Rousseff Buoyed by Rising Poor as Brazil Rating Drop Looms

Photographer: Evaristo Sa/AFP via Getty Images

Brazil’s once-richest man, Eike Batista, is watching his empire crumble. The 16 percent plunge in the Sao Paulo stock exchange in 2013 was second-worst in the world. Meanwhile, Luzia Souza is faring better than ever in the country’s poorest state. The 29-year-old mother of two is one of 22 million people who have emerged from extreme poverty during President Dilma Rousseff’s three years in office, according to government figures. She moved from a shack regularly flooded by surging rivers and surrounded by open sewage to a house with running water on the outskirts of Teresina, the capital of Piaui in northeast Brazil, under a program financed by the government and the World Bank

Souza is the type of voter who may help Rousseff win re-election this year despite an economy that has grown at half the pace achieved by her predecessor and inflation that has exceeded the 4.5 percent official target throughout her watch. As investors focus on rising interest rates and deteriorating fiscal accounts that have raised concerns of a credit downgrade, Rousseff’s expansion of social programs for the poor has shored up support among her political base.

“Everything is getting more expensive, but certainly I’m doing better than two or three years ago,” said Souza, who receives 134 reais ($56) a month in cash aid and last year got a 2,500 reais subsidized federal loan to open a clothing store. “Unless a new, much better candidate comes along, I’ll vote for Dilma again.”

Extreme Poverty

This year, Rousseff expects to make good on the pledge from her 2010 presidential campaign to eradicate extreme poverty, defined by the the Social Development Ministry as anyone with income lower than 70 reais a month and by the World Bank as income of $1.25 per day or less.

Such programs ensure Rousseff millions of loyal supporters and help offset discontent with rising living costs and poor public services that brought 1 million demonstrators into the streets in June, said Mauro Paulino, managing director at Datafolha, a Sao Paulo polling firm.

“Recipients of social welfare overwhelmingly support the Rousseff administration,” said Paulino by phone from Sao Paulo. “It’s enough votes to make the difference in an election.”

The president’s office did not immediately respond to requests for comment from Bloomberg.

Approval Rating

Rousseff’s approval rating is 52 percent among those earning less than 1,356 reais per month and zero among those with more than 33,900 reais monthly income, according to a Datafolha poll taken Nov. 28-29. If next October’s presidential election had been held then, Rousseff would have won 42 percent compared with 26 percent for her closest rival, former Environment Minister Marina Silva, the poll showed. The survey had a margin of error of plus or minus two percentage points.

Many of Rousseff’s social programs were started by her predecessor and mentor, Luiz Inacio Lula da Silva. During his two terms from 2003-2010, Lula expanded the cash transfer program he renamed as Bolsa Familia and started the public housing drive called My House, My Life, which has delivered 1.4 million homes since 2009, with 1.6 million more under construction.

Reduce Inequality

As a result, Brazil was the only country to reduce inequality in the decade through 2009 within the group known as the BRICS, which includes Russia, India, China and South Africa, according to data on the World Bank website. The Gini coefficient, a measure of inequality, fell 5.08 points for Brazil, while that of Russia and China rose 2.62 points and 2.86 points, respectively.

The reason Brazil made more progress in promoting social mobility than economic growth is that Lula and Rousseff focused on tackling inequality rather than unwieldy taxes, poor infrastructure, and other obstacles to economic growth, said Deborah Wetzel, head of the World Bank in Brazil. As the global economy and demand for Brazilian products slowed during Rousseff’s tenure, those costs became more evident and eroded the country’s competitiveness.

“Brazil has grown more slowly and growth has been more volatile but the progress in reducing inequality has just been amazing -- it is indeed a revolution,” Wetzel said in an interview in Brasilia. “It was a very deliberate policy choice.” 


Print this post

Do you like this post?

Showing 7 reactions

commented 2014-01-06 18:02:14 -0500 · Flag
Chris R. writes:

dilma smiling because she has the favela vote. no different than what every incumbent in latin america does… ignore the hard structural work required to move from 3rd world to 2nd or 1st during most of tenure, than offer campesinos cash and promises as ‘elections’ approach. this seems to be the magic o’s stratagem as well.

lula bequeathed onto her a bare cupboard. he ignored nearly all supply-side structural reforms — infrastructure, tax regime simplification and reform, bureaucracy rationalization, educational reform — and instead fueled the demand side with cheap credit edicts and pretend middle-class giveaways. now she’s scrambling as she has no time to do the heavy lifting lula ignored, that would require decades (brazil had the opportunity with the soft commodity ramp,but it squandered it and blew the proceeds) so she’s resorted to amplified cash hand-outs and marquee sports event hosting to maintain the fiction of brazil as a middle class arriviste.
commented 2014-01-04 13:29:46 -0500 · Flag
Tom N. writes:

as JC so aptly put it:

‘The gerbil wheel of Western life. Enjoy yourself, it’s later than you think.’

the baseness of the gerbil wheel has always existed,
We Just Didn’t Used to celebrate it, champion it and
aspire to it, this is the reality of what the self-seekers
have turned the country into, a Huge piñata, just keep hitting
it until it spills forth that which you seek, by whatever means
commented 2014-01-04 13:28:40 -0500 · Flag
JC writes:

my gut tells me & many other sentient beings, that something epochal is afoot, BUT, I would caution you that the eventual “winners” of power post this event will NOT be
free-market libertarians. My guess is that this group will make Reid-Pelosi camp seem like Ayn Rand disciples, which is why you have taken pre-cautions look at every single bloody revolution you can think, OTHER than the Ameican example, & what followed was worse than what preceded dictators & caudillos across the board.
commented 2014-01-04 13:27:55 -0500 · Flag
A.R. writes:

I believe there is an epochal, violent, and historical event on its way soon that will sweep much of what we know away. An economic “Black Swan” – type collapse is surely in the cards. And that will precipitate a monumental social upheaval. If you think that the sad-sack monkey-theater that is playing in front of our eyes in the West today – starring nullities, mediocrities, sycophants and psychopaths like Obama, Merkel, Putin, Abe, “Dilma”, et al. (not to mention local grotesqueries like Pelosi, Reid, Rubin, Clinton, DeBlasio) – is sustainable I believe you are mistaken.
commented 2014-01-04 13:26:23 -0500 · Flag
JC writes:

public office was once held by the loftiest of citizens, usually serving w out pay (see Gen & Prez G. Washington & others) 200+ yrs on, all manner of opportunists came to DC for slurp from the public trough. there is nothing new under the sun when it comes to human nature
commented 2014-01-04 09:07:45 -0500 · Flag
Alexander writes:

Machiavelli studied Human nature…not the transient issues of the day. Thus he will always be a touchstone and his insight into human nature will always hold.

Tragically the section of the Human race that chooses to get into Public Service is usually the dregs of society…the mediocrities, the sycophants, and the ruthless psychopaths…productive and intelligent people usually avoid that sewage pit…to humanity’s detriment…
commented 2014-01-04 08:42:46 -0500 · Flag
JC writes:

look at Dilma, smiling & confident she will be re-elected, even as Brazil goes from hero to zero do you think we are any different? this is why talk of righting the ship USA & self-reliance is delusional the founders of this country were well aware of the fatal flaw of a democracy, in that, once the populace understands that it can “vote” itself money, in all its forms, there is no turning back, other than a benevolent dictatorship. Chile is a good example, it took someone like Gen Pinochet to wrest control from the socialist Allende
& give the Chicago Boys a free hand in running the economy. He & his team were wildly successful. But look at Chile today, Once again voted for Michelle Bachelet, who was President a few years ago thx to her agenda of giving more to the poor, the underprivileged & the victims of inequality. She will tap the copper fund, which is Chile’s equivalent of a sovereign wealth fund, to further distribute federal largess. what lesson has been learned (or even remembered) by Chilean residents 1 generation removed from default, military dictatorship & austerity? Clearly next to nothing. And so goes the human
race, catastrophe, rebuild, debauch, destroy. The gerbil wheel of Western life. Enjoy yourself, it’s later than you think.
Lastly, look no further than DeBlassio’s election to further prove my point. Many of those in attendance now have a godfather in power that can (re)distribute the goodies & perks. So we in this circle flail at the distortions & economic ignorance of the newly elected mayor, but it is all about power, it is not about economic rectitude. Honestly, 500 years on from publishing his great work, Machiavelli has been proven utterly correct