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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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Brazilians went to the polls yesterday (10/24/2005) in order to vote
for or against the passage of a gun ban law. Although in fact quite lax
(e.g. existing gun owners could continue to own guns, but access to
bullets would be restricted; one could also become a member of a gun
“club”/shooting range, etc.) the proposal was soundly defeated.

Two years ago, when the legislation proposing the referendum passed in Congress,

three-quarters of Brazilians favour banning the sale of guns

Guns in Brazil | Disarming | Economist.com

The results? 59 million voters (64%) casted a “”no” vote? while only? 33 million voted “yes”.

Some say the defeat is linked tho the decline in support for Lula’s
government after the long batch of corruption scandals. There is no
reliable survey data to support this fact. What we know is that voting
in the last presidential election is not significantly correlated with
the gun ban results at the state level.

On the other hand, the vote for the ban was weaker at the upper
income and education levels, which were also are the most critical of
Lula administration. As this datafolha poll
shows, at the lowest income level, 55% answered they would vote “No” in
the referendum, while 67% answered similarly at the higher income
levels.

The gun ban was never a policy intended to stop criminals, but
rather to help diminish the staggering rate of futile homicides that
happen in Brazil. Fortunately, local policy experiences (such as the
decline in homicides in Diadema, Sao Paulo) show that much can be done even without the ban. Let’s hope the local governments across the country are up to task.

It was almost like a soccer match. The most popular brazilian politics bloggers (in Portuguese, of course)  NOBLAT and Josias de Souza
broadcasted vote by vote  an important decision in the Brazilian
Supreme Court. Federal Deputy Jose Dirceu, former President of the PT,
Chief of Staff (and at times called “Prime Minister”) in the Lula
government, was trying to stop the ongoing expulsion procedure in the
Camara.

The  episode illustrates a broader pattern. Supreme Courts  have
been performing an increasingly important role in economic and
political issues in contemporary latin american politics. However,  our
understanding of how decisions are cast in these bodies  is quite
incipient. Not much data have been assembled in a easily accessible
form, and our theoretical understanding is in an even worse shape.

This is the main reason Antonio Pedro Ramos and I embarked on a project to estimate the ideal points of the Brazilian Supreme Court Justices. Our objectives are twofold: a) to what extent do ideal point models account for the votes cast in the STF? b) How are the preferences of outside actors, in particular the Executive, related to those of the Supreme Court Justices?

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Federal Deputy Ricardo Berzoini will be the new President of the Workers’ Party, having defeated Raul Pont in the run-off of the elections that took place last week. What does Berzoini’s victory represent? Very simply, it represents continuity with the party’s previous administration, deeply involved in the current corruption scandal. Like the victory of Aldo Rebelo for President of the Chamber of Deputies, the victory of Berzoini is further proof that the Workers’ Party and the government’s strategy is to stick with its current policies and its approach to the corruption scandal. The medium term goal of both the Workers’ Party and the current administration is obviously to invest in the reelection strategy, avoiding any deep restructuring of the party. The PT and the Lula administration hope to promote its achievements while in power as well as vehemently denying the involvement of its top leaders in the scandal. Reelection is the goal, and dealing with the scandal is but a component in the strategy of achieving electoral success.

The question then is, what are Lula’s and the PT’s chances in the 2006 elections? It has become common place to see Brazilian political analysts being asked to estimate Lula’s chances. Instead of engaging in a guessing game of speculating the probability of Lula’s success in 2006, we will instead list some of the current administration’s achievements and failures and leave it up to the reader to judge what Lula’s chances are. Comparisons with the Cardoso administration are unavoidable simply because the main competition Lula will face will come from a candidate backed by the PSDB/PFL coalition that is strongly restructuring itself.

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September 30th was the last day politicians in Brazil had for making a party switch if they wanted to compete in next year’s election. Excessive party switching between elections is seen as a permanent problem in the Brazilian polity.

The following figures help to make some sense of the dynamics of party switching in Brazil. The first plots the number of seats held by each party.

One of the things to note is the slight drop in the number of seats held by the PT, somewhat accentuated in the last days of September 2005. Another is the rise in the number of seats held by the PMDB, making it now just as large as the PT.

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Aldo Rebelo (PC do B/SP) defeated José Thomaz Nonô (PFL/AL) by 15 votes in the runoff for the presidency of the chamber of deputies, last Wednesday night. In spite of the victory of the Lula administration, represented by the success of Rebelo, the tight margin reflects how hard it will be for the government to construct a supporting coalition in congress in this pre-electoral year.

In fact, the first signs are that it will be very hard to construct consensus around pressing issues. Take the political reform, for instance. Today is the last day for changes to be made in the electoral code in order for them to become effective in next year’s general elections. There was a growing agreement that a constitutional amendment was going to be voted today to extend the deadline for reform to December, so that Deputies could debate the several proposals in Congress’ agenda. Still, as of now, no agreement has been reached and it seems like no changes in the electoral rules will be implemented in 2006. Furthermore, there is no guarantee that any kind of agreement will be reached by December.

Another factor that caught the media’s attention during this race was allegations of rampant use of pork barrel distribution and patronage in the weeks prior to the elections. According to speculations of the media, the use of pork and patronage was fundamental to assure Rebelo’s victory. Such claim is completely in line with a strand of research in Brazilian legislative politics that claims that a main mechanism of pork barrel politics in Brazil is the allocation of monies by the executive branch to fund budgetary amendments presented by Federal Deputies. During the year, the allocation of federal monies was quite restricted. Some analysts of Brazilian politics (Carlos Pereira and Tim Power), have actually made the claim that the disproportional allocation of resources amongst the supporting coalition, and concentration benefiting the PT, is in the essence of the difficulty in dealing with congress and the need to rely on the mensalao.

It seems though, that even amidst its most serious crisis, when the government put all of its muscle in the dispute, it came out victorious, especially because apparently it has distributed resources more proportionally amongst potential allies. Maybe that is the strategy the administration will follow in the remaining of its first, and very likely, only, term in office.

First round is over. Here are the results:_

1. José Thomaz Nonô (PFL/AL) - 182
2. Aldo Rebelo (PCdoB/SP) - 182

3. Ciro Nogueira (PP/PI) - 76

4. Luís Antônio Fleury (PTB/SP) - 41

5. Alceu Collares (PDT/RS) - 18

A draw! Ciro Nogueira received 14% of the votes (instead of the 10% I predicted.)
There will be a runoff between Nonô and Rebelo in a couple of hours.