Trickle-Down Authoritarianism – An article by Benjamin Bradlow.

 

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Two weeks ago Fernando Haddad, the presidential candidate for Brazil’s Workers’ Party (PT), was down in the polls for Brazil’s runoff election, but picking up enough late support to justify last-ditch hopes for an upset. His campaign held a rally in Rio de Janeiro with a number of famous musicians. National hip-hop legend Mano Brown challenged those in attendance: “If we are the party of the workers, we need to know what the people want. If we don’t know, go back to the base and find out.” Five days later, the PT received an unwelcome answer. The thundering victory of right-wing Rio de Janeiro congressman and former army captain Jair Bolsonaro of the Social Liberal Party (PSL) seems to echo the rise of similar figures across Europe and the United States. Steve Bannon, erstwhile ideological consigliere to Donald Trump, gave an interview the day after the election to Brazil’s leading daily newspaper Folha de São Paulo. He claimed to have followed Bolsonaro’s career “for years” and remarked upon his resemblance to Trump, Italy’s Matteo Salvini, Hungary’s Viktor Orbán, and Britain’s Nigel Farage.

The Bolsonaro phenomenon represents the success new right-wing movements have found in the distinctive political ecologies of middle-income countries. Election postmortems have largely focused on the domestic politics that catapulted Bolsonaro to the top, including a reactionary social agenda, promises to be tough on crime, and extreme pro-market economics.

Bolsonaro’s anti-democratic and tribalistic tendencies are indeed troubling—from calls for the return of the military to political life to explicit racism and sexism and a promise to “take Brazil back fifty years,” a reference to the brutal military dictatorship that lasted from 1964 through the mid-1980s. This may sound like a familiar iteration of “great again” rhetoric, but we cannot explain Bolsonaro’s rise without accounting for the delayed perfect storm that the 2008 global financial crisis unleashed in Brazil. Unlike Trump (and Vladimir Putin, for that matter), Bolsonaro has not cast himself as the savior of a wealthy world superpower in decline. Instead, the Bolsonaro phenomenon represents the success new right-wing movements have found in the distinctive political ecologies of middle-income countries. (Another example, which now appears positively tame compared to that of Bolsonaro, is the rise of Hindu nationalist Narendra Modi in India.)

The global fallout of the financial crisis both revealed and deepened the vulnerabilities of Brazil’s twenty-first-century social democratic state. section separator To appreciate the contours of this development, one must look back to the Brazil of the mid-2000s, a period of prosperous economic expansion under the PT. Bouyed by strong commodity exports, the government of Luiz Inácio “Lula” da Silva used tools such as federal minimum wage policies and cash transfers to substantially increase the incomes of ordinary Brazilians. According to the Brazilian government’s Institute for Applied Economic Research (IPEA), the real minimum wage, measured in 2018 Brazilian reals, grew on average 11 percent per year from 2003 to 2005 and almost 7 percent per year from 2006 to 2010. These gains were accompanied by a political pact between the country’s traditional ruling class and the PT. Business elites had long perceived Lula as a communist bogeyman since his days as a trade union leader in the São Paulo metropolitan suburbs beginning in the late 1970s. After three failed presidential runs, he finally came to power in 2003 after writing a “letter to the Brazilian people,” in which he promised not to veer from orthodox macroeconomic tenets. Under his tenure, annual rates of inflation fell from 7.5 percent over 2003–2005 to 4.7 percent over 2006–2010. We cannot explain Bolsonaro’s rise without accounting for the delayed perfect storm that the 2008 global financial crisis unleashed in Brazil.

As global financial headwinds grew in 2008, however, Brazil was one of a few large middle-income countries, including China, to deploy a large fiscal stimulus to protect its economy. Two major investment programs—in infrastructure such as roads, sewers, and energy (the “accelerated growth program,” or PAC) and in housing (“my house, my life,” or MCMV)—were explicitly intended both to counter the global crisis and to bind elites to the project. MCMV, for example, was planned by Lula in concert with leading magnates of the real estate sector. This cooperation frustrated elements of the PT’s political base in social movements and unions, which were largely shut out of the design and implementation of these flagship programs. In my own field research on housing politics in São Paulo, which I conducted over the past three years, executives of real estate companies would regularly tell me, “There was life before MCMV, and there was life after MCMV.” And MCMV’s regular flows of investment into private real estate and construction meant that life after the program began was good for these executives. To a significant degree, the policies worked. Lula’s successor, Dilma Rousseff, stuck with and expanded them after taking office in 2011. Wage growth at the bottom end of the income distribution slowed between 2011 and 2014 but maintained an annual rate of 3 percent, even while GDP growth slowed to 2.3 percent per year in the same period. Brazil continued to lift tens of millions out of poverty, while deepening its young democracy.

For decades, Brazilians and foreigners alike have referred to Brazil as “the country of the future.” When a cover of The Economist blared “Brazil Takes Off” in 2009, it epitomized the rising expectations of millions. Despite significant improvements, these expectations generated new political discontent in what remained a highly unequal country. These forces burst into the open in June 2013, when protests about urban bus fares in major cities metastasized into more generalized demonstrations against corruption and the political class. Those who were previously willing to go along with a slow but steady improvement in both basic services and livelihoods appeared to be unwilling to wait much longer. What is happening in Brazil can be seen as an echo of the political convulsions that continue to rattle the foundations of democracy in the United States and Europe.

These protests came less than a month after the global economic inflection point for many middle-income countries that same year: the suggestion that the U.S. Federal Reserve would begin to reduce its bond-buying program known as quantitative easing (QE). The slowdown in QE, formally announced in December 2013, unleashed what was commonly known among economists and business journalists as a “taper tantrum” in poor and especially middle-income countries. The Fed, and later the European Central Bank, had initiated QE as a response to the 2008 crisis in order to stimulate private lending through low interest rates.

The strategy also made it difficult for Western investors to get returns in their home countries because bond yields were held at a bare minimum. This move incentivized investors to look further afield—to lower-income economies previously deemed to be overly risky. Large middle-income countries such as Brazil became prime investment targets, and the ensuing influx of global capital helped fuel Brazil’s booming economy. When the Fed began to “taper” its program to buy bonds, investments flooded out of these same countries back to the United States, where attractive bond yields were suddenly reappearing. When this taper tantrum hit, the financial press referred to the “fragile five” countries that were most exposed to the fallout: Brazil, India, Indonesia, Turkey, and South Africa. All these countries faced rapid deterioration in the value of their currencies and an increasingly unstable balance of exports, imports, and investment. China, with its highly planned economy, could maintain relatively strict currency controls and a tight rein on its corporate leaders’ investment decisions.

Brazil’s liberal democracy, by contrast, had no such options, especially under the PT, with whom the business elite had always maintained only a conditional acceptance. While the Brazilian real had hovered around two to one U.S. dollar since Lula had won reelection in 2006, the taper tantrum set off a steady fall beginning in 2013, and the real fell below four to a U.S. dollar at the beginning of 2016. Export growth in Brazil continued to stay slightly above zero, but total investment growth plummeted into deeply negative territory. Brazilian business elites had previously been quite happy to join the relatively stable political and economic pact that powered the PT’s golden years. Now, with the federal government taps running dry, these same elites closed the door on the PT and threw away the key. The national prosecuting authority, whose independence had been strengthened under PT rule, initiated the “Car Wash” corruption investigations into leading politicians and businesspeople. Rousseff just managed to win a second term in the 2014 presidential election, but the die had been cast. The Industrial Federation of São Paulo (FIESP) supported rolling protests in 2015 and 2016, culminating in 2016 with the impeachment of Rousseff for “fiscal pedaling,” an accounting trick which ballooned during Rousseff’s presidency but had been regularly used by Brazilian presidents to temporarily hide government debts.

Bolsonaro’s ascent highlights how the PT has seen both pillars of its governing hegemony crumble—business elites and working-class families alike. The new administration of Michel Temer, allied to a center-right bloc of parties that represented the traditional ruling class of Brazil, initiated austerity reforms that plunged the country even deeper into its worst recession in history. The PT was unable to recover politically, choosing to hunker down into a defensive stance and failing to reconnect with its historic bases of support in poor urban peripheries and social movements.

In 2016 Haddad, who would later become the party’s presidential candidate, ran for reelection to his post as mayor in São Paulo. He was trounced, unable to win a single ward in the city—even the poor southern and eastern peripheries that had powered his successful win in 2012. The air of corruption and stagnant politics that trailed the PT helped fuel the discontent with the broader political establishment, including the traditional parties of the right. This paved the way for Bolsonaro’s entrance onto the national stage. His ascent highlights how the PT has seen both pillars of its governing hegemony crumble. Business elites embraced Bolsonaro, with his promises of strict austerity and privatizations under University of Chicago–trained economist Paulo Guedes, the putative finance minister. And as Mano Brown had warned the party faithful, it was losing too much of its traditional working class base to promises of a return to more stable—if potentially authoritarian—rule under Bolsonaro. On October 28 Mano Brown’s warning came to pass.

Though exit polling and post-election surveys are still emerging, reporting over the past week has found that the biggest swing from the PT’s base in the previous election was not among the poorest voters, who mostly remained loyal to the party. Rather, it was among those in the middle of the pyramid of the national income distribution: households between the fortieth and eightieth percentile. These were the ones that had built up the highest expectations for continuing change over the preceding decade and a half, many benefiting from PT policies like the expansion of opportunities to study in universities. Now the PT was struggling to convince that they could do for these voters’ future what they had done for their past. section separator What is happening in Brazil can thus be seen as an echo of the political convulsions that continue to rattle the foundations of democracy in the United States and Europe. The response to the 2008 crisis in these countries—a bailout for banks, but not for ordinary households—drove a decisive stake in the heart of center and center-left political coalitions such as that of the Democratic Party in the United States. In Brazil, the middle-income aftershock of the crisis—the taper tantrum—has now ripped both the business elite and a decisive portion of the working class from the PT’s social democratic pact. It was a bargain that had once promised to reshape one of the most unequal societies on earth. If we do not take these dynamics seriously, the revanchist right will remain well positioned to maintain the upper hand. Now Brazil has joined the growing global axis of the authoritarian right. Our world continues to be shaken by the white-collar criminality that almost brought the global financial system to its knees in 2008. In the United States as in Brazil, national politics mixed with these global shocks to fuel the political gains of reactionary movements. Those committed to democracy need to take these dynamics seriously. If we do not, the revanchist right—with its commitments to law-and-order militarism, the enforcement of racial and gender hierarchies, and the expansion of private monopolies—will remain well positioned to maintain the upper hand.

I Have Seen the Future – an essay by Diana Mitlin (photos by Baraka Mwau)

I have seen the face of the “housing” future.  It is chilling.

Jack is not sure where we are going. Or at least he knows where but not how to get there. I would guess at being somewhere behind Mukuru, in the bowels of Mukuru. This is not the informal settlement. This is the industrial Mukuru. We are dwarfed in the car by the size of the trucks motoring on either side of us. Teetering alongside us. Swaying their weight towards us as the potholes unbalance then and then they righten themselves. It is the tankers that give me a sense of unease. Warning signs alerting to the dangerous contents.

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The power, the dominance of the space. This lies in the intensity of activity rather than in the scale of the buildings or the breadth of the road. Everywhere was activity. By the side of the road, a simple yellow truck was being scrubbed down by a couple of men. Only to be sent back into the mud once its battered body had been cleaned. There was the idea of a road that had been worn down by the weight of the traffic. This was more a collection of potholes than a road.

We will wait for Kim here, Jack told me. And we sat in relaxed silence. A man emerged and asked Jack to pull back the car. The man was working from the phone booth that was at the back of the parking space. He dusted down the outside and the shelf. Began to pull out the wares. Someone came up to buy airtime.

Kim emerged from the sea of moving traffic. Hand shakes. We followed him. We failed to follow him. Somehow we had emerged in a road I recognised alongside shops that lead into the Mukuru informal housing. Jack phoned. Spoke. Closed the phone. We turned around. Eventually we emerged onto a major – and modern – road; double lines of traffic streaming in straight lines with not a pothole in sight. In front was Kim. Alongside was the railway track. On the other side of the railway track a residential road.  We had to cross the mud to the line and then to the other road. We drove on. It took time for an opening to emerge.  We followed Kim up the road. To the point where they were still building it. Jack chatted to Kim. We drove back. The issue was where to park. Jack was nervous about leaving the car. Kim thought it was safe. Jack still nervous. Kim phoned. We can park here, he said. They know it is us.

I was picking this up. Should I leave my bag in the car, I asked. Leave it, suggested Jack. Jack and Kim were still chatting as we walked into the neighbourhood. I was following. We moved beyond the ground level market stalls into the buildings. We went on. At the beginning the vistas were open, the streets were broad. Kim greeted someone.  A man. Medium height. Slightly stocky build. Friendly, confident, interested. A man showing us work he was proud of. He was dressed casually, warmly because it was a chilly morning in Nairobi. His left hand was in a black glove.

He led us on. Into the spaces between the buildings. Some kind of jungle of buildings. It was not that they were disorderly. But that they encroached on space. Coming close. The roads were being made. There was mud and concrete slabs. Pipes. Sand.  There was mud and I carefully stepped away from the soft mud, onto the rough rocks and the harder compacted soil. Or I tried to step carefully. When we returned to the car a couple of hours later I realised I had not been successful. Jack and Kim had kept their shoes clean; I had not.

I have forgotten his name. I find it again later; Mr Mwangi. The manager who so kindly showed us around. He wanted to marry Kim’s sister. That is what I understood. But even now I am not sure that my understanding was correct. It was a peripheral speech. That I understood. Jack had brought me here to understand tenement finances. Or, as I said to him over lunch, now I better understand your challenge with the structure owners.

Mr Mwangi brought us to a temporary structure. Not a porta-cabin, more of a substantial shack. There were chars and a desk. Slightly shabby. This was a place where work was done. We were about five metres from the entrance of one block, about ten metres from the entrance to a second. There was the muddy walkway between. People were criss- crossing the spaces. Walking with purpose. There were a few curious glances at my white skin, but little real interest.

This is the welfare office, the man with the black glove told us. We organise the infrastructure here. I am the manager of the area. The tenement owners pay me for this.  They pay me KSh30,000 per block to the welfare association. There is additional money they pay for the roads, water, power.  We do it all, he tells us. The government does nothing here. Only the police station is staffed by the state, built by the tenement owners. It is helpful for security.

Kim explains that we are interested to see around. I am not sure what the story is; what the story about me is. That does not matter. Focus, smile, extract information. Keep it light; find the details.

We walk out and  on. We turn the corner. There is a different scale of road building. Machines carefully moving between the buildings. Larger stones. Shifting of rubble. We walk back onto the mud and the pathway. Someone catches up with us; looks at me. Talks to the man with the black glove. Smiles at me and Jack. “I have come to see my investment”, he explains. “I have invested here.” Super smart and casual jeans. Walking slightly ahead of two men; slightly larger, more than slightly protective, aligned to walk behind.

Everywhere we walk there are blocks. Most are about ten stories, some are eight and some are nine. Occasionally there are empty spaces. Occasionally just two stories. Construction is ongoing. There are single blocks and double blocks. Marking out territories with different colours. Colours and design define where one plots ends and another begins.

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There are clothes at every window. Hanging out to dry. But not much activity on the street. The cooking that is outside is commercial. There are street foods stalls even now when most of the residents are away at work.  There are taps for water close to the doorways. At some there is a group waiting in turn to fill their containers.

The ground floors are rented out to businesses. As we move back towards the main road then the commercial activities spread up to the first floor as well. We walk passed a woman selling clothes on the bend of a road that is newly finished. Mr Mwange says something to her; she replies. Later Jack tells me he was reproving her for being too close to the traffic. The cars and vans pass within inches. Driving slowly as they navigate the space. Beside the woman and the clothes is a young girl; about seven or eight. She stares out.

Mr Mwangi talks with pride about the infrastructure that is being improved. How great the roads look when they are tarmacked. A new building has been completed. A banner is advertising for tenants. “Free wifi and free DSTV, Plentiful water”. Freshly painted walls in orange and white claim attention and quality. Water is provided throughout the neighbourhood; but on the ground floor only. It must be carried up without lifts. Power is paid for separately.

Mr Mwangi talks about the building that is ongoing. And the quality? What about the quality of the building; I have heard some of the tenements may fall down? He shrugged: it depends on the engineer. These are good, he adds gesturing around us. But one fell down nearer the river.

The residents? Factory workers who can afford. Those who want to move out of the slums. It is mostly factory workers who live here, we are told. They walk to work. They earn KSh500 a day ; they work 25 days a month (as long as they can). So they earn KSh 12500 each month. It costs them KSh 5000 for a room on the inside of the neighbourhood; or KSh 7000 for one alongside finished roads and with improved services, nearer to the outside.  All the rooms are 10 ft by 10 ft.  Those that can rent two rooms. But the wages are so low; Mr Mwangi explains. People cannot afford two rooms.

There are communal services on each floor; toilets. The water is carried up from below. When we walk up to look at the view from the top floor we pass a collection of containers waiting by the toilets. There is some water dripping through the building. The stairs are irregular in the spacing. They have been tiled to give a better feel to the place. We step onto the balcony at the end of the hallway from which the doors access the rooms. We stare over the neighbourhood. Someone brushing his teeth apologies and steps passed us to enter his room again.

When we go down Mr Mwangi apologies. He needs to go. Some paint is coming. He has to sign the bills and arrange for the delivery to be where it is needed.

We move swiftly out of the neighbourhood. I am disorientated by the turns. Suddenly we are on the road on the side of the railway track. We walk down the tarmac road. The car is still there. Mr Mwangi nods to the people selling in the shacks alongside. We shake hands and say goodbye.

Doors are locked at 2200. I remember now. There was an earlier conversation; in the meeting room at the office. Someone was explaining to someone else why not everyone prefers the newly built tenements. Why some prefer the shacks in the informal settlements.

Plots of 33 by 90 feet. 14 rooms a floor. Buildings to 8-10 stories. Let’s make it nine storeys plus the ground floor. That makes it KSh 630,000 a month. The ground floor rentals are Ksh15000-20000. Say KSh 150000; that is another KSh 210,000. And on the busier streets the first floor as well had commercialised. So let’s say each block has an income of Ksh 840,000 a month. Or KSh 10,080,000 a year. Say KSh10 million. That is $100,000 in an annual income.

And to build? KSh 15 million for the land. Ksh 18 million to build. There is, he added, an additional KSh3 million for foundations. The soil is black cotton. It is necessary to go down three storeys; to take it all way. Nothing much in maintenance. So KSh 36 million to build; that is US$ 360,000.

Each plot is 33 by 90 feet. 2970 square feet or 275 square metres. Say two people in each room. That is 252 people. A few more metres along each building. Maybe 1.5 metres per person? Imagine, Jack tells me, when the people come back from the factories. These roads are packed. Really packed. It is hard to walk.

We learn little about who these investors are. Mr Mwangi, Jack tells me, may have four blocks. But that is a small holding. As we are walking out of the area, Kim points out one of the blocks, double plot, smartly painted, right on the edge of the area by the main room. That is owned by senior police and Government officers, he tells us. The judges, they probably own many buildings. But they never come here. They probably do not even know where their blocks are.

We visited the tenement because Jack is trying to tease out in his mind the possible options to move forward in Mukuru.

Jack wants to understand these structure owners. He wants to understand what the “one stop shop” to tenement construction and tenement management regimes really mean. Find the agent, put down the money. And there is the block. The structure owners, he explained, they are excited about this possibility in Mukuru. Some already know they have limited options. They don’t have this kind of capital. But others.  Others are thinking that the redevelopment of Mukuru is opening up this possibility for asset accumulation. Structure owners are saying they don’t want the SPA; they have their own organization. How might a housing solution be structured that gets them on side? That uses their capital?

The residents who come here? They want the services, Jack explains. They want to be clean. The slum rents are KSh 2500 or 3000 for a room of this side. They pay more to be respectable.

Mukuru demands thinking outside of the box. They have 100,000 hhs in Mukuru; there is nothing in the box that is plausible.