and a reading of the global record of the last
half-century suggests that international capi-
tal flows are fickle that Brazil would do well
to generate a lot of that capital from domestic
that the savings rate must rise to meet the
ambitious spending plans of the government
without crowding out private investment.
perience: Brazil, after all, coasted through this
last recession on the strength of government-
induced consumption. For another, the focus
on the primary deficit as a measure of the
becoming increasingly misleading. It has
been all too easy for policymakers and the
public to forget that the public sector is a
net drain on national savings.
collects 36 percent of GDP in taxes almost
double the percentage of Mexico and close to
the percentage raised by Europe's welfare
undermine incentives for private investment
and kill the golden gosling. Of course, tax
hikes seem a political nonstarter: the public is
retirement system. It runs huge deficits, and
simply requiring it to keep revenues in line
with outlays would increase national savings
as a portion of GDP by 4 percentage points!
benefits in the private sector.
If savings rates can't be raised, perhaps the re-
turn on public investment in particular, on
investment in education can. Brazil spends
a larger percentage of its income on educa-
tion than most other developing countries.
among countries in Latin America. The coun-
try has managed impressive gains in primary
and secondary enrollment in recent decades,
but without a corresponding advance in qual-
ity. Equally important, Brazil needs to rework
its priorities within the public education bud-
get priorities that now favor investment in
higher education over the provision of decent
schools for the masses.
economy is better governed today that it has
been in the past. A center-left government has
made great strides in correcting the injustices
that stranded millions of Brazilians on the
edge of subsistence in the midst of a culture
that celebrates material excess and it has
managed that task so far without undermin-
ing the economy's stability or productivity.
Enduring evolutionary change in the 21st
century, under a democratic Nova República,
no longer seems an impossible dream.
cheaply. If it is to achieve European or East
the expense of producing more tomorrow.