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Letter from Lhasa, number 278. O Brasil Privatizado

Letter from Lhasa, number 278. O Brasil Privatizado

by Roberto Abraham Scaruffi

Biondi, A., O Brasil Privatizado. Um balanço do desmonte do Estado, Editora Fundação Perseu Abramo, São Paulo, SP, Brazil, 2003. 

(Biondi 2003).

Aloysio Biondi

It is actually the same text published in April 1999. The author died in July 2000.

This Brazilian story of privatizations is similar to other privatizations in the world where State companies were sold with substantial losses. The mechanism is easy. The company is heavily refunded before being sold. Immediately later, it is sold and bought at a super-sale price, considerably inferior even to the recent previous refunding. Companies are bought with very favourable banking credits sometimes even totally covering the paid price. Sometimes companies even have cash permitting to pay with it the price to be paid for buying them. 

Everything is formally regular. A seller. A buyer. It is only that, behind formal regularity, an immense predation against State is operated with the active cooperation of the same State, alias of those managing and representing it. In this way, the State/government (federal or ‘local’; Brazil is a federal State) makes gift of enormous amounts of funds to private oligarchies so wasting taxpayer money.

In addition, cheap credit is assured to the buyer from State-controlled banks so that it could eventually buy without spending its own money, so even without money, more precisely with the same money of the seller. I give my (people’s) money to you for allowing you to buy my own (people’s) properties! It is a classical predation. ...Finally, those who have property right certificates write history...

In Greece, there were cases of public companies bought from people without money, using part of the cash of the bought company for paying the price for buying it, and immediately later closing the company. In various countries, there are also cases of companies bought at very cheap prices and a bit later sold, eventually to foreign companies, for a multiple of the original price.  

One may suppose (frequently there is also clear evidence, if one wants to see it) that a small percentage of these predations goes back from the apparent profiteers to the politicians and State bureaucrats having realized such ‘splendid’ businesses. Taxpayers pay while private and ‘public’ oligarchies predate public funds.

Not only there are restructurings, what is frequently inevitable, before and after the privatization. Despite that, prices and tariffs generally are substantially increased already before the privatization. One may suppose that that be done in agreement with the incoming buyer, even if a company is officially sold ‘on the marker’. However, generally, imaginary anonymous markets do not exist. It is frequently known who the buyer will be. Not everybody can buy big companies and with private and public banks’ credits. Finally, even the quality of the provided services frequently deteriorates.   

Even if public companies were mismanaged and subsidised, it is a curious way of privatizing. Privatization became everywhere (in the less developed areas, with weak States) a slogan for covering a massive predations. Certainly, States/government cannot well manage companies are even less able to profitably sell them.

That was what happened in Brazil too, specifically at the end of the 1990s, on initiative of the government of Fernando Henrique Cardoso. That is well evidenced from the (Biondi 2003) detailed exposition, firstly published in April 1999, so covering the previous period.

The technique was the usual one: people brainwashing about the advantages of privatizations and the new happy era they would have opened, a long list of clamorous lies, absence of whatever State/government control on the privatized companies although legally possible and absolutely appropriate when they are public services, companies sold without any real payment and with great profits for the buyers.

Anglophone States/governments privatised at market prices expanding popular capitalism. Comprador and para-comprador areas made gifts at advantage of the predations of private oligarchies, and of State/government bureaucracies and corrupted Statesmen and politicians which equally profited from the privatizations’ great feast.

The author seems to idealize Italian privatizations, perhaps focusing only on the appearance of some one of them. Also Italian privatizations were a big predation. Some pseudo-popular-capitalism ‘privatizations’ were realized only for companies de facto kept under State control. Little shareholders have no control on them. Big shareholder remained State/government. In addition, there were not only the official privatizations but also the super-sale of the vast real estates of public institutes, including the Social Security ones so now the pension funds are without any real cover. Real estates guaranteeing them do not exist anymore, not even the cash from their selling because it was used for facing State/government ‘social’ interventions. What was before managed as in whatever insurance company became a device facing current costs by current revenues. Capitalization disappeared in predations. Consequently, there was a double big predation: public companies, and public or para-public real estates, the former for oligarchic predations, the latter also for the direct predation of politicians, trade unionists, bureaucrats et similia.         

According to (Biondi 2003), Brazilian privatizations were totally disjoined from whatever industrial policy. Government claimed that privatizations would have some constraints about covering companies’ productions by certain quota of Brazilian intermediate products. That does not seem a great industrial policy, even if Brazilians seem incapable of conceiving anything more than that. Anyway, perhaps fortunately, such engagements were not maintained. In Brazil, also nowadays, there is an extended protectionism overall relatively to not technological products. Its result is higher internal prices ‘for protecting Brazilian industries’, commodities of the lowest quality and a Brazil without any competitive sector, even less in whatever advanced industry. Of course, that is not responsibility of predatory privatizations. Predatory privatizations and the absence of real modernization policies are consequence of such a regime, a State and a country, and of its people, although people behaviours be determined from the quality or absence of quality of its oligarchies.

It might be useful to recall that President Dilma Rousseff appreciated Fernando Henrique Cardoso for his stabilization policies. Such privatizations were part of such ‘stabilization’. If Brazil is universally [from the Empires] ‘appreciated’ it is only because it is a comprador area which will never really develop. It is backward in everything, and without any sign of recovery, although with media brainwashing Brazilians obsessively telling them that they are a world power.

Biondi, A., O Brasil Privatizado. Um balanço do desmonte do Estado, Editora Fundação Perseu Abramo, São Paulo, SP, Brazil, 2003. 

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Atualizado em: Qua 12 Set 2012

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