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Brazilians have taken to the streets to protest rising prices, high taxes and government corruption. What the demonstrations mean for Latin America’s biggest economy.
- Liz Leeds senior fellow for Brazil, Washington Office on Latin America and honorary president of the Brazilian Forum for Public Safety.
- Carl Meacham Americas program director at Center for Strategic & International Studies.
- Barbara Kotschwar research fellow at the Peterson Institute for International Economics and adjunct professor of Latin American studies and economics at Georgetown University
- Paulo Sotero director of the Brazil Institute at Woodrow Wilson International Center for Scholars.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Brazil's President Dilma Rousseff met with protestors yesterday in an attempt to contain the unrest of the last few weeks. But experts say the situation is far from resolved. Here to talk about protest in Brazil and the response by the government, Barbara Kotschwar of the Peterson Institute for International Economics, Carl Meacham of the Center for Strategic & International Studies.
MS. DIANE REHMJoining us from a studio in Sao Paulo, Paulo Sotero of the Woodrow Wilson International Center, and by phone from Boston, Liz Leeds. She's with the Washington Office on Latin America. Do join us, 800-433-8850. Send us an email to email@example.com. Follow us on Facebook or send us a tweet. Good morning to all of you.
MR. CARL MEACHAMGood morning.
PROF. BARBARA KOTSCHWARGood morning, Diane.
MS. LIZ LEEDSGood morning.
MR. PAULO SOTEROGood morning, Diane.
REHMGood to have you all with us. And, Paulo, if I could start with you, I know that President Dilma Rousseff met with protestors yesterday. What came of that meeting?
SOTERONot much, Diane. Most importantly, she met with governors, mayors and made a proposal to among others called a plebiscite on a constitution assembly with a specific objective of reforming the political system. This was not well-received by political parties. It was seen as a very dangerous move because once you start a constitution assembly process, you don't -- you can control in. There are other -- another proposal on the table, interesting. Both proposals are -- involved direct democracy because these -- the traditional forms of political mediation seemed to have -- to be paralyzed in Brazil.
REHMMm hmm. You know, one wonders, these protests have gone on since June 6. Do you expect them to continue, Paulo?
SOTEROThey -- that's the expectation here. There was actually a poll here in Sao Paulo by one the local newspaper, and two out of three people interviewed said, yes, we should remain in the street, and the reason is obvious. People went to the streets asking for a reduction on bus fares. Police in Sao Paulo use excessive violence to attack them.
SOTEROThat was what actually provoked this mass swarming of protests conveying the anger, the frustration people have here about the very slow pace of change in a country whose economy is stalling with inflation going up. I think people here is fearful that all this dream, this prosperity with more equity that was and is experienced here may be coming to an end. People are very, very angry with corruption, with the disconnect between politicians and the people. And they vow to stay in the streets, and there is a major rally for July 1.
REHMPaulo Sotero, he's joining us from Sao Paulo in Brazil. Barbara, turning to you, Brazil is now the seventh largest economy in the world. The pace of growth became so fast. What happened and why?
KOTSCHWARWell, Brazil has seen an incredible decade of growth buoyed by rising prices of commodities. Brazil is a commodity producer and exporter. Demand from China and East Asia has really pulled Brazil's economy along. And so you've seen incredible rates of growth that you haven't seen in Brazil in a long, long time, not since the '60s and '70s. In the last couple of years, that stopped.
KOTSCHWARAnd so that's caused one of the pressures on the administration. At the same time, you have growing inflation. As Paulo mentioned, Brazil is very skittish about inflation. Perhaps the students in the street that are protesting don't remember, but their parents certainly do. Brazilian sort of psychology -- economy psychology is formed by a fear of hyperinflation. At the same time in the last decade, there have been incredible increases in prosperity in Brazil.
KOTSCHWARYou've had about 35 to 40 million Brazilians pulled out of poverty into the middle class as a result of good microeconomic conditions, strong external growth and probe poverty programs, such as Bolsa Escola and Bolsa Familia, really promoted by the Lula and now the Rousseff administration. And so you're seeing those people now become frustrated with, A, the possibility that the slow growth and rising inflation might erode those gains and, B, they're looking now at quality of public good such as education, infrastructure and health care services.
REHMBarbara Kotschwar of Peterson Institute. Carl Meacham, I want to go back, what was it that halted this decade of growth? What happened to the economy?
MEACHAMWell, what you've seen lately is that Brazil has been very dependent on the purchase of natural resources -- its natural resources. A lot of investment from countries around the world, the Chinese purchasing lots of natural resources. Iron ore is one of the big ones. Now you have oil coming online probably in the early next decade. But with the Chinese growth diminishing, what you've seen is less money, less infusion of capital coming in. You had a boom, as was mentioned earlier, in the economy, which really increased folks' expectations for the improvement of their lives.
MEACHAMAnd what you have right now is basically folks saying, hey, you know, we're seeing all this money coming in -- or we've seen all this money coming in. We want to see the impact, the direct impact on the improvement of our services, education, health, and in the case of the folks that started the protests, transportation. It was an increase of 20 cents that really set this whole thing off, and it really channeled this outrage that already existed with the Brazilian, with the poor people, the middle class and the students.
REHMCarl Meacham of the Center for Strategic and International Studies. Turning to you, Liz Leeds, I know you study police public safety. How have the police responded to these humongous crowds in the street?
LEEDSI think the police have been totally unprepared to deal with major demonstrations of this kind. We haven't seen major demonstrations like this throughout the country in almost 20 years although there have been localized demonstrations. But the police, if they've been trained to deal with crowds, it's been training in preparation for the big mega events, the World Cup and the Olympics. But they are totally unprepared to deal with demonstrations of this kind.
LEEDSAnd I think this is one of the larger issues in the government not providing national guidelines and state guidelines on the appropriate use of force for the police in situations like this. I think we have to remember that the jurisdiction for the police in Brazil is at the state level. It's not at the federal level. And there have been some states that have been more progressive in reforming their police practices and others. But there's much that the federal level could do in terms of setting national guidelines and providing more resources for the police at the state level, and that has not happened.
LEEDSIt's very interesting in this most recent -- the Pacto Nacional that Dilma proposed in the last couple of days when she's talking about health and education, but the police and the whole issue of public safety have been totally left out of the discussion. And this is very consistent with how the federal government has dealt with this issue over many years.
REHMSo what you're saying is because of the forthcoming World Cup, you've known that this kind of reaction was coming, police have known but did not expect this large a reaction?
LEEDSI believe the police were pretty much taken by surprise. I mean, they had -- once this started, the intelligence seemed to fail the police in the larger cities. But they -- as I said, they've been training to deal with crowd control in these national big events. But this kind of spontaneous reaction has really not been part of their training at all, and it's a real failure on the part of both the state and federal level in dealing with these kinds of issues.
KOTSCHWARI think that everybody was taken by surprise. I think that both police and the government and people were taken by surprise. These protests, which started out as relatively small-scale protests against bus fare increases, and this is part of a movement and to promote having zero bus fares for students, for the elderly, for disabled. It's an expression of social inequality.
KOTSCHWARIt's a reaction to social inequality. Who takes the buses? People who can't afford cars. It's also an expression there is an ecological component to this. Taking the buses and having free or subsidized bus fare is better for the environment and is better -- it also allows you not to use the not-so-wonderful Brazilian infrastructure.
REHMBarbara Kotschwar, research fellow at the Peterson Institute for International Economics. Short break here. And when we come back, we'll talk more about the implications of these large protests and how the government may react. Stay with us.
REHMAnd breaking news now from the Supreme Court, which this morning announced a ruling on the constitutionality of part of the Voting Rights Act of 1965, which requires nine states, mostly in the South, to obtain federal permission before changing voting procedures. Legal analysts are reading that decision to understand its scope and consequences. In our next hour, we'll be bringing you experts to talk about precisely that.
REHMMeanwhile, we continue our discussion on what's happening in Brazil. And here is an email from Dito (sp?) in Little Rock, Ark., which says, "Northeast Brazil has seen Brazil's Landless Rural Workers' Movement increasingly express the need for land use reform in this poor part of the country. Could this current unrest provide President Dilma Rousseff the political cover to institute even more far-reaching social reforms even if those would be seen by many as socialist reforms?" Paulo Sotero.
SOTEROIt may. But this protest is urban. This is not about only people that takes bus in cities. A lot of the people in the streets are people that own cars. They want better traffic. They want better -- the issues are related to urban policy. The issues are demands of people that live in cities. Eighty-five percent of the Brazilian population live in cities.
SOTEROThis is not a protest of poor people. This is a protest of middle class. And the challenge now, both for the government and for the opposition, is to come out ahead, formulate the proposals that will be seen as positive in the streets and channel this energy back to the political process. It's not going to be easy to do that.
REHMAll right. And one more question from a listener, who says, "I'm wondering if your guests will address who the leaders of these protests are. Do we know what their political ideology is?" Paulo.
SOTEROThey are from all over, Diane. You can have sympathizers from the parties of the left, the center, the more conservative. This is -- that's precisely how this is so difficult to grasp. That is precisely -- there is so much perplexity about -- from the government, from the opposition, from the media. Nobody saw this coming, but it is an outpouring of frustration of -- in the country that has seen some of the benefits of 20 years of stability, of democracy, some good social programs but is fed up with corruption, politicians that seem to be really preoccupied with their own interest.
SOTEROAnd these people are saying, you know, we had seen what it can be, what it can become. I think that the World Cup, or the World Cup event that we are having here right now worked, in some ways, to provoke the protest or to feed this atmosphere of protest because you're seeing, you know, lavish expenditures of money.
SOTEROAnd people are saying, well, we need -- we have other priorities here.
KOTSCHWARI think, following on what Paulo said, there's a real disillusionment in terms of seeing Brazil's growth and seeing the potential but then confronting some of the basic realities, for example, the increase in prices. You see the price of tomatoes doubled in a year. At the same time, the corn inflation has been increasing. Also recently, there was a study that alleged that international automakers and domestic automakers made autos for the Brazilian market that were substandard, that were below the standard of autos sold abroad.
KOTSCHWARAnd I think that calls to the frustration of Brazilians. They pay very high tax rates. They also pay very high prices. And they don't feel that they're getting the goods in return. With regard to the investment in the World Cup, I think -- the government promised that the investment in infrastructure that was to be made in order to be able to hold the World Cup and the Olympics would benefit Brazilians. Brazil has problems in terms of infrastructure. They really need bolstering their rail, their roads and their ports.
REHMSo, Carl, are these protesters correct to presume that they are not going to benefit from all this spending for the World Cup?
MEACHAMWell, the thing is is that, even if it is a profitable venture, they will see the results in the midterm or in the long term. They're not going to see the results to the protests right now. The issue that President Dilma will have is how do I -- how does she channel expectations. And I think she's trying to do that with the reforms that she's talking about. But it's going to be very difficult in a democracy, and Brazil is a democracy.
MEACHAMThe expectations of the populists are going to be very difficult to channel because they want to see changes right now. So when Paulo said earlier that these protests are going to continue, he's completely right. And the model that I see for Brazil going forward is probably more like what's happened in Chile. Since 2011, you've had sporadic protests, that being guided by education reform, the same type of outrage.
MEACHAMThey're doing better economically. They want quality services. I think the Olympics and the World Cup have served to sort of spark this outrage that exists and the desire for better living, to see the spoils of their success. So I think that Brazil's a little bit a -- this is -- they are a victim of their own success, I think, on this one.
REHMLiz, can you talk about education in Brazil? How is it for those who have the wealth and those who don't?
LEEDSWell, I think that it's very much a two-tiered system. Most middle-class residents, and increasingly, people from the lower classes, who have the resources, will send their children to private schools or religious schools because the public education system is totally unprepared and of poor quality to deal with the educational needs of their children. And this is especially the case in the low-income areas of Rio and Sao Paolo where the public education system is particularly bad.
LEEDSAnd in those areas that have been most affected by -- the violence are prevalent in these -- in these communities, where until very recently in Rio, the drug dealers, at many points, were controlling what went on in the school systems. So I think this is -- the issue of public education is extremely important.
LEEDSLet me just say also, just repeating a little bit what Paulo said, that when you look at interviews of the people, of the demonstrators on the street, consistently one after the other, and they're multi-class, saying this is nonpartisan. But even more, that it's not a right or left issue. It's not an ideological issue. And I think this is an important piece of this demonstration.
LEEDSAnd, you know, I would also like to say that even though it seems to be out of the blue and spontaneous, I think we have to recognize that Brazil, since the end of the dictatorship, has had an extremely vibrant, organized civil society. And so NGOs dealing with all these issues working on the ground will continue to probably take up the battle of these spontaneous demonstrations. So I think we have to recognize the importance and the vibrancies of Brazilian civil society.
REHMAt the same time, Paulo, why is it that the Brazilian leaders have not been more responsive to the people than they have? Why has it come to these large protests?
SOTEROOne explanation possibly, Diane, is the fact that, you know, 10 years ago, the first party in Brazil that was organized from the bottom up came to power, the Worker's Party of President Lula was very successful, gave a lot of legitimacy to his change because of Lula's own personal biography helped a lot.
SOTEROIn this very unequal society, we could see a popular party be elected, but in power -- and here's the criticism -- the -- that the Workers' Party became concerned about keeping power using different instruments -- unions, student associations, even some NGOs -- to become instruments of power, and people lost the connection.
SOTEROA senator, a young senator from the Workers' Party, Mr. Farias, a former student leader, said in an interview yesterday that the Workers' Party lost its connection with society and with youth. And this explained to me why suddenly, without having a channel to, you know, to transmit their demands, people end up going to the streets, and the leaders here are basically not understanding what's going on.
REHMBarbara, how do you compare what's happening in Brazil to, say, what's happening in Turkey? Are there similarities, and are there major differences?
KOTSCHWARWell, I'm not an expert on Turkey, but there are similarities in terms of the galvanization of young and middle-class people in -- through social media. Turkey and Brazil are both in groups of countries that have been selected by investors as emerging markets that you should watch funds, BRICs funds. Brazil is the lead of the BRICs: Brazil, Russia, India and China. Turkey is in the CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.
KOTSCHWARThe commonality in the second group is a low median age, and so you've got a large group of young people with rising GDPs. And so you have large group of relatively young people, relatively young middle-class people. And I think in Brazil -- and in Chile as well, as well as in Turkey -- in Turkey, there's more of a -- I mean, there's a different political aspect. But if we compare the protest in Chile to the protest in Brazil, you're seeing the frustration of the middle class in terms of the social services that they're receiving, basically in terms of the components for opportunities for increasing their well-being.
KOTSCHWARAnd I think that President Rousseff would be well served to really watch what's been going on in Chile where the student protests were against a very popular, left-leaning sort of student-friendly government. And right now the protests recently have also been -- the protesters have been rather disillusioned by the Concertacion candidates and their response to the recent protests.
REHMAnd you're listening to "The Diane Rehm Show." We're going to open the phones now, 800-433-8850, first to Michael in Conway, Ark. Good morning. You're on the air.
MICHAELGood morning. Thank you so much for taking my call.
MICHAELPlaying off this idea of the protests in Chile, furthermore there have been protests in Mexico, like, for example, the Yo Soy Ciento Treinta y Dos protest and the followers of Javier Sicilia. And I'm just wondering: To what extent might this be kind of this -- what's going on in Brazil? Might it be inspired by Chile and by protests in Mexico? And following that, in Argentina, where they really are seeing inflation, is it possible that they could become kind of inspired by what's going on in Brazil?
MEACHAMWell, yeah. I think that the caller makes a very good point. A lot of this has been sort of channeled through social media as well. It's -- the demographic of the millennial generation, hopefully some of the X generation, has been able to really, really benefit from having more channels to communicate to talk about different issues.
MEACHAMAnd that's enabled them to be able to organize and express themselves in a way that they hadn't in the past. So you see what's happened in Chile. You see what's happened in Mexico. And I think what you're seeing in Brazil follows along the same line, and it's folks that want to have more participation, but want quality services. They want -- at the end of the day, they want quality services.
REHMPaulo, what about this whole notion of corruption and its growth in Brazil?
SOTEROWell, that provides the very negative atmosphere. You know, people are so disappointed at their leaders here because, as I was mentioning, the Workers' Party that grew up and was accepted by the people as the party of ethics -- and they were that, but the largest corruption scandal in Brazilian history involved precisely the government of President Lula. We had last year for four months live -- on live television the trial of 37 people directly associated with the government.
SOTEROYou have other -- others from other parties. You have judges here, you know, asking for privileges, and the government's saying that we are the sixth- or seventh-largest economy in the world, and people say, but see if we are that. Can't we do better? If we are that, do we have to have this, a set of leaders, of politicians that are unresponsive, that really take care of themselves?
SOTEROAnd add to that the question of impunity, you know? There has been some progress in terms of trying to make the political life a little bit cleaner here, but still there is an enormous sense of frustrations because people see trial, see denunciation, but they don't see people being found guilty and going to jail to serve time. So, you know...
KOTSCHWARYeah. I think -- following on Michael's question, I think in Mexico you're also seeing this disillusionment with politics as usual and hypocrisy. You see this movement of ladies and gentlemen where people record the bad behavior of elites and politicians. So you have an example of the daughter of the Consumer Protection Agency who wasn't able to get a seat at her favorite restaurant, went to the Consumer Protection Agency, had them close down the restaurant.
KOTSCHWARAnd this was -- now Lady Profeco is a hashtag on social media, and people can see a video of this young lady in -- being upset about this. And this has caused an uproar, and there are many examples of this in Mexico. Now, these are things that have been going on in Mexico. Light is being shined on them, and now people are reacting to it. And so this, I think, is a good thing.
KOTSCHWARNow, in the context of Mexico, where steps are being taken at the governmental level to eliminate or to reduce some of the monopolies and the head of the teachers' union was fired on corruption, I think that that's a complement to what's going on. Let's hope that this movements gets legs, but I think that there is some parallels to the Brazilian anti-corruption movement.
REHMBarbara Kotschwar, Carl Meacham, Paulo Sotero, Liz Leeds -- they're all here to respond to your questions regarding Brazil.
REHMAnd before we continue with our discussion on Brazil, let me be sure to inform you that I am reading here from The Wall Street Journal, "The Supreme Court upended longstanding pillar of civil-rights era legislation, the 1965 Voting Rights Act, ruling that the decades-old formula that Congress used to identify areas of the country subject to stringent oversight of election procedures is no longer constitutional. Chief Justice John Roberts wrote the 5-to-4 ruling for the court, which was divided along its usual ideological lines."
REHMIn the next hour, we will bring you a full discussion of the court's decision. I'm going to go back to the phones now as we talk with guests Barbara Kotschwar of the Peterson Institute, Carl Meacham of the Center for Strategic & International Studies. Paulo Sotero joins us from Sao Paulo, Brazil. Liz Leeds is on the line with us from Boston. She's at the Washington Office on Latin America. Let's go to Miami, Fla. To Roseanna. (sp?) Good morning to you.
ROSEANNAGood morning. Thank you very much for taking my call.
ROSEANNAMy question is very -- I mean, it's short. I think one thing missing in the discussion is that one of the galvanizing point in Brazil is the amount spent in the stadiums for the World Cup and later for the Olympics. I think the comparison of South America with other governments that are corrupt governments and sensitive governments is wrong.
ROSEANNAThey did protest what it show the same in Argentina -- I'm from Argentina -- and Chile is that they're used to governments now responding to the demands and that's a new dynamic. And, in fact, if you look at the way that Dilma responded to all the protests is not even close to the brutality -- a form of protest -- how they are being putting down.
REHMAll right. Thanks for your call. Barbara.
KOTSCHWARWell, I think there are two important points from that caller. One is the spending on the World Cup and Olympics preparations.
REHMHow much was it?
KOTSCHWARI don't know the figure but...
REHMGo ahead, Carl.
MEACHAMIt's about 14 billion.
REHM...taken out of the treasury. OK.
KOTSCHWARAnd one of the issues is also that the construction of the stadium for the Pan American Games, which was a couple of years ago, went six times over budget or six-fold over budget. But the argument was that some of those stadiums could be used for the World Cup, and this was actually part of the World Cup portfolio that we have this great stadium. A number of those have been declared unfit for use as a stadium. The roof is falling down, and so...
KOTSCHWAR...there's a perception that there was corruption. They've also gone over budget in the preparations. They've been late, and so they have to put more money into getting it ready. And it's now focused on just getting ready for FIFA and for the Olympics. And so there's not the sense that this is going to be used for the improvement of Brazilian's life. The second issue of the -- Brazilians haven't protested on a large scale since 1992. They've used other means for voicing their opinions. And so I think it is a new thing for Brazil to see this sort of protest.
REHMAll right. Any...
LEEDSDiane. May I interrupt on this one?
REHMCertainly, Liz. Go right ahead.
LEEDSYou know, I think regarding the preparations for the mega events, it's not only the corruption in the building of the stadiums but it's -- in the case of Rio, it's refiguring of the entire city in terms of transportation networks and building new bus lanes and building new metro stations. But essentially, they're serving the elite segments of society. They aren't benefiting the -- all the classes in Rio. And people are realizing that this was -- what was built originally as a way of integrating the city is essentially creating even more class divisions with the city.
LEEDSIn addition, I think that there are a number of cases as has happened in other cities where Olympics preparations were -- began where segments of housing was removed totally unnecessarily because they were allegedly in the way of the Olympic preparations, where, in fact, it was just inconvenient to see houses like this where large international populations would be coming to Rio. So it's more than the corruption. It's the refiguring of the city through the eyes of these elite planners.
MEACHAMI wouldn't just highlight the fact that it's a class issue because of the protesters. The protesters and the demographic of the protesters is multi-class, multi-race, multi-generational. So I wouldn't just say that it's that. I think that what you're seeing, though, is that folks are coming together around a common outrage. I would go back to what Paulo said that you don't have a specific political ideology behind this or a specific class. It started out with the poor -- with poor people and services, but it moved on to middle class and very educated people. And that's what's unique about this.
REHMPaulo, here's a question from Pat, who says, "Are there statistics for wealth distribution and growth for Brazil? Is it like most of the world where wealth is moving to the top?"
SOTEROBrazil has been improving. It's a very unequal country, has always been. But in the past few years, Brazil had gained -- been gaining on the inequality front. And that is what precisely what fuels -- these people see that they are moving ahead. They have access to new things, to new consumer products including iPhones, including the Internet that now is being used precisely to mobilize.
SOTEROBut they -- the demand here, Diane, is the demand of a growing middle class that is young, that has seen prosperity with equity. They want more of it. For instance, on the stadiums, I think people feel very offended that FIFA, the international soccer organization, that is itself a cartel known for corruption and comes to Brazil and dictates to Brazil what to do, how to do, and then Brazil accedes to that. People get very irritated with that and say, why don't we have FIFA-standard hospitals, FIFA-standard education, meaning world-class things, you know? And this is what is so irritating to people here.
REHMSo how likely do you see the prospects for reform, Paulo?
SOTEROWell, the reform right now is dependent on leadership. Politically, there's getting together and agreeing on a few minimal things. I believe that there is one proposal in terms of the political system that is probably be going to go forward. It is from the same people that, three years ago, managed to pursue a legislation from direct demand by society. You need 1 1/2 million signatures so Congress will act.
SOTEROThis is about making politicians more accountable by reducing the number of political parties, prohibiting corporate donations to political campaigns. Before we move on to specific demands on health, education, et cetera, I think we are going to have to do something with the political system because without that, people are not going to leave the streets.
REHMAll right. And let's go now to Charleston, W.Va. Good morning, Richard.
RICHARDGood morning. I lived in Brazil for 10 years, returning, I think, last year. I had lots of experience direct hand with the corruption there. I don't think people know exactly how -- with how much impunity the politicians operate there. Also, one thing I haven't heard much about is there's amendment for those in Congress to limit the investigative powers of certain -- for most of the ministries of government because many of the ministries have found evidence of corruption going right back to the members of Congress, members of the Senate up there.
RICHARDSo they're trying to limit that with a constitutional amendment. Also, people call Brazil a democracy. But in Brazil, the parties are very -- they're like gangs, and they put forward their own candidate. There's no primaries, anything like that, no open process to become a candidate, so, yes, it's a democracy. But more or less, you have a pick -- a choice of this crook or this crook...
REHMAll right. Liz Leeds, do you want to comment?
LEEDSYeah. Well, first of all, this constitutional amendment, I think, is a disaster if it ever pass, which it won't because it takes the investigatory power out of one element of the criminal -- of the justice system, which is the Ministerio Publico, the public ministry, which is the prosecutorial win. And if there's any possibility of potential for relatively neutral investigations, it's with them, much more so than with the police. The amendment would give the investigatory powers to the police. So I think this is -- this would be pretty much a disaster.
LEEDSI would also say that the timing of all these demonstrations and all these proposals for political change is crucial. We have to remember that there is a presidential election next year, 2014. So much of the proposed political changes and solutions to these problems has to be seen in the context of the necessity of Dilma to maintain her political alliances and coalitions in order to get re-elected. And that's becoming to look kind of questionable at this point.
REHMAll right. To Cavan Antonio (sp?) in Miami, Fla. Good morning. You're on the air.
MR. CAVAN ANTONIOHi. Thank you for taking my call. I wanted to ask something because I was in Brazil last year. And the prices I was noticing -- I'm a reporter, and I was noticing the prices are so outrageous there. I couldn't figure out how the population was able to pay for some pretty basic stuff.
MR. CAVAN ANTONIOAnd then the other thing I wanted to ask the experts is if they could give an opinion of how much fee from the IOC which, as they said, make demands for their events and upgrades and all this stuff and, of course, are known -- some of them -- as kleptocracies, affecting the sense of what Brazilians called safado, maybe being -- just being over the top because the Brazilian symbols are then -- after the World Cup, some of them, like Maracana are going to supposedly go into private hands of some of the biggest billionaires.
MR. CAVAN ANTONIOI think the guy's name is Eike Batista. And what is the sense of outrage from the people about that where the public expenditure for these events will then go into private hands after the events are over? And...
REHMAll right. Barbara.
KOTSCHWARI'll speak to the issue of prices. That certainly is one of the galvanizing points of frustration. Brazilian inflation is -- has just broached its inflation targeting upper bound of 6.5 percent, and it's been growing for the last couple of years. And this certainly is causing some consternation. If you go to Brazil, it's really expensive. With U.S. purchasing power, it's really expensive.
KOTSCHWARAnd so the traveling class is able to go to Miami, Fla. where Antonio is and buy stuff, bring it back to Brazil and sell it for a pretty good profit. So you're seeing some of this. Just as an example, the purchasing power has gone down in 2006 in Sao Paulo. The sort of the median wage was able to buy 9.5 times the basic bundle of goods by 2013. That's gone down to just under five times the basic bundle of goods.
KOTSCHWARAnd so this really speaks to people's daily frustrations.
REHMAnd you're listening to "The Diane Rehm Show." On his second point, what happens to these structures and the profits there from, Carl?
MEACHAMSure. There's a perception that the private sector is corrupt. There's a perception that the politicians are corrupt. So even the natural course, which would be the contract of these services because the government doesn't have the money to pay for these refurbishments and renewal of the stadiums or the infrastructure, will be looked at with skepticism. So you're going to have the stadium that's going to go into the private sector's hands, and that will feed into the narrative that exist already of mistrust.
MEACHAMI would also mention that the elections are next year, but the World Cup is also next year. So all that environment, what happens with the World Cup, if it goes well, if their protest movements had actually make it not go so well, all of these things will determine the context in which the president goes to re-election. And that's a big, big issue right there.
KOTSCHWARI think this is also a bit of an example of overstretch. I mean, Brazil was doing really well. It's one of the bricks. I think everybody remembers The Economist cover of Christ the Redeemer, you know, blasting off. Offering to host the World Cup and then the Rio Olympics might have been a bit much for the government to handle.
REHMAll right. One last call, Baltimore, Md. Good morning, Angela.
ANGELAGood morning, Diane, and thanks for taking my call.
REHMQuick call, please.
ANGELAI just want to ask Paul. What about the cost of Bolsa Copa, if it's true or not? And then if it's true, Diane, you can see why we are so mad about it.
SOTEROCould you repeat the question, Diane?
REHMYeah. I could not quite understand it. Angela, would you repeat?
ANGELABolsa Copa, if it's true?
REHMI don't understand that. Does anyone? Carl.
MEACHAMIt seems that she's asking about the Bolsa Copa. Could it be having to do with the Confederation Cup or the cost of the...
REHMAngela, is that what you're talking about?
SOTEROYeah. Well, this is about, you know, this highlights the problem. People don't have any access to those games. It is not for the poor. You know, those are -- the tickets are very, very expensive. So you see a process of building excessive stadiums. Actually, to be fair with FIFA, they asked Brazil to build eight stadiums. Brazil decided to build 12. This is -- again, you know, this is not for the people. And we are the country of soccer. We love this stuff, but the people does not have access to the stadium. And this adds to their aggravation.
KOTSCHWAROn the other hand, I mean, I think that's absolutely true. It's a little bit ironic that all of this is happening under the presidency of Dilma in the sense that, I mean, this government did negotiate a trench of lower price tickets to the FIFA, which had been done before. President Rousseff is seen as one of the presidents who's cracked down on corruption. She began her term having to fire a number of key ministers. She, in her inauguration, promised to protect the most vulnerable and so...
REHMAnd here we are.
KOTSCHWARHere we are.
REHMSo we shall hope that things improve, but we'll keep an eye out. Thank you all. Barbara Kotschwar, Carl Meacham, Paulo Sotero and Liz Leeds, thank you all.
REHMAnd thanks for listening. I'm Diane Rehm.
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