Paulo Guedes is a formidable figure in financial circles. But can he fix the economy?
It’s been some 40 years since a small group of Milton Friedman disciples returned from the University of Chicago to their native Chile and, under the watchful eye of the repressive dictator Augusto Pinochet, unleashed a wave of free-market reforms that turned their country into the economic envy of Latin America. Friedman beamed with pride as Chile posted one spectacular economic growth figure after another —7 and 9 and 11 percent. He called it the “Miracle of Chile.” His protégés quickly became known as the Chicago Boys.
Taking all this in was another young Friedman pupil—a Brazilian by the name of Paulo Guedes. Fascinated by the transformation, Guedes moved to Santiago, and while he didn’t stay long—Pinochet’s henchmen put a scare into him one day—the lessons stuck with him. In an interview with Bloomberg News in March, he said Brazil “should’ve done what the Chicago Boys instructed.”
Now Guedes, 69, gray-haired, and brimming with self-confidence, will get his chance to do just that in the incoming administration of the far-right nationalist Jair Bolsonaro. With the newly minted title of economy minister, Guedes will likely assume the powers of the ministers of finance, planning, and industry. The Brazilian press has dubbed him the super minister.
There’s a lot of pressure to produce results—and fast. The country has been in an economic funk for the better part of a decade, the result of heavy-handed government meddling in private industry, a sprawling pay-for-play corruption scandal, and political gridlock that allowed the budget deficit to balloon. It feels like forever ago when Brazil was the high flying B in the BRICs, racking up record earnings on commodity exports and, in a sign that it had arrived on the international stage, pledging billions of dollars to help countries struggling in the aftermath of the financial crisis. Its sudden reversal of fortune presaged the broader downturn in Latin America and, to a certain extent, in emerging markets as a whole.
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November 12, 2018