Three Cheers for Brazil

World markets seem to be turning up their nose at Brazil right now. They may be as mistaken about Brazil as world football experts were earlier this summer. When the World Cup began, you will recall, the Brazilian team was deemed talented but flawed. Yet somehow Brazil again became the World Cup champion. The country, too, may prove equally surprising and resilient.

Indeed, in recent years, Brazil has created a vibrant democracy with a strong economy. It deserves a vote of confidence from investors and political leaders alike.

As in any vibrant democracy, differences in views exist. Not all Americans are enthused about President Bush's rapid conversion of trillion dollar surpluses into deficits, nor does a majority embrace his proposals to privatize America's social security system, which has done so much to eliminate poverty among America's elderly. On key issues within Brazil, however, a broad political consensus (not unanimity, but no one should expect that!) exists, and this includes all the major contenders in Brazil's forthcoming presidential election in October.

There is a consensus, for instance, on sound fiscal and monetary policies: no one wants to return to the hyperinflation of earlier decades. Brazil's monetary policy has been managed extraordinarily well by Arminio Fraga (my former student), but behind him is a strong institution , with the analytic capacities of a first world Central Bank.