Year 1-No3
Jul/Aug 1997

Main Page
Economic Alchemy
Energy Sector highlights
Brazilian Proposal for Kyoto
BEB 1997
e&e Team

Edição Gráfica:
MAK
Editoração Eletrônic
a
marcos@rio-point.com
Revisado:
Saturday, 14 February 1998.

Year 1-No3
Jul/Aug 1997

Main Page
Economic Alchemy
Energy Sector highlights
Brazilian Proposal for Kyoto
BEB 1997
e&e Team

Edição Gráfica:
MAK
Editoração Eletrônic
a
marcos@rio-point.com
Revisado:
Saturday, 14 February 1998.

Economic Alchemy

Carlos Feu Alvim
feu@marlin.com.br
English Version:
Frida Eidelman
frida@password.com.br

One of the greatest damages that the economic prestidigitators have done to the economic science is to make it believable that common intelligence is incapable of perceiving its logic.

It is happening to economy what occurred at the dawn of the physical sciences when the alchemists were able to work miracles that were beyond human understanding. The dissemination of astronomical, chemical and physical knowledge took away prestige and power from alchemists and sorcerers who manipulated this knowledge as if it were a mystery. The problem of the economic prestidigitators is that they really succeed - to the gain of a few and in detriment to many - in transforming lead into gold and vice versa.

It is sure that there are some economic factors that are difficult to interpret and that are fundamentally linked to the currency and its value as a symbol of exchange power among men and nations. The accumulation process and the laws that govern the flux of this symbol have important psychological and social variables that mask in the short-term and even in the medium-term the logic of the economic process. An economy without money , with direct exchange, would be easier to understand but, as our ancestors have proved, not practical at all.

The Brazilian Ministry of Finance has just re-established ( end of June, 1997) logic by declaring that huge surpluses in the balance of trade were not positive for the Brazilian economy because they represented transfer of wealth and capital to foreign countries. Well, a country lives from what it produces less what it exports. When the commercial flux is externally directed, wealth - and sometimes with some delay - capital is being transferred.

If it is still necessary to add some arguments in favour of Minister Malan it should be remembered that deficits in the balance of trade in the seventies signified growth while the formidable surpluses of the eighties, as he reminded, brought recession. So it should not be considered odd that in order to resume growth we are having in the last years deficits in the balance of trade.

Obviously the common man feels lost because during many years he has heard several government authorities saying that surpluses in the balance of trade were highly positive for the country, that it created jobs and that "exporting is what matters".

In order to generate the huge surpluses as in the eighties, Brazil has transferred abroad ( official figures from IBGE) between 1983 and 1992 an average of 6.2% of the GNP in real terms (base of 1980) . If the values in current terms were smaller ( 3,2% of the GNP) it was due to the degradation in the exchange relations. In 1992, Brazil exported twice as much goods it exported in 1980 and received the same value in constant dollars.

Germany, after the First World War, under the impositions of the Versailles Treaty, has never transferred more than 3.3% of the GNP a year. As it is known, it was based on this unbearable load to the German economy that economical crisis was generated in the early thirties. This crisis and the sacrifice of transferring wealth was part of the rhetoric that Hitler used to reach power.

Still in the period 1983/1992, Brazil , according to the International Monetary Fund (IMF), was the third capital exporter at world level , after Japan and Germany. The big capital importer were the United States which, due to out-of-date information from the post Second World War period, is still considered as a source of capital.

It should be remembered that the effort demanded from Brazil in the eighties originated in the debts incurred in the seventies and in the international "interests chock" at the start of the eighties. Capital input, welcome for development in the form of direct investment or loans, means it may leave at any moment, since no one invests without the perspective of interests. The fundamental question is to know if in the future the new wealth generated will suffice to pay for the dividends or the interests.