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Don’t believe the naysayers, Brazil is still strong and the World Cup is a force for good

No flagging here. Antonio Lacerda/EPA

When FIFA awarded the 2014 World Cup finals to Brazil seven years ago, it looked as if the tournament would be a coming out party for the country. Now, the picture is far more mixed. It has become fashionable to say that hosting the World Cup was a mistake, and that the competition will only expose Brazil’s economic weakness, social inequalities, and political tensions.

These arguments are tendentious and based on selective reasoning. Rumours of the demise of the Brazilian economy are greatly exaggerated, and the Brazilian government’s decision to host the World Cup is not the root of the country’s social, political, and economic problems.

The past decade has been a good one for Brazil. From 2003 to 2011, Brazilian per capita income increased by 40%, from R$550 (about £146) per month to a little over R$770 (£205). The incomes of the bottom 10% rose much faster than the incomes of the top 10%.

The poverty rate fell from 37.13% in 2003 to 21.42% in 2009. In absolute terms, from 2001 to 2007, the population living in extreme poverty (with monthly per capita income below R$70, or roughly £19) fell by 11 million people, while the number of people living in poverty (with monthly per capita income below R$150, or about £40) declined by 13 million.

From 2003 to 2011, the number of people in the so-called “class C” – a marketing category consisting of those with a monthly family income between R$1,000 (£266) and R$4,000 (£1,064) – rose from 65.8 million to 105.4 million, becoming a majority of the Brazilian population.

Growth and equality

Until recently, the Brazilian economy has been doing something very few other major economies have been doing. It has been growing (modestly, at an average of close to 3% per year in 2003-2010) and reducing inequality. From 2003 to 2011, the Gini coefficient, a measure of income inequality, fell by 9.2%, from 0.576 to 0.523. Thomas Piketty, the author of Capital, would insist that such a measure should be supplemented by other analyses, such as an estimate of inequalities in wealth, and a disaggregation of income from labour and capital. Nevertheless, Brazil’s recent inclusive growth has been striking, considering that inequality (as measured by the Gini and a variety of other indicators) clearly rose in India and China, as well as in post-financial crisis Europe and the US.

Under President Dilma Rousseff, the Brazilian economy has slowed. Growth averaged 2% in 2011-13, and is predicted to be about 2% again this year. Reductions in economic inequality have also slowed. The drop in quantitative easing in the US, a fall in commodity prices, and structural limitations in the Brazilian economy, including poor infrastructure and relatively low quality basic education, are some of the reasons for this.

The international financial press has attacked Brazil’s malaise (exaggerating it in the process) and called for a more liberal, market-oriented approach. But Brazil’s challenges go beyond a simple dichotomy between more state and more market. And the consensus on economic policy in Brazil is more statist than the consensus in the UK and the US – no politician accepts the label of “neoliberal”, for example – and will remain so whoever wins this year’s presidential election.

Home advantage

Slower economic growth obscures a relatively buoyant picture at the level of household incomes in Brazil. Per capita earnings were still positive in 2013. And Brazil’s fundamentals, such as international reserves of almost $400 billion and an unemployment rate of less than 5%, would be the envy of any European country.

So why do Brazilians seem so unhappy, or at least ambivalent, about hosting the World Cup? The Confederations Cup of June-July 2013, a warm-up for the World Cup, became a lightning rod for a huge variety of protesters last year. One of the most common criticisms of the government was that it built “FIFA-standard” football stadiums, without building “FIFA-standard” hospitals, schools, or public transportation systems. Protestors objected to the tripling of the costs of the football stadiums, to about $3.7 billion, and the overall price tag for the World Cup, of about $11.5 billion.

These criticisms reflect an admirable exercise of citizenship, and protestors’ demands for the government to curb corruption and improve public services are understandable. Nevertheless, the World Cup has to be put in context. It was not silly for football-mad Brazil to host another tournament, given that it last did so in 1950. Popular football clubs will extensively use most of the new stadiums after the World Cup. (Just ask a Corinthians fan if spending on the new Itaquerao stadium in Sao Paulo was worth it.)

And the cost of the World Cup for Brazil is relatively small compared to other government expenditures. The annual interest payments on Brazil’s public debt, for example, are almost nine times bigger than the government’s World Cup spending. FIFA may be a corrupt and unaccountable organisation, but it is not the main cause of global economic inequality. A financial system that enriches an oligopoly of lenders to sovereign states is a much more plausible candidate for such a role, but, being complex and fragmented, tends not to be targeted by protesters.

Football is not responsible for social exclusion in Brazil. Instead, football has been a means of inclusion and social mobility for many poor and non-white players, and is more racially integrated than other spheres of Brazilian life, such as fashion, elite universities, or the upper echelons of many Federal ministries. There is more to do to include non-white participants in football management and club directorship in Brazil, but football hardly deserves to be singled out as a symbol of something that is uniquely wrong about the country.

Playing football has brought joy to millions of Brazilians. Watching football has united fans, and performances of the Selecao, Brazil’s national team, has projected a positive image of “Brazilianness” abroad.

Political football

Brazil’s presidential election officially begins on July 5, but it will really begin on July 14, the day after the World Cup final in the Maracana stadium in Rio. The World Cup is unlikely to directly affect the election, unless there is a major problem in the tournament’s organisation. In recent years, success on the pitch for the Selecao (the national side) has not been a requirement for the re-election of a government.

José Serra, the preferred successor to President Fernando Henrique Cardoso (1995-2002) lost in 2002 when Brazil won the Cup in Japan, and President Lula (2003-2010) was re-elected in 2006 after Brazil was knocked out by France in a quarter-final in Germany. President Roussef’s principal opponent in the election, Aécio Neves, may try to play on public misgivings about the World Cup, but he helped to organise the tournament in his home state of Minas Gerais when he was governor there.

Despite what many critics say, the real question facing Brazil is not whether it should have staged the World Cup or not, or whether it should liberalise its economy along orthodox lines, or even whether it can achieve again a growth rate of 7.5%, as it did in 2010. The real question is whether it can continue to reduce economic inequality, and thus fulfil its democratic promise. That challenge will remain after the last final whistle blows next month.

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