Plus ça change…

An Italian woman has put France back in the headlines of newspapers all around the globe. She married the French President, exchanged her heels for sandals and got in the good books with the English – all in the same week that the press announced a nude photograph of her would be auctioned in New York, on April 10th. Now, anyone who’s anyone has to show off their French, even if it’s in a column about municipal politics in Brazil.

What changes will the local elections bring?

Two professors from MIT, Acemoglu and Robinson, in their paper, “Persistence of Power, Elites and Institutions” (2007), affirm that, as regards politics in Latin America and Africa, plus ça change, plus c’est la même chose. They argue that political institutions in general, and especially in the two continents in question, shift from dictatorships to democracies – and vice-versa – at the same time that their political leaders rewrite constitutions with extraordinary frequency. However, despite the radical appearance of the political changes, their economic systems show surprising continuity. The authors modeled the idea that the shift of a dictatorial regime to a democratic one only changes the distribution of power de jure; as the elite can invest de facto power by using, for example, paramilitary forces or lobbies in Congress, thus compensating for their apparent loss of power.

The consequence is that, in spite of the political changes, economic institutions continue to favor the elite.

In Brazil, Lula complains that, although he is seen as the father of the masses, under his government banks are posting record profits. Is this an illustration of the MIT professors’ argument?

The upcoming local elections lay bare the fragility and hypocrisy of the main party leaders in Brazil. In principle, we identify the PT (Worker’s Party) as the ruling party of the coalition government and the PSDB (Brazilian Social Democracy Party) and the DEM (Democrats) as its opposition in Congress. But in the municipal elections, the bonfire of the vanities and personal ambition raises doubts regarding these parties’ national image.

In São Paulo, the alliance between the PSDB and the DEM is under threat. The principal officials of the DEM municipal government are still PSDB members or sympathizers. However, Geraldo Alckmin, also a PSDB member, is abandoning the long term strategy of forging alliances in favor of personal objectives. He is launching himself as a pre-candidate and revealing the internal divisions within his party.

In Belo Horizonte, the divided party is the PT, currently in panic regarding the possibility of a program convergence with the PSDB.

But, amidst all the hubbub, voters still know how to find their way. At least, according to three FGV-SP (Getúlio Vargas Foundation – São Paulo) professors, Paulo Avarte, Enlinson Mattos and Vladimir Ponczek, think so. They take the opposite stance of the MIT professors and other social scientists that argue that economic policy results only favor the elite and don’t actually change the political institutions, simply perpetuating the power of a few influential families.

To sustain such an important thesis, the FGV-SP professors embarked on a study regarding the persistence of power of Brazilian political parties using municipal reelection figures for 1992, 1996, 2000 and 2004, taking into account the constitutional change of 1988. They reveal the following story: in the space of only two years, 1992 and 1993, 483 municipalities were created in Brazil, almost as many as the 500 that were created between 1980-1991. The voters approved the creation of new municipalities by judging the merits of two opposing factors.

On the one hand, dividing municipalities goes is counter efficient for the provision of public services, due to the reduction in the economies of scale. On the other, this division is advantageous for two reasons: it minimizes the difficulty in focusing policies on heterogeneous groups; and, it attracts more federal subsidies, as the municipalities gain more per capita, the smaller they are.

The evidence suggests that the advantages of dividing municipalities outweigh the loss in economies of scale, as long as Brazilian voters know what they’re doing in choosing the scale of their municipal jurisdiction and budgets.

Furthermore, it seems that the Brazilian political parties are also capable of benefiting from the economic policies that dividing municipalities make possible, as the chances of a party being reelected if it comes into power after a division is 13% higher than for a party trying to get reelected if a division hadn’t taken place.

Among the 310 municipalities created between 1989 and 1992, the percentage of those in which the same party was reelected at least once reached 37%. For municipalities that remained whole during that same period, this figure fell to 33%.

The FGV-SP professors believe that the electorate vote in favor of division because they perceive the benefits, which the parties know how to use to their best advantage. The neighboring voters, who can see the benefits of the recently created municipality, follow their suit by also voting for a division of their municipality.

Those in doubt of this conclusion would have to come up with a more convincing story and redo the professors’ research. Those who don’t can see a confirmation of the optimistic thesis that we are currently experiencing le meilleur des mondes possibles, as, according to Leibniz, if it isn’t the best of all possible worlds, God (or the invisible hand) would have created another one.

Pessimists will tell us to forget about philosophy and the French. Our world might be the best possible one, but by the end of 2007, Brazilian voters will be bitter about high import prices and trying to guess the rate of inflation (that is waiting around the corner) and the Selic increase that has been promised by the Central Bank. Of these, the return of inflation would be the biggest threat to the popularity of the President and his Party.