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Fernando Henrique Cardoso, the former Marxist intellectual colloquially known as FHC, who went on to slay hyperinflation and then twice became president of Brazil, from 1995 to 2002. Few people can claim to have been a philosopher king, let alone to have put the “B” in Bric – the now commonplace acronym, coined in 2001 by Goldman Sachs’ chief economist, that groups Brazil, Russia, India and China. And, although both the world and Brazil have fallen in love with FHC’s successor, President Luiz Inácio Lula da Silva, Cardoso is the man widely credited, at least abroad, with laying the foundations for a boom that has caught many off guard both by its speed and where it has come from.

We discuss why Brazil should have developed an image in the eyes of
the world as an exotic, lazy, tropical paradise, associated with
football, carnival, samba – and not much else. “Because of slavery and
because it was once a European monarchy in a tropical country, it was
much easier for outsiders to stick to preconceived ideas than to do any
analysis,” he says. But, by the 19th century, abetted by waves of
immigration, Brazil already had a strong export sector. And by the
1940s, it had really taken off.

The big change came with the
second world war when, after flirting with Nazi Germany, Brazil joined
forces with the Allies. “Intellectually, Brazil had previously looked to
France; economically, to Great Britain,” says Cardoso. “Now the focus
moved to the United States.” Along with the US investment Brazil
secured in return for its support – CSN, the Brazilian steelmaker built
with US money, is still going strong – the war delivered an automatic
defence from imported goods. Brazil became a closed economy, withdrawing
into itself in the same way that other big countries with huge land
masses such as Russia and China have done. The country’s postwar boom and industrialisation were led by powerful,
centralised governments, at first civilian and democratic, and then,
from the mid-1960s to mid-1980s, under military rule, until democracy
was re-established in 1988. But the transition to democracy, he says, was chaotic, and culminated in
a world-class bout of hyperinflation in 1990, which “only strengthened
outsiders’ preconceived ideas: as well as being exotic, Brazil was not a
serious country”.

now that Brazil has found self-belief, what next, I ask.

“The
big thing is quality,” he begins. “We’ve spent all our lives worrying
about quantity – whether GDP grows or not. Now the question is quality.
What kind of education is this? The main reason children skip school is
no longer economic. It’s because they’ve lost interest. There’s no
point. The quality of teaching is awful.

“We need a new wave of
reforms,” Cardoso continues. “How will we increase productivity to
compete? That means fiscal reform, lower taxes, investment in human
capital and infrastructure.” Read the rest of this entry »

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