Privatize Water!


In recent days reports have been coming out about authorities’ struggle to battle a water shortage in Brazil’s two major cities of Rio de Janeiro and São Paulo. Ostensibly caused by a severe drought, the crisis has even sparked fears of an impending “water war”. Measures taken earlier this month to reduce the water flow at a major dam were unsuccessful to say the least, cutting off running water to families in some neighborhoods for as long as 12 hours a day.

Unsurprisingly, the vast majority of the water system is government-run without much debate. After all, for all its ubiquity, government incompetence does not always overtly affect people’s daily lives. Now that it does, it might bOLYMPUS DIGITAL CAMERAe an opportune time for Brazilian freedom advocates to voice their opinions.

While some market reform has taken place in recent years, the process has been severely stifled by jurisdictional conflicts fueled by Constitutional as well as other regulations. Besides establishing a national system of water resources management the Constitution also defines criteria for granting rights of use, and it regards surface water and groundwater as property of the states. The National Water Resources Policy even specifies many uses of water that require government permission.

A World Bank publication analyzing market reform in urban water supplies in Santiago de Chile found “surprisingly large” net benefits in economic welfare despite significant price hikes. After years of losses largely imposed by regulatory obstacles the Santiago Metropolitan Works Enterprise had become so underfunded it could no longer perform basic maintenance on its systems. Some of the positive results included almost 100 percent coverage of expanding demand, better water pressure, fewer interruptions of service and higher wages for employees. The outcomes were so positive, in fact, that full privatization of the entire urban water supply and sanitation sector was eventually implemented.

Studies on market reform of the water sector in other South American countries have also found positive results. In Argentina the privatization of local water companies – covering approximately 30 percent of the country’s municipalities – reduced child mortality on average 5 to 7 percent, preventing 375 child deaths per year. It is worth noting also that the effect was most pronounced (24 percent) in the poorest areas, offering empirical evidence that runs contrary to oft-heard claims about increased inequality. Overall the number of households connected to the water network increased by nearly 12 percent.

In Bolivia privatization was shown to increase water access relative to both the existing trend and the non-privatized areas. The results also concurred with the aforementioned that the relative benefits of were larger for the poorest segments of the population, who gained from the largest increases in access. Some of the same findings have been reported in Brazil, if only on a small scale.

Notwithstanding those positive results generated by market reform, the current legal framework is a severe impediment. These obstacles will have to be dealt with if Brazilians are to reap the full benefits of voluntary – rather than compulsory – human action in the provision of such a basic need as water. Empirical evidence clearly confirms it can be done, giving liberals and libertarians plenty of arrows in their quiver to build a convincing case for liberty and against statists’ fear mongering. If successful that could be a big step toward a freer Brazil.

 

 

 

 

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The State of Firearm Freedom in Brazil


Walking down the street here in Brazil it quickly becomes apparent political campaigns are in full swing. Signs displaying the slick smiles and hollow rhetoric of (would-be) politicians abound, and the same rhetoric emanates from megaphones on small vans driving around town. But besides the more high-profile presidential elections there will also be state elections injecting more specific issues into the public debate.

Recently one such sign immediately caught my eye. With an image of a firearm and the text “contra o desarmamento” (against disarmament) it was impossible to miss. A firm believer in the right to self-defense, I felt compelled to find out more about a gun debate I was unaware even existed here. Having found out that gun laws are very much like the ones in my native country of the Netherlands I figured the issue would not even be on the table. Fortunately I was wrong.

StateofGunRightsIn 2003 the Brazilian government passed a law dramatically restricting gun sales while all but outlawing their carrying by civilians. Termed the Disarmament Statute it forces potential legal gun owners to go through a litany of paperwork, checks, and tests just to own a firearm and keep it at home. A carry permit can still be denied if it authorities determine “genuine reason” was not provided. Yet in terms of bringing down crime rates the Statute has been a dismal failure; a decade after its adoption Brazil has 50 percent more gun deaths than the United States despite having110 million fewer citizens.

Undeterred, Brasilia put forth another initiative to further clamp down on gun ownership in 2005. Luckily this time lawmakers at least had the decency to call a referendum – the first of its kind in the world. The proposed law was meant to entirely ban the sale of firearms and ammunition to anyone except security firms, sports clubs, and the government. Much to the surprise and chagrin of its proponents, however, it was met with a resounding no. Based on early polls ostensibly indicating overwhelming support for the ban they were expecting a win, but equal time on television in the final weeks prior to the referendum resulted in more than 60 percent of voters opposing it.

Now it seems the debate has come full circle and gun rights advocates have the upper hand. It will be interesting to see how this plays out during the campaigns and subsequent elections early October. If fought well this battle might go a long way toward winning the victim disarmament war. Then again, leave it to politicians to talk a good game about something on the campaign trail and then suffer from acute memory loss after taking office. Perhaps a grassroots campaign focused on educating people about natural rights would help keep their feet to the fire.

Given the corrupt reputation and consequent distrust of the police it goes without saying that Brazilians don’t feel protected by uniformed gunmen. Rather than further the case for gun control, the 2005 referendum might well have backfired. Anti self-defense groups were forced to begrudgingly admit that the other side had successfully linked owning a firearm with freedom, using images of Tiananmen Square and the Berlin Wall. Furthermore, current restrictions are (predictably) leading to much different outcomes than predicted. Residents of São Paulo and Rio de Janeiro can attest to that.

Pacification and Brazil’s War on Drugs


For decades, Brazilian favelas (slums) have been under the control of highly organized, well armed gangs. Financed by the drug trade and armed with weapons often bought from the police the gangs rule their territory, rivaled only by other gangs trying to win turf. Up until a few years ago even law enforcement officers dared not enter. But spurred by the pleas of a large voting bloc and especially this year’s World Cup and the 2016 Olympic Games a change in policy was deemed necessary.

In an effort to polish up Brazil’s image abroad a new policy of pacification of the favelas was adopted in 2008. Aimed at Favelaeliminating the gangs’ control the policy can be divided into three phases: (1) reclaim territory formerly lost to drug gangs, (2) expel them from those areas and (3) integrate resident communities with the rest of the city. This last phase theoretically includes long-term government initiatives to improve quality of life in pacified favelas, although this has been called into question by residents. Besides, when being a bureaucrat becomes as lucrative as it is in Brazil, one should not be surprised to hear would-be politicians make any and all campaign promises necessary to win political office.

As mentioned in a previous article Brazilian police is notoriously corrupt and consequently distrusted by many people, particularly in the states and cities of São Paulo and Rio de Janeiro. Perhaps that is why two special police departments were set up to establish closer ties between them and local residents: the Batalhão de Operações Policiais Especiais (BOPE) and Unidades de Polícia Pacificadora (UPP). Although often referred to as “community police” these forces can call for military support – as they did most recently in 2010 and 2011.

In select slums gang members were successfully chased out and life has returned to a relative normal. But returning peace to once crime-ridden slums has also had other, unforeseen consequences. Built on the outskirts of Rio overlooking the world famous bay, the areas are attracting interest from the upper classes. As a result real estate prices have skyrocketed to where poor residents can no longer afford to live there, and now it is not only the drug gangs that are having to relocate to other favelas. Yet even the pacified slums did not necessarily turn into thriving communities.

While sending armed forces into an area to arrest or kill drug dealers is easy enough; actually solving the underlying problem is another issue. Given conservatives’ stance on drug legalization or decriminalization the war on drugs in Brazil is unlikely to end anytime soon. Never mind the fact that stray bullets wound and kill many non-gang members including children, or that many drug traffickers would likely take a much different career path by their own volition if given the opportunity. Though the arbitrary outlawing of certain substances is directly responsible for the death and misery suffered on a daily basis by those least able to defend themselves, proponents of the war on (some) drugs seem unfazed.

With only a few dozen out of some one thousand favelas pacified so far, it could be argued the jury is still out on whether the policy has been effective. So far it has become clear that so long as law enforcement includes prosecuting people for meeting the demand for certain “dangerous” substances many lives are lost or ruined in the process. Meanwhile, a study conducted by Amnesty International found Brazil to be the country where people feel most unsafe in the hands of authorities. Or in the words of one resident to Smithsonian Magazine, “It’s the same thing as before – a group of different gunmen is taking care of this place.”

Brazil’s Most Controversial Government Program


A common characteristic of developing nations is the high rate of urbanization and subsequent disparate development between regions. Brazil being no exception to this rule, the effect is quite far-reaching in the healthcare industry. More than 90 percent of medical professionals are concentrated in areas that cover less than 10 percent of the country. A program launched by the federal government in 2011 to address this problem failed to attract but one third of the required number of doctors to address this problem. Consequently, it was replaced with a new program: Mais Médicos (more doctors).

Overseen by the World Health Organization, this three-year program aims to alleviate the unequal geographical distribution of healthcare professionals by bringing them in from abroad. Fifteen thousand doctors from Cuba, Portugal, Argentina, and Spain were to work in these remote areas. Yet while government initiatives with such laudable goals generally tend to garner plenty of popular support among Brazilians, Mais Médicos has been shrouded in controversy from its inception. Industry representatives, students and the Ministry of Labor have taken aim at the program, A conservative magazine even went so far as to accuse Cuban doctors of being “communist spies” infiltrating the country.

Mais_MédicosIn a mere 12 months (Mais Médicos went into effect in July 2013) the program has become arguably the most controversial one implemented by the Dilma administration. While the Cuban healthcare system has a relatively good reputation the fact that a significant chunk of Brazilian tax money directly funds the communist Cuban state makes some feel quite uncomfortable. The Brazilian Medical Association and the Federal Council of Medicine have been encouraging healthcare professionals to voice their opposition in the form of protests and strikes. They even went to the Supreme Court last August in an attempt to roll back the program, stating foreign doctors were illegally practicing medicine without a license.

When the Court ruled in favor of the government, critics started taking another angle, claiming Cuban doctors were being exploited and comparing them to feudal serfs. At a university ceremony in Fortaleza where newcomers were to take classes for three weeks prior to becoming part of the public healthcare system, the doctors were harassed by a group of unionized healthcare workers calling them “slaves” and “incompetents”.

Controversy and name calling aside, the solution is really very simple. Extraordinarily high tuition fees for Brazilian medical schools have largely restricted access to the medical profession to the upper class. Though annual fees ranging from approximately $18,000 to $54,000 may not seem exorbitant to a Western mind, a GDP per capita of only $12,100 makes going to medical school a pipedream for the average Brazilian. Without a university degree, however, one is not licensed to practice medicine. It should be no surprise, then, that graduates start their careers in the major cities where demand for their services – and consequently the monetary incentive – is the highest.

Given the Brazilian government’s close ties with the pharmaceutical industry one might not be surprised to find out that the playing field is heavily tilted in favor of those doctors taught to adopt the “pill for every ill” mentality. But it’s curious to see how the Brazilian government – just like many or all other governments – restricts competition on the one hand through a system of licensure, while artificially introducing competition from abroad through the Mais Médicos program. After all, if people did not have to ask permission to be compensated for helping others heal there might not be any need for foreign doctors. Besides, the fact that wages are relatively meager would be less of a concern if Brazilians did not have to spend a fortune on a medical degree.

As usual, freedom is the answer. The only problem is there is no special interest group lobbying politicians for more freedom, because who but the ordinary man or woman benefits from that? As liberty-loving folk it is our job to inject this line of thinking into the public debate.

 

A Critical Look At a World Famous Welfare Program


Hailed by The Economist as a “much admired and emulated anti-poverty program”, the signature legislation of Brazil’s last president Lula da Silva was the Bolsa Família (Family Allowance) program. Aimed at alleviating the misery of the poorest segments of the population, the program provides financial aid to families and free education for children whose parents cannot afford to send them to school. The largest conditional cash transfer in the developing world comes with strings attached, though.

The eleven million families receiving the financial aid – on average $35 per month – commit to keeping their children in school, adhering to the government’s vaccination schedule, and taking them for regular health checkups. In a country plagued by persistent inequality and poverty widely blamed on an unjust system, the popularity of a program of direct wealth transfers to the least privileged should be no surprise. Still, might the superlatives expressed by the likes of The Economist have been a little overdone?

At first glance the numbers seem impressive; extreme poverty has been halved from nearly 10 percent to just over 4 percent, income inequality has fallen, and about one fourth of the population has benefited from the program. In addition, the initiative has been touted for its decentralized nature and target accuracy in reaching those in the most dire of circumstances. As Henry Hazlitt might have pointed out, however, there is more than meets the eye.

The National Congress in Brasília

It does not take a genius to understand that since the government has no money to spend it has to fund its operations through taxation, the printing press, or by going into debt. In the long term, therefore, the Bolsa Família program cannot be said to contribute to real wealth creation. Worse yet, regardless of the preferred means of funding itself these government programs necessarily extract wealth from the private sector, thereby making society poorer in the long run. Any consumption whose origin is found in the artificial creation of illusory wealth only contributes to a reduction in living standards due to the absence of an increase in general productivity. Sooner or later the market corrects the unsustainable boom, and it’s back to square one.

The irony of government intervention, as famously pointed out by Ludwig von Mises in his critique of interventionism, is the invariable snowball effect of piling on new interventions aimed at solving the problems created by previous ones. History tells us this endless game of government whack-a-mole invariably leads to an economic and humanitarian catastrophe. But in the case of Brazil there is plenty more reason for skepticism besides the objections raised from a more academic standpoint..

The aforementioned fundamental problems are compounded by the fact that would-be contributors to real growth such as a good education system are still lacking. After all, boosting school attendance rates is one thing, creating an environment in which students can get a good education is another. In its Human Capital Report of last year the World Economic Forum ranked the Brazilian education system as among the 35 worst in the world, trailing such nations as Surinam and Botswana while just barely ahead of Bhutan and Kenya. Steady increases in government spending in the last decade have entirely failed to achieve a competitive education system even compared to other, poorer Latin-American nations.

Perhaps a cynic would call Lula’s program and his successor Dilma Rousseff’s support thereof a classical example of vote-buying through government handouts. That might not be so far off.

The Self-Regulating Power of the Market


A common objection to a libertarian society is the “without the government corporations would rule the planet” argument. The theory goes something like this: having few or no laws would give business free reign to run roughshod over our rights since the people have no recourse if they are violated. By extension the idea of limited (let alone no) government is quickly dismissed as a utopian illusion thought up by naïve dreamers who think corporations are run solely by selfless do-gooders.

Fortunately those that have taken a more than slight interest in the message of liberty know better. The majority of libertarians are not corporate apologists but rather critical thinkers who understand that while no system is perfect, centralizing power into the hands of a relative few is least likely to genuinely protect people’s rights. Besides, while government can – and routinely does – secure your compliance with the threat of “legitimate” violence, a business that fails to live up to its promises can either step up its game or watch while its customers take their business to a competitor.

Libertarian theory basically holds that built-in market mechanisms reward good business practices and penalize bad ones, thereby removing any need for government intervention. After all, a free market has no barriers to entry that would stop an entrepreneur from filling the void left by competitors. In many cases however, one does not need to go that far at all. Since reputation is key to the survival of any business the free flow of information protects customers from mistreatment. In this information age that has become truer than ever.

ReclameAquiHere in Brazil a good example is a website and mobile application called ReclameAqui (“complain here”). Dissatisfied customers use such websites to post their grievances about a product, service or poor customer service and businesses can respond promptly on the same platform. While there are many ways for a customer to express his or her discontent ReclameAqui has gained particular popularity, enabling people to post complaints in a matter of mere minutes with a few clicks.

The specific information required filters out many false complaints and any that might slip through can be pointed out by businesses in their response on the website. Legitimate complaints often result in the customer receiving a call from a customer service representative who takes care of things over the phone. New businesses are constantly listed on the site as requested by users. Other free features include a listing of the overall best companies, daily, weekly, and monthly rankings, and a tool to compare two or more firms – all based on customer feedback.

The website is full of success stories written by happy ReclameAqui users and serves as a great resource for consumers at any and every stage of the purchasing process including post-purchase. A friend who bought an e-reader six months ago used the site to see if anyone else had experienced the problem she was dealing with. When she found out the bookstore answered positively to almost all issues she listed hers and was promptly invited to pick up a new one in the store.

The claim that the market regulates itself is not just wishful thinking on the part of libertarians. Nor does it say that all businesses are run by morally upstanding people or that every single employee always puts the customer first. But examples like these show that the consumer can bring forces to bear that a business ignores only at its own peril. And so long as the strong arm of government does not impede or block competition, success in business depends on staying in the good graces of the consumer.

Constitutionally Protected Corporatism


The seventh and current Brazilian Constitution dates back to 1988, when it was written from scratch by a Constitutional Congress elected two years earlier. It contains a whopping 250 articles making it about as thick as the Bible. As its length might indicate it was not exactly written in the traditional sense, for the purpose of outlining what government can and cannot do to ensure the rights of the people.

Drafted after a period of military dictatorship with a constitution that severely restricted the rights of the people while expanding government power, the current one is also known as the Citizen Constitution. Did the Constitutional Congress in the late eighties feel the need to allay people’s fear of having their rights stripped away anew? Perhaps, but entrusting the very same institution that trampled all over the rights of the people with a litany of new powers does not seem to make logical sense. Couple this flawed logic with collectivist egalitarian rhetoric and what results is not exactly a recipe for freedom.

OLYMPUS DIGITAL CAMERAMany classical liberals and libertarians understand the inherent contradiction in constitutionally protecting positive rights; that protecting someone’s “right” to force a doctor to provide healthcare services inevitably ends up violating the doctor’s rights. Yet much less thought seems to be given to the practical implications, not to mention how it warps the general perceptions of capitalism. Whether one calls it corporatism, crony capitalism, or state capitalism, it certainly is anything but capitalism. Yet it is written right into the “law of the land” and few seem to take notice.

The constitutionally guaranteed “right to healthcare” apparently includes – among other things – free drugs for those suffering from hypertension, diabetes and asthma, as can be seen advertised in and around pharmacies here. While perhaps seemingly laudable at first glance, the true beneficiary of this constitutional provision is the pharmaceutical industry. After all, only their drugs are provided for free. This gives them not only a government-granted competitive advantage, but also an infinite revenue stream complete with heavily inflated prices. In that light it is no surprise that there are other reasons to believe the Brazilian government has a very cozy relationship with the pharmaceutical lobby.

Contrary to popular belief the average Brazilian, who might be thought of as the main beneficiary of a constitutionally guaranteed “right to healthcare”, is not at all helped by the situation. After all, since government has no money of its own to finance this system of cronyism, funding has to come from taxation, borrowing, or the printing press. While the former is not generally the preferred method for obvious reasons, the other two options are at least as detrimental to the people’s civil liberties and financial well-being. Brazilian inflation figures since the adoption of the current constitution serve as an indication of how the government likes to keep the scheme going.

In short, the constitutional provisions on healthcare and subsequent laws amount to nothing less than a giant handout to the pharmaceutical industry. Imagine running a business whose only customer consists of uninterested bureaucrats who don’t care how much you overcharge and whose end users have no clue how badly they are getting ripped off by the system. How easy it is to make a killing when the government is holding your hand!

It would serve Brazilian liberals well to emphasize this point when debating their detractors who claim to oppose corporate power.