Brazil 1990

April 5, 2001

Note: Before the due date for this assignment was announced in our last class, I had lost track of how close it was. As a result, I haven’t been able to find a last minute speaker to review, so it was necessary for me to disregard (or at least bend) some of the stipulations. I am evaluating a taped electronic broadcast, which I saw (and recorded) live about 11 years ago. This is my first time watching the actual tape.

In mid-March of 1990, Fernando Collor de Melo (referred to hereafter as “Collor”), having just that week been inaugurated as the President of Brazil, made his first official address to the Brazilian people from Brasilia (the capital city). But this was much more than just the standard acceptance speech we are accustomed to in the US, wherein various people and organizations are thanked, and additional vague promises are made. There was a great deal at stake, and this was arguably the most important speech of his career. Had it gone badly, had he come across as not credible or dishonest or not self-assured or just not very bright, it could conceivably have resulted in complete economic collapse for Brazil, as well as for Collor’s political career. (That’s even more pressure than the fear of a low grade in COMM 210.)

The political and economic situation of Brazil at that time was precarious. First of all, this was the first time in over 25 years that a president had been popularly elected. The military, which forcibly took power in 1964, had relinquished it a few years ago and appointed a civilian president, but there was always a fear that any sort of national crisis would be used as an excuse for a new takeover. Also, the rate of inflation had been steadily increasing throughout the 80s, despite several ambitious but unsuccessful governmental plans to reverse this trend. In the month prior to Collor’s inauguration, monthly inflation was measured at almost 90%. The main reason for this sudden increase was uncertainty in the market caused by Collor’s unwillingness to discuss any details of his economic strategy prior to taking office. With inflation at an all-time high, and increasing, Collor’s first action as President was to close all banks and financial institutions in order to buy some time to put into effect the enonomic plan worked out in advance by him and his team of economic advisors. The most notable aspect of the plan was that it called for the the temporary seizing by the government of all money above 50,000 cruzados (a little under $500) in every bank account in the country that was over that amount. (In other words, a person having the equivalent of $20,000 in one bank account before the plan was instituted would suddenly find that amount reduced to about $500.) The plan included the promise that after 18 months, all the money would start to be paid back in monthly installments over the course of a year with the appropriate interest. All this despite the fact that, during his campaign, Collor had promised that he would not use extreme means to repair the economy.

All of this happened very quickly. It was only about 3 or 4 days between Collor’s inauguration and his television address. He had a great deal to explain and a lot of convincing to do. As can be imagined, almost everyone in the country made a point of tuning in. (Brazil has one of the highest per capita numbers of televisions of any country; as in the US, even the poorest of the poor out in rural areas usually have television access.) I had arrived in the country less than a month previous to all this as part of a year-long exchange and was very grateful that I had not converted my dollars for the year into cruzados and then opened a bank account. Nevertheless, I was extremely interested in seeing the broadcast. (I even recorded it.) Although by sheer luck, none of my money had been seized, one side effect of the plan was that the exchange had gone up tenfold, not in my favor. (Overnight, the cost of going out for pizza at my favorite pizzaria had gone from the equivalent of about $5 to $50!)

As I watched the recording today (about 1 hour and 10 minutes long), I was amazed by how just how much of it I remembered. Collor’s economic plan and speech made such an impact on me, and everyone in Brazil, that even now, 11 years later, so much of it is still familiar. (Since first seeing the live broadcast, I had never watched it again.) One thing I had forgotten, though, was that the speech was done in an interview format with 2 reporters asking him questions. The fact that I forgot this, illustrates just how incidental it was. The broadcast was done on the Globo network (one of the largest networks in the world). Globo makes no secret of the fact that it possesses and promotes a certain political viewpoint and had openly supported Collor in the elections. The reporters were clearly not hostile, and it was clear not only that they had shared most of the questions with him in advance, but even the order seemed predetermined. The questions were arranged in such a way that they served as useful transitions between the main points in a logical progression. One reporter even quoted some other journalist who had said something to the effect that Collor’s economic plan made a previous economic plan seem like a paper airplane compared to a rocketship. (How is that even a question?)

Collor had some colorful metaphors of his own. At the very beginning (the attention-getter), he said that he was a man living in the forest who suddenly came upon a hungry tiger. He had a shotgun with only one bullet. Then he explained that the tiger is inflation, and the bullet is his economic plan. He has only one shot to save the country. If it didn’t work, hyperinflation would consume Brazil. (This metaphor was parodied hundreds of times in the weeks that followed.) Another metaphor, which he used later on, was that of a dam. He said that a deluge of liquidity was threatening to flood the country. By removing and consolidating all the excess money into one centralized governmental account, he was daming it up, where it would no longer be a threat. In the event of a drought (recession), some of the floodgates could be opened at the necessary intensity to provide the proper irrigation where it was needed.

The speech as a whole was incredibly persuasive. What I found most impressive was how calm and clear-headed he appeared to be. There was a lot at stake, and he had a lot of very complex issues to explain to an enormously diverse group of people. He couldn’t afford to be misunderstood or disbelieved. There was not a sign of nervousness. That by itself probably did more to reassure the public than anything he said. He was very articulate and spoke clearly. He used a lot of gestures, but they all looked very natural and fluid, and his speech reflected a wide array of emotions without ever seeming melodramatic or contrived. He, of course, wore a suit, and his hair was slicked back. He also made a point of looking directly at the camera when answering questions, rather than at the reporters who were supposedly interviewing him. Twice he addressed himself directly to the Brazilian people rather than the reporters. For most of the speech, he was very easy to follow. (It was only toward the very end when the questions became much more specific and technical that I got a little lost. For example, he addressed issues like privatization and how the plan would affect the credit system for agriculture.)

Collor’s arguments were very persuasive, although in my opinion, he got off to a bad start when he stated that all the major surveys of public opinion showed that the vast majority of Brazilians supported his plan. In other words, he was telling people that they should support him, because the surveys (which he didn’t even cite by name) already said that they did. But he did much better with his other arguments. He pointed out that unlike most other economic plans of the past, this one did not target the poor. Only people with bank accounts of over 50,000 cruzeiros lost money, and 90% of such accounts were below this amount. He also pointed out that even people who had money seized would be see the upside to all this when on the following day for the first time in the history of Brazil, prices would actually start going down as stores lowered prices to compete for the business of customers with almost no money – reverse inflation. And he stated that once the economy was stabilized, social justice for the poor would once again be possible, since huge inflation rates always preclude that possibility. The one argument which I was surprised that he didn’t make and which to me was the most obvious was that if no money had been seized and inflation were allowed to continue until it crossed the threshold to become hyperinflation, then the economy would have collapsed and cruzados would have become nearly worthless. Losing nearly all one’s money to hyperinflation would certainly be much worse than losing some of it for 18 months and then getting it back with interest, and my sense was that that was how most Brazilians looked at it.

What strikes me as most remarkable now that I have seen it a second time is that even now it persuades me. With the benefit of hindsight, I now know that the plan ultimately failed, the Brazilian Supreme Court ruled that seizing money in that fashion was unconstitutional, and Collor was eventually successfully impeached on an unrelated matter and banned from holding public office for 10 years. Still, I couldn’t help but be swept up in the enthusiasm, almost as much now as I was in 1990.