Minority captured Budget and made Brazil very unequal, says economist – 10/14/2021 – Market

With more than half of the Brazilian population in food insecurity and nearly 30 million living in poverty, Brazil has resources that are underutilized in other areas that should be directed towards programs for early childhood and youth.

For the director of the Brazilian Center for Research Applied to Early Childhood, Naercio Menezes Filho, if these individuals are not assisted now, they will become dependent on the State for the rest of their lives.

“The money exists. The question is how to manage to tinker with interests involved in its distribution. A minority captured these resources,” says Menezes.

“Instead of having inefficient programs and subsidies, let’s do one simple thing: transfer more money directly to the poorest.”

According to his calculations, for every R$1 more per capita offered in a program such as Bolsa Família, the GDP per capita of the municipality where the money is spent increases by R$4, which would contribute to the acceleration of growth and development of local economies.

In international comparison, Brazil does not spend little in the social area. They are about 25% of GDP, with growing expenditures on education, key to increasing income and productivity. But the poverty rate remains high. What happened? In fact, we have greatly increased spending on education and health in the last 30 years. In high school, it increased about three times since 2000 until now. But spending on education alone is not enough to definitively eliminate poverty.

There is a portion of the population that is born into a very poor family and cannot have the minimum conditions for learning and passing the grade, because they cannot develop socio-emotional skills, such as persistence and determination. Nor the cognitive ones.

There is recent research that clearly shows that the first years of life are essential for healthy child development. If you are born in conditions of poverty, without basic sanitation, in crowded houses, with uneducated parents who did not have the opportunity to educate themselves, you end up with impaired development.

Without a good child development, the person cannot learn, does not have the desire to do their homework, to go after it, to make an effort and ask questions to the teachers.

We are spending more, but this often does not work for children in very poor families. Furthermore, it is not only the expenditure that matters, but the management of education.

There are education networks in poor municipalities that do not have the slightest management capacity. Brazil has more than 5,500 municipalities, most of them very small, without managers with a high educational level who know how to plan and execute, demanding goals from teachers and students.

Over the past 30 years, Brazil has included many people in school, people who did not reach high school. But spending alone is not enough.

Bolsa Família was created in 2003 to focus on early childhood. It requires children to visit a health center and maintain a minimum school attendance (85% of classes for students aged 6 to 15 years and 75% for students aged 16 and 17). What is the result? In the beginning, Bolsa Família was created to eliminate extreme poverty and not let any family go hungry. He reached the goal. Only two things happened later.

First, the value was not readjusted according to inflation and is now low [o último reajuste foi em 2018].

The second is that its coverage has not expanded in line with increasing poverty.

But the program has always been highly praised for its efficiency. spend little [R$ 35 bilhões/ano; 0,5% do PIB] and you can practically eliminate that extreme poverty over time. But that little is too little.

To end extreme poverty, depending on the region, you would need to transfer R$500 or R$600 per family, especially for those with young children.

In some regions, the nearly R$200 on average currently paid by Bolsa Família are not even enough to end extreme poverty, because spending on food is greater than that. Bolsa Família needs to be improved and reach all extremely poor.

You can do this using the federal government application that was developed in the pandemic for emergency relief. For families with small children, it is not enough for parents to have enough to eat, but not enough to buy medicine, clothes and children to develop in a healthy environment, where the mother has time to talk and interact with the child. This is essential.

A child who lives in a home of difficulties, where he sees his mother worried about money, having to work with no one to leave the children with, who does not interact, this child will take longer to start talking, walking, and then he will have a lot of learning difficulty.

She’s going to be one of those troubled kids, which neuroscience has been explaining very well.

She will hardly leave high school well-educated and get a formal job, where there is more productivity and where more taxes are paid. This creates a vicious circle, harmful to the perpetuation of poverty and to the economy.

I know that money is scarce and that we have a relevant fiscal issue at present, but the most important thing we can do for the country is to invest more in these children so that we have a chance to change in the future.

What would be the alternatives to finance more spending on early childhood? The resources are there. The question is how to move the distribution, with a minority that captured these resources. As, for example, with subsidies to groups and sectors [quase R$ 310 bilhões/ano].

This goes through a lot, because Brazil is a structurally unequal country. People who were born into more privileged families have a series of benefits that poorer people do not have.

From deducting health and education expenses from your income tax to studying at a public university for free after spending your life in private schools.

My point is that instead of having all these inefficient programs and subsidies, we do one simple thing: transfer more money directly to the poorest.

For this, it is not necessary to create a new ministry or administrative structure. Just give these people a card. We already have the technology to do this. We have the Bolsa Família, the Cadastro Único [sistema nacional de informações para fins de inclusão em programas sociais] and the record of people who needed to receive emergency assistance.

We need to use all of this in an efficient program, with greater value, with cash provided directly at the checkout. So that people can draw alone, without assistance, without political influence.

This would allow the family to raise this child, with the mothers interacting with them. Then comes the education and health system, where we have already spent a lot, although improvements are needed.

But today it is as if Brazil had only gone halfway. The other half is missing, which is the inclusion of these children from birth. With more resources than available today by Bolsa Família.

For even if the economy grows and manages to generate jobs, these very poor people in childhood will have accumulated disabilities that will make it difficult for them to benefit from it.

A part of society is against this type of initiative. They say it generates accommodation among the beneficiaries. How to respond to this concern? Yes, there is a risk if you transfer too much money to parents. There is a temptation to avoid formal work, for example; and the fear of appearing in the databases and losing the benefit. But this risk is smaller than that of these families ending up having children who will depend on public resources for the rest of their lives.

When these children do not have adequate development, they will become “neithers”, who neither study nor work.

These young people will be depending in some way on the State forever, because they will not be able to insert themselves in the formal sector of the economy.

Because they don’t have any experience. The only thing they can do is deliver food per app. These people will end up draining public finances, one way or another, for the rest of their lives, reinforcing the cycle of poverty. This is called structural poverty.

Despite the need for more investments in children, the main cause related to poverty seems to be low growth and the stagnation of productivity for years, no? If we go back, Brazil grew a lot in the 1960s and 1970s, at the time of the economic miracle, because we brought people who were in rural areas, in subsistence agriculture, to urban centers. Working in the service sector, even if earning little, is better than subsisting on the farm.

When people came to urban centers, they started to earn a little more, to be more productive. Then the economy starts to grow. When this cycle ends, other things are needed, such as education and human capital, health and technology.

And we haven’t had this consistently in Brazil over the last 40 years. This source of growth, which is what is happening in China today, has been exhausted with the decline in rural-urban migration.

We didn’t have a new engine to stimulate growth. Little by little, we put young people in school, up to high school. But the quality of learning remains very poor, as well as health.

And there is no incentive, neither for people to educate themselves more, nor for companies to invest in technology and management. Brazilian firms are poorly managed too, even in industry.

Because there is no competition, international competition, there is a lot of government subsidies.

In the case of young people, why do they become “neither-nor”? Because they think they will never be able to compete and have a decent life. This lack of investment from early childhood makes these young people look at their parents, their friends and think: “I’m not the one living in a nice apartment, I’m going to get rich. This is not for me.” many give up on studying along the way.

It is necessary to give people opportunities to make their dreams come true. A package in early life that will allow for this. And, for companies, competition. Open the economy, integrate value chains, simplify the tax structure. We don’t do any of that.

We have persistent inequality, a lot of people lost and without hope, and companies that are complacent, without investing, without innovating. And so we’ve been stuck for four decades.”

Naercio Menezes Filho, 56

Professor of the Ruth Cardoso Chair at Insper and at FEA-USP, he is director of the Brazilian Center for Research Applied to Early Childhood and member of the Brazilian Academy of Science. He has a Ph.D. in economics from the University of London, with a master’s degree and a degree, also in economics, from USP


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