44]No, all of this makes monetary policy much more difficult, because if you have, for example, a capital flight, your exchange rate will skyrocket.

[00:59:59]Yes, we've already watched it, right? So, managing this complex situation, you know, makes people understand that the monetary policy of a country with a non-convertible currency, as is the case with Brazil, needs to be explained. You have a currency hierarchy, a non-convertible currency like the Real, it becomes very, very subject to monetary policy, it becomes very subject to these relationships, and what happens with the American interest rate, right?

[01:00:43]So it's a very complicated thing, because an abrupt devaluation of the real against the dollar is a disaster for inflation, because it actually greatly affects imports, and since we are mainly importers of industrial goods, machinery, equipment and everything, this directly affects inflation.

[01:01:17]So the problem is that the configuration of this monetary and financial system is revealing its [clearing throat] precariousness.

[01:01:29]Yes, right?

[01:01:31]And what happens? The biggest defense of this situation is offered by the financial markets.

[01:01:38]So, because they engage in arbitrage with the dollar and the real, right?

[01:01:44]Yes.

[01:01:45]And that 's called carry trade, and that's very bad.

[01:01:54]I understood. In other words, it's not as simple as just lowering interest rates.

[01:01:58]No, it's not. Something that improves everyone's lives isn't simply a matter of chance, is it? Do I want to download this or do I not want to download it? There's a problem there that needs to be solved.

[01:02:12]Can I ask you a question about soccer?

[01:02:15]Sure, you can.

[01:02:16]Who is the star player for Palmeiras? Is that Leila?

[01:02:21]Is it Abel or is the star player on the field?

[01:02:27]No, Abel was very important in Palmeiras' journey. Over the last two years he hasn't been so happy, but Leiria has been a good manager of Palmeiras, of the club, because there was a moment that I have to mention that changed Palmeiras' financial situation, which was the construction of the AK stadium.

[01:03:03]Why? Because you created an arena.

[01:03:06]If you were to look, if you were to look at my son who was here, if you were to, I would also appreciate him helping with the technical aspects of getting into the program, right?

[01:03:19]Yes, he's leaving.

[01:03:22]But I was saying that there was a financial breakdown. When I was president of Palmeiras, the team, the club was completely without financial means. So, after Alias, why is Alias important? Because he turned the stage around, it's preferred for shows.

[01:03:49]And the shows provide Palmiro with a very strong income, right? Of course, there were more people involved, for example, in Palmeiras' youth academy, which improved exponentially and also helped financially. You sold, let's say, Hendrick and Estevan for the price. And in Brazil, Palmeiras had a very important cash flow boost.

[01:04:20]Well, last year it was something like 1.7 billion. That 's a lot, huh?

[01:04:30]A lot of things.

[01:04:32]A lot of things. Sensational.

[01:04:35]Now Abel has surpassed Osvaldo Bradão of Palmeiras. Look, what I think is that these are two different moments, right?

[01:04:52]Yes, when Osvaldo Brandão was Palmeiras' coach, he stopped being the coach, then he came back, the conditions of competition in Brazilian football were different. You were still in the period of semi-professional clubs, and in fact, somewhat unprofessional in the management of the clubs, right?

[01:05:26]Yes.

[01:05:27]So, Osvaldo Brandão followed those rules of that time, right?

[01:05:35]He won many championships with Palmeiras, but Abel's situation is different.

[01:05:43]When is he arriving at Palmeiras?

[01:05:44]2020.

[01:05:46]Yes, the club's financial situation was different then, there were many signings, but I think it's difficult to make that comparison because they are two different moments.

[01:05:59]But I had great admiration and friendship for Osvaldo Brandão.

[01:06:03]Osvaldo Brandão.

[01:06:05]And it is interesting that you speak of Palmeiras' situation with a certain degree of tranquility. A certain no, right?

[01:06:12]Everyone's in debt. I'm a Corinthians fan, so I can imagine what goes through my head when I think about everyone else being in debt. And Palmeiras is doing just fine because you were the main architect of the construction of Anias Park, right?

[01:06:25]Yes.

[01:06:25]The president of Palmeiras orchestrated everything perfectly. I remember that at that time people were saying: "Oh no, but Palmeiras is trying the wrong thing because W Torre is going to own the Palmeiras stadium, and so on." And I've been to shows at Ines Park about four times already. right? Because they really are sensational shows, and we're seeing what this has actually brought Palmeiras in terms of prestige, money, and a whole range of other things, right?

[01:06:52]So, uh, I'm going to tell a short story.

[01:06:57]Uh, when I had vascular surgery here in 2010, right?

[01:07:11]And after I left the Sírio hospital, Andrei Sanchez, who was president of his club, invited me, along with Juvenal Juventus from São Paulo and the president of Santos, because I said I wasn't going to run for election anymore under any circumstances, right?

[01:07:36]And then we started talking about the stadium projects, and Andre told me the following: "In Palmeiras' case, the stadium belongs to W Torre, and in Corinthians' case, the stadium is ours, right?

[01:07:57]But Palmeiras didn't spend a penny on the stadium. It was all W Torre that went into debt. Yes, I even told him, look, the property belongs to Palmeiras, the surface rights for 30 years belong to W Torre, so it has nothing to do with ownership. The property belongs to Palmeiras.

[01:08:19]Yes. And that's what actually gave the club this advantage that the contract—I don't like to say this because it sounds arrogant, pretentious, but the contract was made very carefully.

[01:08:39]In fact, I would say the contract is unfair in favor of Palmeiras. If you want, I can send you a copy of the contract, the deed of the contract.

[01:08:51]Yes, yes. That would be interesting, because I've never seen a contract like that, right?

[01:08:56]Oh, I'll send it to you. That would be interesting. That would be interesting.

[01:08:59]And I think we..." We are football lovers, we also need to look at these things with a bit of rationality, right?

[01:09:07]Yes. Yes. In my case, as a fan, and you are much more than just a fan of your club, you need to look at this kind of thing with a bit more rationality, right? We need to think about how the clubs can get out of this mess, right? Besides, I think Flamengo and Palmeiras are in a better situation, the others are in a very difficult situation, right? We need to have a certain rationality.

[01:09:34]Professor Luiz Gonzaga Abeluso, I want to thank you immensely for your kindness, your gentleness in accepting our invitation, for having this chat, for giving us this real lesson here.

[01:09:47]We have a lot to think about in everything that has been done. And I ask you to make your final remarks.

[01:09:53]No, I just wanted to thank you for this opportunity you offered me, and my mantra at the end is actually the protection of the less fortunate, especially the black population, the protection.

[01:10:22]It's the social inclusion of these people that, otherwise, won't bring about the desirable development.

[01:10:34]I repeat, my message is that the economy should serve people's lives, not serve itself, serve people's lives and not serve itself.

[01:10:50]Sensational. Sensational.

[01:10:53]Thank you very much. Thank you to everyone. We 'll wrap it up here, we'll round off a couple of minutes.

[01:11:01]Big hug. On Monday there's Café Preto, Poder e Política and another interview. Big hug. Thank you. Until next time.

[01:11:11]Bye Bishop. Thanks. Stay a little longer just to round things off, Professor.

[01:11:16]Ah, okay.

[01:11:19]Greetings.

[01:11:41]Now yes, now I'm finished.