Political Risk Latin America Blog @PolRiskLatam

Brazil: a modest proposal

Posted in News and Articles, Political Risk by politicalrisklatam on July 20, 2011

by Jonathan Wheatley for Financial Times – Beyond Brics, July 20th, 2011.

Banks have paid their staff in stock for years. Lots of companies do it, too. Even some public sector workers are on performance related pay. So why not go the whole hog and make entire populations, literally, stakeholders in their country’s future?

That, says Nuno Camara, Latin American strategist at Fortress, the New York-based private equity and hedge fund manager, is what Brazil should do if it wants popular backing for progressive reform.

Economists and analysts – even some politicians – have been arguing for years that what would really unlock Brazil’s enormous potential is a dose of serious reform: of its regressive and complex tax system, of its rigid and restrictive labour laws and, above all, of public spending, which eats up 40 per cent of GDP (comparable to many developed countries) for precious little return.

Trouble is, no politician worth the name would dream of actually pushing stuff like that, especially with Brazil buzzing along so nicely. That’s where Camara comes in.

“Brazilian civil servants and politicians should be paid in Bônus do Tesouro [treasury bonds] or stock in Vale and Petrobras,” he says. “This will align their interests and then we’ll see if anyone will continue to favour government intervention in those companies or infinite increases in the minimum wage.” (continue reading… )



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