Thursday, February 23, 2012

Why inflation could be bad for sustainability

Adding a few rooms on the third floor of a univeristy building in Santarem.

       How do you invest your savings when 100 dollars now will only buy half as much in a few months?  Before Brazil switched over the real in the mid-90's, it's old currency was inflating at a rate of 50% per month.    And although the real is now one of the strongest currencies in Latin America, the history of inflation has had lingering impacts on the culture of saving.  Instead of putting the family's nest egg in a saving's account or mutual fund people add on to their houses -- another room or an additional floor.  In Santarem, a lot of buildings looked like they were unfinished when really they were just beginning a new stage.  And it makes sense -- what investment can a family make that is most likely to increase in value over time?  Cars depreciate rapidly after purchase.  There's education, of course, but what if you've run out kids?  Real estate seems like a pretty good bet.
      There are probably other solutions to this problem.  During the civil war in Angola my grandmother's brother was able to get his salary paid to him in pounds.  In fact, investing in foreign bonds would be another way to secure your money.  But what if you are a local merchant or a farmer without access to international financial markets?  Capital investments -- a new tractor, a new floor -- might be the only way to go.
   But having to spend in order to save could create a haphazard development scenario.  The nice thing about investing is that it allows you to plan longer term -- to wait and buy the new equipment when you're ready to expand production or build the addition on the house after the second kid is born.  The sum total of all growth in fits and bursts could make city planning chaotic and business coordinating tricky.  And if investment has to be concrete it requires materials be consumed and natural resources extracted -- liquidity in savings would be better for the environment.
      I might have this all wrong.  Perhaps interest rates are usually tied to inflation rates in countries with an unstable currency, so saving isn't that big of an issue.  Or maybe there is some other way to keep investments liquid.  There are probably tangents I haven't thought of either.  I'm curious to learn more and hear other people's thoughts and experiences.

Thursday, February 16, 2012

A little bit of Lusophone cultural exchange

There is a song which is everywhere in Brazil right now - Ai se eu te pego.  It´s awful.  The chorus goes - Nossa, nossa, assim voce me mata - Oh god, oh god, this is the way you kill me.  I thought no good would ever come of it.  But it´s been transformed into a protest song which people are shouting in the streets in Portugal as they march against austerity measures which the government is imposing in the battle against the Euro´s instability.  Being catchy and simple can have some advantages. 

Ai se eu te pego

Nao, nao nos calam

Wednesday, February 1, 2012

On the division of the Brazilian state of Para

A riberinho (river community) along the Amazon.  The building on the far right is an evangelical church.

I finished a two day boat trip on the Amazon from Santarem to Belem on Monday night.  I tried to use my Portuguese with some kids who thought it was fun to talk to the strange guy who sucked at putting up his hammock and tried really hard to carry on a conversation with the 87 year old man in the one next to me, who told me stories about monkeys and his sons who are chemists and engineers and answered all the questions I posed to him.  I thought at one point: this is sustainable development, a boat with eighty people on it heading from one city to the next on a river that's been vital to people and their environment for thousands of years, a gigantic river where this is just one tiny boat.  Nothing to do but talk and nap, play dominoes and watch the ribeirinhos (little hamlets along the river) slide by now and again.  With meals it was 180 reais, or about 100 dollars.  I spent yesterday in Belem, and today I'll take a 33 hour bus to Bahia where I'll be working on a farm.

Dividing Para

       For at least a decade now there has been a movement to split the state of Para, a sprawling mass twice the size of France that spreads out from the northern coast and encompasses the eastern half of the Amazon river and rainforest, into three smaller states.  A state of Carajas would take a quarter of the land and most of the mines which are key revenue source, a Tapajos state in the west would take more than half of the current state, and a new Para state would encompass the largest city of Belem and the surrounding areas. Supporters of the division say each of the three state governments would bring each of the new state governments closer to the reality on the ground, allowing each to manage its resources more efficiently and be more in touch with the demands of their constituents.  Since the state governments in Brazil collect revenue not only from state taxes but also from a fund that the federal government distributes to states, each state would also have money flowing in the national government.  As an added bonus northern states are dwarfed in representation by the South in the Brazilian Congress and an addition of two new states would mean six new senators for the North (the Brazilian Congress is bicameral, with one house allotted proportionally by population the other equally).
        In Santarem and Altamira, the signs for Tapajos are everywhere, especially Santarem which would be the capital.  The bumper stickers say "Sim 77", the ballot measure number, with the Brazilian colors green and yellow, and the thumbs up sign which is synonymous with "Tudo bem.  Everythings good."  Every twenty feet are posters identical to the bumper stickers with the phrase "Se a bom pra todos nao podemos ser contra.  If it's good for everyone we can't be against it."  A few shops even have Pro-Tapajos messages painted on the sides of the building.  The uniforms for the local grocery chain have Sim 77 printed on the back.
      On December 11, the people of Para voted on the question.  In Santarem, 98% of the population voted yes.  But it didn't pass.  Why?  Because in Belem, the current capital, which has a third of the states 8 million people, 94% of the population voted no.
      As an American living in Santarem put it, people there are fucking pissed.  They feel they're sending tax dollars to Belem and not seeing results in their roads and infrastructure.
      People arguing against the division say the only people who would really benefit from a division of the state are the the bureaucrats and elected officials who would spring up to fill the new legislatures, courts, and state agencies.  They say commerce would be more difficult between the three states than it is within one.  The division would create three impoverished states (one economist says the current expenditures of the new states are a lot greater than their income and they'd really be banking on the money they get from the federal government) and the real problem is with the nature of governance institutions in Brazil.  Beneath this there must also be the desire of those in Belem to maintain the political and economic hold that comes from living in the capital of the entire state.
      While I haven't understood or been satisfied with the explanations I've heard and read to make up my mind about who's right, it's clear there's been a big regionally-polarized mobilization campaign by both sides, as evidenced by the results.  Yesterday I walked around Belem and a woman I bought some juice from told me it would just mean more government and would make it harder to trade the ore from the mines in what would be the new state of Carajas.  The presence of propaganda against division is almost as ubiquitous as was the pro-propaganda in Santarem.  There's billboards against it, and street vendors have stickers on their carts that say "Nao e nao.  Nao dividir o Para.  No means no.  Don't divide Para."

I spent four days in Altamira, before I got on the boat to Belem, talking with people about Belo Monte.  I'm still collecting my thoughts, but there'll be something here soon.