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In the past two weekends, two different events took place to discuss the role of corruption in Brazilian politics. The Centers for Latin American Studies at University of Arizona (UA) and at Michigan State University (MSU) organized round-tables to discuss how corruption still plays a central role in Brazilian politics and how Brazilian political institutions may create incentives for corruption. In MSU, the focus of the event was on political corruption in general, with some emphasis on the Brazilian case. Brian Crisp, Lucio Renno, Timothy Power, Carlos Pereira and Claudio Couto delivered papers ranging from the macro-determinants of corruption to the details of the current Brazilian scandal and how it is linked to the rules of the electoral system, to campaign finance and to strategies of coalition management in multiparty systems. In the University of Arizona the emphasis was more on the challenges posed to the strengthening of democracy in Brazil by corruption. The goal of this round-table was to discuss the progress of and challenges to Brazilian democracy especially in face of the current crisis. Mauro Porto talked about the role the media plays in the Brazilian political system and how it participated in the current scandal. Ben Goldfranck evaluated the impact of the political crisis on the Workers’ Party and Carlos Pereira discussed how legislative/executive relations in coalitional presidentialism created incentives for the existence of the Mensalao. All in all, both events generated an interesting debate about the causes and consequence of corruption in new democratic regimes.

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One of the constants as the current crisis has speed along is the large discrepancy between the perceptions of external investors and international press and the domestic debate and press coverage. Very often they seem to be reporting about paralell worlds: one with dark undertones, talk about impeachment and a new denounce every single day; other a much rosier picture, where a most excellent minister of finance holds his place, economic policies are sound and, despite all the noise, things have been going quite well.

Why are these views so different? I’ve been in Brazil for over a week now, so I can now venture to propose an explanation. The perceptions in Brazil are different because (the informed) people here actually listens once in a while what politicians have to say, while the external public tend to concentrate on observable actions. So it is easy to get a more positive view about the Brazilian government: stop listening to whatever its representatives are saying.

Which view is more correct? In (normal) political science, we tend to pay much more attention to observed behavior that impressions or expressions. The reason is simple: talk is cheap. Politicians tell you what they think you want to hear. And that’s probably not very close to any sort of “truth”.

So, we take a position closer to the one of the “external observer”. We infer politicians preferences by their actions and judge policies by their outcomes. We try to stay away from the sound and fury of the news*, and concentrate on long run patterns, build toy models, and always think “what would a rational actor do?”.

The downside of it is that we have very few specific recommendations, nor discourses about current events. No matter how erroneous so called “analysts” views can be, decision makers seem to take into account what they think (at least judging by the amount of money spent on them.) So the information must be valuable, right? Not necessarily. But this is a topic of another post.

If someone followed closely the political crisis in Brazil for the last couple of months, but were also completely oblivious to the economic situation of the country, what would be his/her guess about Brazil’s currency value against the dollar? Bear in mind that the latest news involve the all powerful Minister of Finance Antonio Palocci and his group.

Surprisingly enough, as the figure shows, the real has increasingly gained value over the past months while the political crisis kept mounting and mounting. Why? I remember saying to Carlos Pio just before the 2002 elections that the numerous veto players present in Brazil do make economic reform very difficult. However it also can have positive consequences. In particular, if the economic conditions are reasonably good and the economic policies in place sustainable, it will be similarly hard to change.

My bet is that investors decision making follows similar lines. Yes, changing bad policies is very hard in Brazil. However, changing good policies is also hard!

Last Monday a long interview with President Lula da Silva was broadcast in Brazilian TV. You can find the transcript (MS Word format) here. I posted a pdf version here.

Sunday, October 23rd, the Brazilian electorate flocked to the polling booths to vote in favor or against the prohibition of the commercialization of weapons and ammunition in the country. 64% voted against the prohibition, while 36% voted in favor. 97% of the electorate cast a valid vote. 1.39% cast a blank vote and 1.68 a null vote. More than 95 million voters participated in the popular consultation. Unquestionably, this massive popular participation gives the impression that this experiment of direct democracy was a success. But is that really the case?

In addition to the comfortable lead nationwide, the vote against the prohibition won in every single state. What explains this victory in face of the astronomically high levels of violence in Brazil, documented both by the media as well as by scholarly research? Especially because a leading cause of deaths in Brazil is through weapons. Furthermore, what does this result tell us about the role of direct popular participation in democratic governance?

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