PERSPECTIVE ON LATIN AMERICA : A ‘Have’ Country Full of Have-Nots : Brazil is an impressive economic machine, yet growing numbers of Brazilians are mired in desperate poverty.

Poverty is much in fashion today in international circles; extreme poverty, as it is often called, has become the enemy to vanquish for economists, bureaucrats and politicians. The World Bank’s 1990 World Development Report focuses on poverty, as does the United Nations’ 1990 Human Development Report; Chile and Mexico are implementing model World Bank policies on poverty. Even in the United States, thanks to Kevin Philips and others, the poor are once again a subject of interest, if not policy.

Here in the Brazilian northeast is poverty on a monumental scale, at least by Latin American standards, and perhaps also in comparison to Asia and Africa. The nordeste, a land of sugar cane and drought, is where one-quarter of Brazil’s population, but half of its poor, live a life that is shorter by one-third than that of the rest of the country’s inhabitants. Malnutrition, illiteracy, violence, disease and oppression are concentrated in this region, as are ostentatious consumption and overwhelming wealth, much of it with a lineage traceable to 17th-Century colonial baronies. These extremes--the absolute destitution of squatters who beg, hustle or die amid the prosperity of the coastal towns--demonstrate why Brazil is such a difficult, if not impossible, country to govern and manage.

During the years of the so-called Brazilian miracle--from the late 1960s to 1980--headway was made against poverty, although official economic policies did not have that as a goal. In 1960, according to the World Bank, 36 million Brazilians, or 50% of the population, lived below a theoretical and imprecise poverty line. By 1980, the number had been reduced to 25 million; more important, it represented only 21% of the country’s citizens. Thus nearly 15 years of spectacular economic growth--despite military dictatorship, corruption and other excesses--made a difference. But from 1980 onward, almost all the progress was erased by the “lost decade.” In 1987, the number of the poor was back up to 33 million, 25% of the population.

The social consequences are horrifying. In terms of infant mortality, for example, Brazil ranks 62nd in the world--next to El Salvador. With regard to education, 76% of the voters in last year’s presidential election had no more than an elementary school education; most had far less. And an estimated 45 million Brazilians over the age of 15 find themselves outside the labor market.

At the same time, despite hyperinflation, semicoherent policies and regional imbalances, the economy actually works. Brazil’s trade surpluses are the third-largest in the world, after Japan and Germany. Its private sector is diversified and dynamic, supplying most of the goods consumed in a country that produces 90% of its needs. Although the largest companies are state-owned, 73% of the largest 500 firms are privately owned by Brazilians. And year after year, with all its inefficiencies, distortions and tensions, the economy churns out an annual growth rate of at least 4%, even in 1989, a terrible year.

The problem, then, becomes how to make this economy compatible with reducing regional disparities and social inequality--and how to do this in a country that is enjoying an adequately functioning democratic system for the first time in 30 years. This dilemma explains President Fernando Collor de Mello’s inconsistency, erratic zig-zags and immense difficulties in implementing the “shock treatment” he promised for the economy. Collor’s free-market zest has cooled off considerably since he took office in March. His theoretically heterodox anti-inflation plan, which originally froze up to $80 billion of the money supply and was supposed to bring inflation down to 2% or 3% a month, has turned into something much more banal. Collor’s policy today is classically recessionary, driving down real wages, industrial production and government spending, in order to temporarily stabilize inflation at around 10% a month--not bad, given the 80% to 100% monthly range it had reached at the beginning of the year, but far from the original aim. Similarly, Collor’s intention to eliminate 360,000 jobs from the federal payroll in five years has turned into temporary layoffs for 20,000 bureaucrats.

Collor’s attempt to open the economy is also tempered by realities and rigidities: Brazilian industry in most cases can compete with foreign imports, but not overnight, and not indiscriminately.

But most important, Collor is finding that government intervention is the only route to his objective in many areas--regional development, social programs and infrastructure, distributing wealth and revenues geographically, if not socially. He is reaching, in his own fashion, the same conclusion that Brazil’s ultra-conservative, pro-American, virulently anti-populist military reached in the 1960s when it took power. In a country as diverse, unequal and complex as Brazil, the only unifying force is the state. The issue, then, becomes whether that state, and its intervention in the economy and in social matters can be truly democratized and modernized. It cannot, and should not, be shrunk into oblivion.

The pent-up demands of the poor are now expressed through elections (the country is in the midst of its third national electoral campaign in less than two years). Those demands--jobs, health, housing, education--are reasonable and can be met in the mid-term, but only if major changes take place in tax reform, land reform, higher real wages, redistribution of wealth, and so on. The democratic system allows those demands to be expressed politically, but it doesn’t make those interests that oppose the changes any more amenable to them.

Herein lies the fragility of Brazilian democracy, and the ultimate precariousness of Brazil’s emerging role on the world scene, quickly replacing Mexico as the only large Latin American nation with an international personality of its own. This is a country where one could understand the overwhelming majority of the population voting no on everything; and that makes democratic governance extraordinarily difficult, if not close to impossible.