First, the obvious thing: our problem is not a lack of money. With a GDP of 6.8 trillion reais and a population of 210 million, what we produce today represents 11 thousand reais per month per family of four. With what we produce today, even without seeking oppressive equality, only less obscene inequality, it is possible for everyone to live in a dignified and comfortable way. Our problem is not poverty, but mismanagement. Or, to say it in an updated way today, it is lack of governance, of making the whole work.
In my modest economic arithmetic – I am averse to econometrics – I do the math, follow the money so to speak, presenting the integrated financial flow. Calculating how much is taken from the purchasing capacity of families through the absurd level of interest on the overdraft, the revolving card, the installments and the bank loan, adding the interest on credits granted to companies, we reach 1 trillion real. Given that it coincides with the financial calculations, presented in the Sunday headline of Estadão of December 18, 2016: “Credit crisis takes R $ 1 billion out of the economy and worsens recession”. They are 15% of GDP sterilized, turned into financial profits. Add to that the R $ 300 to R $ 400 billion transferred to those who invest their fortunes in public debt securities, and we reach 20% of GDP, feeding fortunes. The Selic rate has actually dropped, but it is charged on a much larger stock of debt. In 2018 the State was embezzled by R $ 320 billion. These are profits and dividends that, once distributed, since 1995 do not even pay taxes. It is a powerful drain.
Thomas Piketty opened the box of modern capitalism to find that in the 21st century it is more profitable to make financial investments than to invest in production. And money goes naturally to where it pays the most. The capitalism of the last century, which we criticized so much for exploiting workers, at least invested, produced goods and services of reasonable use, generated jobs and paid taxes. The 21st century does not invest, produce and even pay taxes. David Harvey rightly says that it is not a question of “capital in the 21st century” but of patrimony, because it does not return to the productive process except marginally.
Without going into too much detail, let us remember that taxation in Brazil not only does not correct imbalances, but aggravates them, due to the regressive structure in tax collection and favoring the wealthiest in allocation. And also that, according to the Tax Justice Network, Brazil has about 520 billion dollars in tax havens, more than 2 trillion reais that neither produce nor pay taxes. Add the leakage represented by insurance companies, supplementary pensions and health plans – funds that “invest” instead of investing, and here is one more obvious point: our economy is leaking everywhere. We present these data, with details and sources, in our The Age of Unproductive Capital, in printed text, online, in videos and on discussion platforms. It’s arithmetic, just don’t see anyone who doesn’t want to. In fact, the ability to not see can be impressive.
Americans help us to see. The magazine Forbes, in a special 2019 edition, details who the 206 Brazilian billionaires are. The importance of this survey is obvious. First, because it is reliable, the magazine is American and understands billionaire, the Brazilian press does not carry out surveys of this type. Second, it is an article in which the owners of fortunes, happy to appear in the Forbesinstead of hiding and hiding how they get to their fortunes, they appear smiling and proud. After all, it is a magazine that already makes it explicit for those who are writing: above the headlines, it is recommended to join “Forbeslife – cars, jets and yachts: it’s time to choose yours”. Yes, dear reader, the article I review here was not written for you, it was written for themselves, the billionaires. We are very interested, because this group of billionaires is the basis of real power, the deep power from the country. And it represents an impressive power to suck up financial resources.
Take number 2 on the list, Joseph Safra. Today, Joseph “has a banking empire that bears his name: he owns Banco Safra (Brazil), J.Safra Sarasin (Switzerland) and Safra National Bank (USA). Together with billionaire José Cutrale, he owns the giant Chiquita Brands, the largest banana producer in the world ”. Having a foot in Switzerland is great for a bank, they all today have feet in tax havens. Another foot in the United States helps, is part of the articulation with our economy. And Chiquita is the friendly name adopted today by the old United Fruit, which from so many crimes, blows and deaths – is the banana company that appears in One hundred years of Solitude – decided to change his name. But the essential thing for us is that Joseph Safra’s equity is R $ 95.04 billion, and that in the months between March 2018 and March 2019 increased by R $ 19.31 billion. Without having to produce anything, just collecting dividends. It is what Marjorie Kelly (and so many others) today call “extractive capitalism”. There are 19 billion, two thirds of Bolsa Família, in 12 months, for one person.
The article presents the overall picture: in 2012, we had 74 billionaires in Brazil, who had a total fortune of R $ 346 billion. In 2019, there are 206 billionaires, with a total fortune of R $ 1,205.8 billion (17.7% of Brazilian GDP). How did the enrichment of billionaires in Brazil accelerate so dramatically? Would it imply, we imagine, a dynamic growth of the economy? We know, in reality, that since 2013, which is when, with demonstrations and a boycott, the generalized attack on the distributive model begins, Brazil’s GDP has not only not grown, but after two years of recession in 2015 and 2016, it remains paralyzed.
They are, to put it plainly, stuffing themselves with money. Not seeing the relationship between the enrichment of the richest and the paralysis of the economy suggests economic illiteracy. Money cannot simultaneously fuel speculative gains and tax evasion and finance productive investments. Between March 2018 and March 2019, Brazilian billionaires increased their fortune by R $ 230.2 billion, 8 times the Bolsa Família. The Brazilian economy grows less than 1%, not even following the demographic progression, implying a drop in the country’s GDP per capita. Six years ago they said they would be “fixing” the economy. In reality, they are draining.
Analyzing billionaires one by one, the difficulty of finding someone who produces something is impressive. Following the classifications of the article itself, it basically concerns owners of banks, financial holding companies, shareholders and controlling shareholders, investment funds (in the virtual sense of “investment”, of course), owners of shareholdings, holding companies family members, “investors”, and even a “landowner” appears (fortune 118). Naturally, this is not Jorge Luiz Silva Logemann, owner of this R $ 2.68 billion fortune, effectively approaching the cultivated land …
We have already seen above how in 12 months Joseph Safra increased his fortune by R $ 19 billion. But the institution of Roberto Balls Sallouti, BTG Pactual Holding, “only in the second quarter of 2019, announced a jump of 56% in net profit, to R $ 971 million. Sallouti is a member of the board of directors of Mercado Livre ”(fortune 116). To associate this small club of financial tycoons that drain the productive capacities of the country with the concept of “free market” is to give chills to those who have read Adam Smith. In fact, several billionaires have increased their fortunes in the sphere of BTG Pactual. It is good to remember that the bank has 38 branches in tax havens, and its main activity is wealth management, technically asset management.
The detailed analysis of the 206 files that this dossier of Forbes presents is very productive, as we have found that not only are these intermediation giants, in fact intermediaries of productive activities, but are intensely interconnected. We will find, in the immense economic drain that Itaú represents, at least 13 of the great fortunes presented in the report. Altogether, there are few families, very interconnected, and constituting a powerful cluster financial and political power. They drain the economic capacities of the population, productive companies and the State itself. The reading makes it clear why this country with so many rich people is paralyzed.
In the face of the general drain of this unproductive capital, attributing our problems to old people who get too old and would create problems in the budget is frankly an insult to elementary intelligence. Recalling that we have only 33 million people formally employed in the country, for a workforce of 105 million – that is, only 31% of the total. And we have 37 million in informal activities, which added to the 13 million unemployed, means that 50 million workers are outside the system. The solution is not to tighten the belt, austerity for those who are already in austerity, but to collect the taxes due from those who earn without producing, because perhaps, when seeing their fortunes taxed, they will be interested in doing something useful. Essentially, what we need is to produce. The effectively producing entrepreneur does not need an ideological discourse or “trust”: he needs families with purchasing power, to have someone to sell to, and low interest to be able to invest. In this Brazil of great parasites, it has neither.