1. Education and Political Transformation in Brazil CHALLENGES FOR THE BRAZILIAN ECONOMY Rio Branco Forum on Brazil Center for Latin American Studies University of Califoria, Berkeley November 4th, 2004

2. The mistake within the problem Two ways to look to the economy From inside From outside For decades: wealth defined by GNP, investment in infrastructure, foreign savings, exports and domestic demand by wealthy income-concentrating class, state as the fostering engine. Now: preventing return to political voluntarism and fiscal irresponsibility Giving up the other obsolete or unfair concepts

3. Challenges in the economy Three statements to support the new look to the economy Joan Robinson: “But Ricardo never saw the mistake was in the question and kept right on trying to eliminate mistakes in his answers” Einstein: “We can’t solve problems by using the same kind of thinking we used when we created them.” Roosevelt instead to asking how to resume growth in order to crate jobs, asked how to create jobs in order to resume growth.

4. Challenges in the economy The main economic challenges in the world came from outside: –The discoveries –The technological revolution –The new deal

5. The failed challenge in Brazilian Economy In the 1870’s only five or six big economies In the 1970’s some others, but Brazil was among the promising ones to the near future. In the first decade of XXIth century Brazil lost its pace to many new come countries. Brazil lag behind regarding China, India, Portugal, Greece, Spain, Ireland, South Corea, Tawain, Malaysia, … All of them made a difference, they invest in economy out of the economy, specially in: EDUCATION, basic and high education and SCIENTIFIC AND TECHNOLOGICAL CAPACITY. With that they disrupted the vicious circle of their poverty.

6. The vicious circle of Brazilian debts Poverty Income concentration Economy Finance Culture and knowledge Ecology Sovereignty Youth Model

7. The virtuous cycle of the debt payment Economic dynamics Health Education Productivity and savings Increase in investment Reduction of “Brazil Risk” Decency Cost of omission Complete Abolition and the Republic Model Youth

9. The Golden Curtain Economic Growth does not abolish poverty The income growth does not spread over the excluded people The income transfer is not enough to mitigate poverty More than unequality a Curtain cut poor from the rich people Brazil as a short scale of the global social apartheid

10. A new logic to define poverty

11. Social Shock Social policies as the only alternative for a social revolution in a global neoliberal world.

12. Inclusive legislation and social incentives Inclusive Laws: Compulsory basic education Federalization of basic education, national minimum levels: –teachers wages and teachers skills –equipments –contents Educational responsibility law

13. Inclusive legislation and social incentives Social Incentives : Bolsa-Escola Establishment of a minimum remuneration and increase of teachers’ average salary Teachers training and federal certification School equipment Universal water supply and sewage systems Poupança Escola (Savings-School) program Civil service Elimination of illiteracy Land reform Agro-industries Irrigation in the Northeast Micro credit Reform of the Brazilian university system Housing Unemployment compensation Home health care

14. The Leaps Forward Sociallly: to come from 72th to 30 th position in the UN Human Development Index, in 15 to 20 years Economically: to have an increase on the economic rate of growth since the begin of the program, thanks to a kind of social keynesianism, or a social new deal, or as we prefer SOCIAL SHOCK

15. The Cost of a Social Shock Total Cost R$ 47.3 billion,(around US$ 16 billion) 3.5% of domestic debt, 3% of GNP, 30% of yearly interest charges, 6% of the annual tax burden, The Net Cost R$ 12,5, discounting the tax return, the reduction on social costs, the increase on growth.

17. How to finance A linear cut of 2% on the 2005 budget costs. A National Independence Fund to be repaid with interest by the year 2022, the bicentenial of our Independence.