Neoliberal policies have infected both arms of politics in Brazil and its people are falling sick. Diogo Mazeron writes.
After a very close and polarised election at the end of 2022 Luís Inácio Lula Da Silva won the race against the incumbent, Jair Bolsonaro. Despite the media narrative of a fight between left and right, the reality was that Lula, too, was under pressure to accept the neoliberal austerity dogma.
In his first two terms in office at the beginning of the 21st century, the situation was very different. President Lula had managed to deliver greater public investment in social policies, improving poverty and inequality indicators in Brazil. However, during that period, the country was experiencing significant economic growth, supplying China’s demand for resources to feed its growth, so financial markets and supporters of neoliberal theory were both happy.
Countless Brazilians, particularly those from low-income communities, have struggled to access timely and adequate medical care.
The surge in Chinese demand for Brazilian commodities since the 2000s has significantly impacted the economy. This increased demand, primarily for agricultural products like soybeans and iron ore, boosted Brazil’s export revenues, contributing to economic growth and currency appreciation.
This brought a reduction of poverty and inequalities through an increase of government investments in social programs and infrastructure due to the rise of revenues; helped on the creation of thousands of jobs as a result of the expansion of agricultural and mining sectors and, as a consequence, improved social indicators such as education, healthcare, and housing.
On the other hand, the worldwide increase in trade with China since the 2000s also made Brazil more vulnerable to commodity price fluctuations, which could lead (and led!) to social and economic instability.
Some potential explanations exist for the worsening of income inequality in Brazil from the economic crisis after 2015. From a fall in the prices of oil and other mineral commodities since 2014, which changed the political environment in the country and culminated in the impeachment of President Rousseff, to the adoption of neoliberal measures in the meantime on a tentative basis to please political and economic elites in parallel to the rise of narratives that social spending was harmful to the economy and hindered investments for the country’s development. In the build-up of the argument, it is important to highlight that the legal framework used on the accusations that caused the impeachment of former President Dilma Rousseff was based on violations of fiscal rules during her administration. All this turmoil brought neoliberal ideology to a position never seen before in Brazil, as it became the mainstream political economy until the re-election of President Lula in October of 2022.
Could Lula work his magic again after Bolsonaro’s austerity policies? After all, the 1988 Brazilian Constitution mandates that public authorities provide all citizens with a free and universal healthcare system.
Austerity in Brazil had started with drastic cuts in public spending on healthcare in 2015, even before Bolsonaro and the right took power in 2018. These cuts led to shortages of essential medications, a decrease in nurses and doctors in clinics and hospitals, and a decline in the quality of healthcare services.
As a result, countless Brazilians, particularly those from low-income communities, have struggled to access timely and adequate medical care, often being forced to turn to private and costly healthcare options. Since health is a fundamental necessity, many citizens have had to forgo other expenditures to afford private health insurance.
Under the Bolsonaro government, austerity measures were increased. A report by Amnesty International shows how austerity measures and mismanagement during President Jair Bolsonaro’s administration have led to a severe human rights crisis in Brazil. The lack of investment in public healthcare has exacerbated the impact of the COVID-19 pandemic, leading to increased food insecurity and unemployment.
Government expenditures on healthcare peaked at approximately USD 450 per capita in 2014. However, following the implementation of austerity measures, this figure plummeted to USD 315 per capita in 2020, even during the COVID-19 outbreak, as can be seen in the graph below.
The graph also shows an increase of almost 330% during President Lula’s first two mandates, rising from USD 104 in 2002 to USD 446 per capita in 2014. A shift in public policies when President Lula took power resulted in constant and significant improvement in government health expenditures in the first decade of the 21st century.
The increase in investments in services such as health and education during the first two terms of President Luiz Inácio Lula da Silva (2003-2010) was a central strategy of the government to promote social inclusion and economic development in Brazil. This approach had a significant impact on reducing poverty and social inequality in the country.
Private, for-profit medical facilities proliferated during austerity as public-sector health services decayed. This created a two-tiered system in which affluent individuals enjoy high-quality care while others receive subpar or no care.
The Lula government prioritised expanding access to quality health services, especially for the most vulnerable populations. The main initiatives include the Family Health Program (PSF) and the construction and renovation of hospitals and basic health units, improving Brazil’s health indicators.
However, in 2023, the Brazilian reality was quite different. The neoliberal discourse was increasingly dominant in society, both in public opinion and in Parliament, controlled by a right-wing majority. At the beginning of his third term, President Lula had no choice but to tie himself to a new fiscal policy based on balancing the budget that limited government investments in social programs even though there were exceptions for health and education.
Private, for-profit medical facilities proliferated during austerity as public-sector health services decayed. This created a two-tiered system in which affluent individuals enjoy high-quality care while others receive subpar or no care. Furthermore, pharmaceutical companies often prioritise profits over providing affordable access to medications, rendering essential drugs inaccessible to many Brazilians.
This financialisation of the healthcare industry resulted in a steep rise in healthcare costs, a decline in care quality, and increased barriers to access for low-income populations. These changes disproportionately impact vulnerable groups, who encounter obstacles in securing essential medical attention, leading to worsening health conditions. The Office of the United Nations High Commissioner for Human Rights (OHCHR) highlighted how misguided austerity policies during the COVID-19 pandemic endangered lives and increased inequality and poverty in Brazil.
President Lula’s third term offered a glimmer of hope. After extensive negotiations with the right-wing-dominated Congress, he pushed through a new fiscal policy that sought to enhance the social programs foundational to his previous governments.
Even with Brazil keeping a high volume of international reserves in balance that is enough to pay it external debt in foreign currency, since November 2024, Brazil has been facing a speculative attack that led to a 20% devaluation of the Brazilian currency due to the financial market’s fear (dominated by neoliberal ideology) of a rise in the Brazilian debt to keep social programs, so the government is being forced to cut spending in an attempt to calm financial markets and improve their public polling with the 2026 elections on the horizon. It seems that austerity is winning again, and the question is: what will the impact be on Brazilian society?
