The return of the global caudillo

For the past two months, I’ve been living in Sao Paulo, Brazil. Brazil has long been a country of interest to me, dating back to my early fascination with samba, tropicalia, and bossa nova music, influenced by some of my favorite hip hop producers and musicians (Madlib, Cut Chemist, etc.)

My first time in Brazil was in 2011, the height of the Brazilian success story. Lula had left the Presidency as one of the most popular politicians in the world, and his hand-picked predecessor and former Chief of Staff, Dilma Rousseff, seemed primed to benefit from his political goodwill. By merely continuing Lula’s tightrope agenda of addressing the concerns of the Workers Party (PT) electorate and Brazil’s poorer population, while simultaneously appasing global investors, who were clamoring to get in on the Brazilian success story through emerging market and country-specific index funds and direct private equity investment, a successful, if uneventful, Presidency could have been easily predicted. The Brazilian real was at a near-high relative to the Dollar, increasing the purchasing power of both ordinary Brazilians and the ultra rich, who were flocking to Miami to invest in real estate, art, and other “safe” investment (all capably recounted in Alex Cuadros’ essential Brazilionaires, a helpful guide to foreigners seeking to better understand Brazilian society.)

Life in Brazil was great for a 21 year old American student living in Sao Paulo, if not expensive, and the optimism of Brazil and its future permeated my own life, as I began to contemplate a future working at the intersection of the United States and Brazil, either in the public or private sector. I distinctly remember discussing this newfound optimism with Brazilian I met or had been professionally connected to, and being surprised by their reluctance to fully buy into this Brazilian success story, suggesting that they reality of Brazil lay below the surface – it was a country on a commodities “high,” still hopelessly corrupt and unproductive as it had been before Lula’s wave of success. That the Brazilian society was still an extremely unequal place, with poor educational system and a bloated pension system that provided Brazilian politicians and former military men obnoxiously generous benefits at the expense of ordinary Brazilians.

Maybe it was youthful naivety, maybe it was a childlike desire to believe in a nice story, but I had a hard time fully absorbing their dour realities. Global capital markets, who were betting heavily on companies like Petrobras, Vale, and JBS, as well as FIFA and the IOC, both of whom had chosen Brazil as the sites of their premier events, couldn’t all be wrong. And, Brazil, unlike its BRIC counterparts China and Russia, was a true democracy – the will of the people would propel truth and root out corruption via elections and the broader democratic process.

Seven years later, having seen much of the ensuing strife and judicial action from a distance, watching formerly prominent business leaders and politicians being led in handcuffs, and seeing Paulista Avenue (a symbol of cosmopolitan Latin America) become the sight of political protests (led by the middle class, no less), my youthful optimism has seemingly transformed into a curmudgeonly cynicism. For the past year and half prior to my arrival, Brazil had been led by an illegitimate President, Michel Temer, brought to power by a technicality-induced impeachment of Dilma, marking the end of the longstanding reign of the PT and the return of a certain type of “strongman”-led, entrenched politics in Brazil. This fact was borne out by Temer’s single digit approval rating and the nearly ubiquitous graffiti of “Fora Temer” (out, Temer) scrawled in graffiti on the walls of any major Brazilian city. The country is slightly less corrupt than my Brazilian friends had previously deemed it (owning to a strong and independent judicial system), but its poor education system and inefficient pension system remain. Much of the foreign emerging market money left (only to return again), and the Real had settled into a middling level of strength relative to the dollar.

Though not a coincidence, the impeachment of the female Rousseff and replacement by Temer, an old, white man “of the institution,” portended our own US election just several months following. I, and many of my compatriots, were shocked that the US electorate could cede power of the world’s sole superpower to a comically underqualified (being generous) symbol of grassroots anger and a desire for a US return to prominence. Watching The Final Year, it’s amazing to watch the reaction of Obama’s staff, who were just as shocked as the media pundits and financial markets by Trump’s victory (though maybe this speaks to the disenfranchised attitude of the electorate.)

However, across the world, it seems like the reaction was less chock and more a resigned acceptance of a global return to nativist politic, and a renewed era of strongmen, as evidenced by the UK’s vote to exit the EU, the power grab and consolidation of power seen by leaders in the Middle East in the wake of the Arab Spring, and the assumption of Michel Temer in Brazil, soon followed by a new breed of financial-caudillo in Latin America – Macri in Argentina and Piñera in Chile (all of whom, incidentally, replaced women previously in power.) Somehow, it seems easier to evaluate the political pulse of a country from the outside, or as an outsider, than it does to be swept up in the daily news cycle and invisibly-shifting taking place among the populace on the ground.

Ironically, my return to Brazil is in an election year, arguably the most consequential election for Brazil since Lula’s first electoral victory 15 years ago. As the pace of the Lava Jato corruption scandal has slowed, and much (though certainly not all) of the political corruption having been exposed, Brazil finds itself with a nearly blank slate to set its political and economic future, with no entrenched incumbent or heir apparent to assume the Presidency. The opportunity is wide open, the potential (though again, the word potential, continuing Zweig’s assessment of the 1930s) is immense. Yet from where I’m standing, as an outsider looking in on another country’s election, the outcome looks to be bleak, a combination of the global trend of strongmen playing on the fears of the populace, and a populist desire to shrink away from the global stage.

Six months from Brazilian general elections, and the pool of candidates vying for the Presidential election has hardly been set. Lula, long rumored to be seeking a return to the Presidency, remains embroiled in his own corruption scandal that will likely keep him off the ballot, with no well-known candidate to replace him and the PT vote. The Green Party candidate, always a long shot but well known to the electorate, seems unlikely to run. The only candidate who’s both well known and certain to be on the ballot in October is Jair Bolsonaro, a former military officer who advocates for more guns and military intervention on the path to law and order, and extrajudicial action (again, being generous) to combat urban crime and security concerns.

As familiar as this story sounds, the Brazilian people that I’ve spoken with aren’t yet convinced of the inevitable ascendance of Bolsonaro. As if seeking to validate my hypothesis on the ability of outsiders to evaluate a political temperature, they claim that cooler / more sensible heads will prevail, and that a more palatable, middle-of-the-round candidate (such as former Governor of Sao Paulo Geraldo Alckmin, or former Governor of Ceara Ciro Gomes) will rise above the fray to become the next President of Brazil, as if asking a populace to eat its vegetables, as opposed to the more immediate and attractive short-term “sweets” of Bolsonaro – the law and order, by any means necessary, candidate. To me, this seems like an inevitable outcome and a continuation of the global populist trend.

I’m oftentimes reluctant to offer predictions with any level of certainty, given my conviction in the occurrence of Black Swans and the reality that in fact no one really knows much, but in this case, considering my status as an outsider looking in, I feel like this diagnosis is appropriate. Regardless, an exciting year to come.