While our government in the U.S. continues to cater almost exclusively to the interest of the global economic elite and working with other traditional conservative elites to maintain the Washington Consensus, there are changes taking place elsewhere. For a variety of reasons Americans are unable to address the economic crisis in a fundamental way. Our banks are still too big to fail and increasingly insolvent. Some U.S. state governments are on the verge of a collapse in basic services as they face budget shortfalls of up to 29% of budget; with the Republicans in charge of the House and the President wanting the same things they do, states in trouble aren’t likely to receive enough help anytime soon. President Obama has thrown his lot in with the Republicans, blowing a $800 billion plus hole in the federal budget over the next five years and then turning around and preaching austerity to a nation that cannot afford it. The I-got-mine Washington Consensus ideology that got us into this economic trap in the first place is still in place and stronger among policy makers than ever. If only we serve the rich better, maybe they’ll deign to spend money in a way that’s in the interest of the rest of us. Maybe.

But all is not doom and gloom for the left. Outside the U.S. there are signs of a serious change in economic thinking and an embrace of the traditional frames of the left. Alternatives are being put forth, and some nations are asserting their independence from a global economy designed to serve the interests of the U.S. and other dominant players in the West. While not all the nations currently undergoing major social and economic changes on the left have taken a directly oppositional stance to the U.S., a la Venezuela, most of them are at least wary of U.S. intentions.

One nation that maintains good relations with the U.S. but is also a rising power in the international left is Brazil. Brazil’s soon to be former President Luiz Inacio Lula da Silva of Brazil’s Worker’s Party has been so tremendously successful economically and politically that the entirety of Brazil’s mainstream politics have moved left of center. The most recent Presidential election in Brazil was won by Lula’s successor from the Worker’s Party, Dilma Rousseff, a former Marxist urban guerrilla from the days of Brazil’s military dictatorship turned economist and politician. Rousseff even spent a number of years in prison in the 70’s for her revolutionary activities.

Her opponent in the recent presidential election was Jose Serra, the former governor of Sao Paulo State. Serra represented a coalition of parties in the center left and center right under the banner of the Social Democratic Party. Both candidates broadly support the Lula Administration’s economic program, but Rousseff favors more state involvement in the economy, more public spending, and more poverty reduction measures. In fact, poverty reduction is being advertised by Rousseff as her number one priority (my emphasis):

So what do you mean when you say “rationalize spending”?

We are not in a depression here. We do not have to cut government spending. We will cut expenses but continue to grow.

We are following a very special path. This is a moment where the country is growing. We have macroeconomic stability, and at the same time we have great pride in the fact that we managed to reduce extreme poverty in Brazil.

We brought 36 million people into the middle class. We lifted 28 million from extreme poverty. How did we manage to do that? Income-transfer policies. The Bolsa Familia is one of its major examples.

Explain how Bolsa Familia works.

We pay a stipend, which is an income stipend to the poor. They get a card, and they withdraw their income, but they have two duties they have to abide by: They have to put their kids in school, and they have to prove they attend 80 percent of the classes. At the same time, children should also get all the vaccines, and they have to go through a medical evaluation when they get their vaccines. This was one factor that was responsible, but it wasn’t the only one.

We created 15 million new jobs during President Lula’s administration. This year, we have already created 2 million new jobs.

Again, on poverty:

Rousseff, 62, paid homage to Lula in her victory speech, pledging to extend what she dubbed a ‘new era of prosperity.’ She also set out twin goals for her rule — eradicating poverty while maintaining Brazil’s hard-won economic stability.

‘We cannot rest while there are Brazilians who are hungry, while there are families living on the street, while poor children are abandoned to their fate,‘ the former leftist militant told cheering supporters in the capital Brasilia.

Clearly, if the leaders of our own government in Washington are to be believed, Brazil’s economy is going to fall apart any day now; everyone knows that what creates economic growth is tax cuts for the rich, not income redistribution, public spending on infrastructure, health care, and education. Oh, wait:

“The economy is on track for sustainable growth of around 6 or 6.5 percent by the end of the year,” Mantega said [Brazilian Finance Minister Guido Mantega].

Latin America’s biggest economy grew at its quickest annual pace in the first quarter since at least 1996, when the government began the current methodology.

Growth forecasts for 2010 have ranged as high as 7 percent, putting Brazil among the world’s fastest-growing economies.

Left wing policy making in Brazil constitutes a rejection of the Washington Consensus and neoliberalism. Brazil, together with China, India and Russia (BRIC), met last year in Brasilia to discuss trade and common interests. While Brazil maintains good relations with Washington, it is clear that along with the other BRIC states they are looking forward to a multipolar world with dwindling U.S. power:

But these internal contradictions pale compared to the BRICs’ common agenda of being very careful not to antagonize Washington. As much as they know that the new multipolar world cannot have a center – which at the moment is in a Washington that, with the exception of military hegemony, is largely impotent – China, for instance, has built an economy battling with Japan to become the world’s second-largest economy by profiting from the current US-centered system.

BRICs anyway will keep insisting on remaking the global financial architecture – and that starts with profound reforms at the Bretton Woods institutions. They will be increasingly more powerful inside the G-20 – and that has already reduced the Group of Eight to irrelevancy. It’s very enlightening to see how they have evolved their common position on burning issues such as the Iranian nuclear dossier: once again they have stressed in Brasilia they want dialogue, not confrontation, sanctions and threats.

So the BRIC name of the game may be evolution – not revolution. But the game itself is clear; full speed ahead towards the post-Washington consensus.

Unlike Chavez in Venezuela, the Brazilians appear to be playing for a “velvet revolution” in the world economy as opposed to open confrontation with the United States and the Western economic status quo. Moves in the BRIC countries and their spheres of influence towards increased public investment in health care, education, transportation and essential state owned industries provides a powerful counter-example to the shrinking incomes and fiscal austerity of the West. Perhaps in ten years time it will be the newly moneyed middle classes of Brazil, China and India that prop up the world economy. Given the path most of the West is heading down, it’s not too implausible to see that future.

Next week I’ll be taking a look at economic alternatives in another large Latin American country, Argentina, in part two of Economic Alternatives.

Crossposted at Captured State.

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