Lobbying and politics

Carlos Melo, Sérgio Lazzarini, and Milton Seligman (Global Fellow at the Woodrow Wilson Center) – Jota, 10/14/2015

Despite ongoing investigations, it should come as no surprise the evidence that suggest authorities have used their public offices to open overseas market, to obtain financing at subsidized interest, or to ensure tax benefits for domestic companies. As per our habits, this is not too far from our tradition of mixing public matters with private interests.

Even former president Lula himself, in the 2002 presidential campaign, affirmed he would be “a peddler of Brazil.” This guidance became even more explicit when Miguel Jorge, former Minister of Development, Industry and Trade during Lula’s administration, stated to the national press on September 29, 2015 that “the role of head of states and ministers in favor of their domestic companies abroad is part of the role of governments in seeking to expand business activities.”

At first glance, there is no controversy on the subject. It is a common argument that presidents from all around the world seek to promote the economy of their countries by raising the level of welfare of their constituents. We defend, however, that this argument does not necessarily comprise a government action aimed at the public interest. The emphasis on “does not necessarily” is key. It will all depend, of course, on the way this will be forwarded. The theme has two sides, and refers to who benefits from government actions, and subsequently, who is paid by the benefits granted.

The first question brings about the issue of State arbitrage, the specific beneficiaries of these actions, and the diffused interests of society. Who wins: private groups and interests or the overall society, in a broader and democratic form?

Under conditions of transparency and technical support, it would be permissible and desirable that public authorities help Brazilian companies, overall, in their endeavors. The support of the State to private enterprise is always justified and is only sustained by the return that society can derive through generating economic value and/or environmental impact.

The opposite occurs when a leader chooses a sector or a particular company over others, without criteria or counterparts to ensure public interest. There can be no exception for companies with which authorities establish special relationships – situation that, by the way, jeopardizes the basic principle of impartiality of public affairs. The specific interest in each company must be justified, before anything else, by the collective good it provides.

Would the financial support provided to political parties, then be considered as justification for companies to receive support from governments? The reasonable doubt, alone, would be enough to conciliate a process that should be transparent and free. It would be even better if companies give in return more investment and effective development to the national economy, increasing competitiveness by increasing productivity, and incorporating new technologies in the production process. This, indeed, would be an incentive worth demonstrating.

In the U.S., for example, this relationship has been pre-defined since 1791, under the 1st Amendment in the 1787 Constitution. Since then, it is lawful and constitutional for companies to petition against government decisions – which includes advocating for public policies that benefit their interests.

Since then, several legal regulatory rules were introduced to limit the relationship between public and private actors, aiming to defend public interest, but more than that, to defend other rights such as free enterprise and competition. All these rules of conduct, alongside with values and beliefs of a well-represented society, make up what is commonly known institutions. It is the efficiency of institutions, legal equality and the strength of the democratic principles that address issues such as these.

Brazil hopes that obscure facts are not only clarified, but also punished if proven to be irregularities and illegal. But, most of all, it hopes that we can quickly move towards a business environment that relies less in personal basis, which unfortunately, only increases inequalities in the economy and also discourages the flourishing of a truly democratic entrepreneurship. After all, this regards only the welfare and well-being of Brazilians.

Read original article in Portuguese here



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