Anna Ternova

15 September 2016
From Disorder to Progress under Cardoso
In 1987, the Economist labeled Brazil as a Clumsy Giant, and a few years later was
described as Drunk, not sick. This was a comical, but accurate, summary of Brazils
rollercoaster of an economy. It took nearly two decades of socioeconomic progress to bring order
and stability to the government. The new system became known as the New Republic; its main
goals were to disassemble the remains of the dictatorship, provide an effective democratic
government, defeat inflation, and address deep-rooted social problems. Numerous measures were
taken to try and fix these issueswhich involved many failures, but also significant
improvements. The story starts once Jose Sarney is sworn into presidency. His main achievement
was the creation of a democracy and a new constitutionwhich was written; however, it
reflected the weakness of the federal government. It was a seemingly flexible document
considering all the amendments made in order to please and bring sanity to society.
A few years later, in the first real election in forty years, Fernando Collor de Mello was
elected. Although he was widely adored during his campaign with promises to restore the
country, Collor was corrupt and made matters worse than they were before. Inflation was as high
as ever, and Brazil in general was messy and unstable. Collor eventually resigned after Congress
voted on his impeachment, and he was barred from office until 2000. New anti-inflation plans
kept being tested over the years, but they all proved unsuccessful. It was not until Fernando
Henrique Cardoso, who became President after Collor, recruited a team of economists (and
demanded they come up with a solution) that an inflation plan prevailed. This plan involved the
creation of a new currency, cutting fiscal deficit of approximately eight percent of GDP, and
allowing for a gradual de-indexing of the economy without contaminating real currency. By
1995, inflation was the lowest it had been in 37 years (without the need for price and wage
freezes), and was finally vanquished by democracy.
Cardosos main task was to consolidate the early success of the real currency, modernize
and increase growth of the economy, and make Brazil into a fairer country. By this time, the
country was highly monopolized, and one of Cardosos greatest accomplishments was in ending
various monopolies and increasing privatization. This greatly reduced the states control of the
economy. His entire first term was a tough battle to defend the economic stability that he had
built, and promised to keep it steady if he were elected for a second termwhich he was.
Despite his best efforts in lowering the inflation rate, Brazils economy kept fluctuating between
increases in inflation, tapering off into stagnation, then defeating it, only to see it start rising
again. Nonetheless, in his eight years in office, Cardoso established a foundation for a fairer,
more democratic country and took the necessary steps to turn Brazil into a more modern and
competitive society.
Reflection
It is obvious to see that Brazil was struggling for years to gain economic stability, but
they were not the only country to have experienced these constant and severe fluctuations. The

United States had its own economic rollercoaster in the twentieth century. In the beginning of the
century, its economy started off poorly after World War I required a massive mobilization of
money to pay for the war effort and thus, led to a depression around 1920. The period of time
after this, however, was named the Roaring Twenties due to rapid growth of various industries
under the influence of President Warren Harding. Unfortunately, this barely lasted a decade, and
the Stock Market Crash of 1929 led to the Great Depression (Soule, 1947). After Franklin
Delano Roosevelt was elected as president in 1932, he enacted the New Deal, which was a
collective patchwork of many programs in an attempt to restore the economy (Mitchell, 1947).
Banking crises, unemployment, and inflation consumed America for the next few years. There
was gradual improvement up until the end of World War II, which finally brought prosperity
back to the country as it entered a golden era of economic growth. The middle class increased, as
did GDP and productivity. The growth in the middle of the century can be attributed to reforms
and policies made by the President, Congress, and other individuals (Yaffe and Bullock, 1979).
Soon after, inflation woes wrecked Americas progress in the 1970s. Ronald Reagan was the one
to solve this with a self-made plan which then led to another economic boom up into 1990. It did
not stop therethe most recent significant financial crisis in America happened began in 2007
and ended in 2009it was termed the Great Recession. Interestingly enough, while GDP growth
rates were in the negatives for all of North America in 2009, Brazil (although small) had a
positive growth percentage during that time (Temin, 2010).
Surely, almost every country has a story similar to this one. Although there are minor
differences in the specifics and on the time scale of when their economies were rising or
declining, America and Brazil have both had a turbulent past. Even today, they are trying their
hardest to keep their economy afloat in an unpredictable world. It is difficult to attribute success
to specific presidents/leaders, since the time period in which they were in office could have had
an influence on it too; or it could also be a combination of the two, with countless other factors
involved. It is also important to note that usually, if one country suffers a large set back, it
expands globally and in turn, affects other countries too. No one knows what will happen in the
future; they can only predict and hope for the best. And, even when times get tough, and nothing
seems to work (as evidenced by Brazil), as long as a country keeps trying and does not give up
on improving itself, it will see progress, no matter how small.

References
Soule, G. (1947). The Prosperity Decade: From War to Depression, 1917-1929.
Mitchell, B. (1947). The Depression Decade: From New Era through New Deal, 19291941.
Yaffe, D. and Bullock, P. (1979). "Inflation, the Crisis and the Post-War Boom".
Revolutionary Communist No. 3/4 (Second Edition), November 1979. Retrieved
September 13, 2016.
Temin, P. (2010). "The Great Recession and the Great Depression". National Bureau of
Economic Research.