Author: Julia E. Sweig, Nelson and David Rockefeller Senior Fellow for Latin America Studies and Director for Latin America Studies May 7, 2014 Folha de Sao Paulo
Last weekend's New York Times Magazine ran a 3-page photo spread, "Where Brazilians Go to Splurge," listing how many thousands of dollars (converted from reais) Brazilians are spending on shopping sprees in Manhattan. The amounts are startling (as they would be if Veja reported similar quantities spent by Americans in São Paulo): $15,000-20,000 for one woman over 18 days; $8,000 for a young couple, $10,000 for a family, $6,000 or $7,000 for another woman, for example.
In 2012 Brazilian tourists in the United States spent 5.3 billion reais, a significant portion of which went to middle class tourism--to Florida's theme parks and outlet malls. The savings compared to Brazilian prices of course are part of the attraction. But leaving middle class tourism aside, there is something downright jarring about conspicuous consumption--whether by the American or Brazilian 1 percent--while both countries are in the middle of a national debate about scarcity, inequality and economic stagnation. This is not just another populist rant. I have good friends in Brazil who regularly make the trek to their beloved Manhattan mecca. They just don't do it with the apparent inhibition and bravado of the likes portrayed by the New York Times.
I guess we are supposed to celebrate this kind of purchasing power--and love for the Big Apple--as a sign that Brazil has arrived on the world stage. Or at least acknowledge that the distortions in Brazil's own economy also compel some of this behavior. But the power to shop, to max out credit cards (as one couple told the reporter), to carry too much household debt, well: we have seen in the United States how the concentration of wealth at the top, a barely surviving middle class, and declining infrastructure and public services can weaken the international leadership even of an established power. Relying on domestic consumption to drive growth in the case of Brazil's new middle class, or on those serial shopping trips abroad for the top tier, surely complicates an already staggering set of challenges to a power whose global influence is still in its early stages.
Context matters too. Last week's 10 percent increase in Bolsa Familia transfers brought the average monthly payment to R$77 per individual, or about $34, or R$167 per family, or about $75. (The price of a good steak and a cheap theater ticket in New York, respectively) The cost of the program is only R$24 billion, a mere 0.528 percent of Brazil's 2013 GDP. Neither Bolsa Familia nor tourist spending exacts a huge drain on Brazilian national accounts. But Brazil's effort to focus the world on its successes--full employment, advances in literacy, and the example of democratic participation embodied by Marco Civil--are quickly overshadowed by the persistent study in contrasts of wealth and poverty.