Stay-Down Economics
June 19, 2008
I get upset at how arrogant some people can get.
The Economist recently covered an article on Brazil's oil potential and its rapidly growing economy. Anybody who knows anything about Brazil's growth during previous years knows that the country has been doing pretty well. Ironically, though, the Economist expressed "a cause concern" that Brazil's currency is getting too strong. "Brazil's currency, the real, has already soared to levels that make manufacturers wince. If it becomes petro-currency, many factories will be forced to close unless the needlessly high cost of doing business in Brazil are slash."
Needlessly high cost? Wince? It sounds like the authors wish anything but good for Brazil. Though it is true that the Third World factories of Brazil might go elsewhere as the country makes its way into the developed world, a strong currency and a healthy economy will allow the population to step out of the sweatshops and into newer fields such as technology, service, or bio-industries.
The international economists community pushes neoliberal policies in order to allow countries to lower the cost of doing business within their borders. But when these countries begin growing and their currencies begin to take value, are these economists willing to let go of their offspring and let them fly?
Filed in Economics
2 Comments
2 comments:
you've got it wrong, the wincing the Economist refers to is not coming from multinationals. On the contrary, a strong real is good for them as it allows for more dollars when repatriated. The local Brazilian companies that depend on exports are the ones wincing and their employees as well should they lose their job. So are you suggesting that Brazilian companies leave Brazil and go elsewhere?
It is true that if the value of the real is boosted that manufacturer - local and foreign alike - will become less attractive due to increased operational costs. Yes... as the real gains value they will loose their competitive edge as manufacturing and products from cheaper locations become more viable.
But that's the way things are. It's a big cycle. With a stronger real, Brazilians who once sowed sweatshop shirts can now buy them. Though manufacturing jobs will leave the country, new ones will come in through other sectors.
There are some Puerto Rican officials who rant against the minimum wage, due to its impeding of our competitiveness on the global market. Do we always want to be a Third World country sowing shirts for the distant middle class or do we wish to be middle class ourselves?