Brazil's reluctant Keynesian forced to spend lavishly
Sun, Jul 19, 2020
COVID-19-battered Brazil is torn between policies of fiscal discipline and a president who wants to continue relief handouts
By Martha Viotti Beck and Mario Sergio Lima / Bloomberg
As usual in a slump, global policymakers have relied on the spending measures associated with John Maynard Keynes to steer their economies through the COVID-19 crisis. Perhaps none has done so with more reluctance than Brazilian Minister of Economic Affairs Paulo Guedes.
As a University of Chicago-trained economist from the school of hard money, Guedes became a market darling by promising to restore discipline to Brazil’s public finances.
He is about to run up the country’s biggest-ever budget deficit instead, but is itching to get back to plan A, even though the IMF has warned the world against a hasty withdrawal of fiscal support.
The whole episode reads like proof of the quip made by another Chicago economist, Nobel laureate Robert Lucas, after the 2008 financial crisis: “Everyone’s a Keynesian in a foxhole.”
That is galling for Guedes. He is an advocate for privatization and tight budgets — and a disciple of free-market guru Milton Friedman, often seen as the polar opposite of Keynes in the economics world.
Guedes was hired by far-right Brazilian President Jair Bolsonaro with a mandate to reverse years of growth in public outlays under left-leaning governments.
More:
https://www.taipeitimes.com/News/editorials/archives/2020/07/19/2003740164
