Swapped Pedals - Minimum salary and inflation
Posted on June 3, 2005
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An economic model, for being democratic, must allow a decent life to all citizens. It is the minimum requirement one could ask for. Is it the case of the economic model applied in Brazil by the brazilian government?
Twenty percent of Brazilians people survives with the minimal salary: 290 reales, approximately 90 dollars, an amount that scarcely allows to buy food –and not good quality food. Brazil is a rich country, and the government has a positive economic balance, one could then expect the government leaded by the president Luis Inacio Lula da Silva to hold the promise to increase the salary to approximately 450 reales in 2005.
Ingenuously during the election period it was said “If 20% of the Brazilians will have more money to spend thanks to the increase of the minimum salary, the home market will be strengthened, and the Brazilian economy consequently”. Nothing more false, unfortunately.
1- If the 20% poorest Brazilians begin to spend more, they will mainly buy Brazilians products. A serious problem, because the trade balance will go on passive because of the decreased exportation.
2- This multitude of “new rich”, with an unrestrainable desire of purchasing material possessions, will increase the demand for goods and this will lead, because of the law of demand and supply, to an increase of the prices, the feared inflation.
If the two points would concretize, Brazilian system would go fastly towards the collapse, the financial capitals would escape abroad in two days, and in this rich country even more people would suffer *hunger*.
That is what the experts are saying, and that is what actually would happen. Just like I had a car with swapped accelerator and the brake pedals –and instead of swapping in my head the position of the pedals, I swap the concept of braking and accelerating. Today, instead of changing the economic models, it is preferred to change the concept of poorness and wealth. Brazil is a rich country, even if millions of Brazilians are suffering hunger. A country distributing to his own citizens the goods it is producing himself is a poor country.
Quite simple, isn’t it?
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