She was just one more perfectly beautiful girl, naked except for her pink tanga—the beach bandage that Women’s Wear Daily was moved to call The String. But waiting behind her in the line for a public telephone, I got interested when she opened her straw handbag and took out a token for the phone.

As I watched, fascinated, she knotted a red silken thread around the notched coin before she deposited it in the slot. Then, as soon as she got a dial tone, she tugged on the thread and retrieved her token. She had broken the law to save four cents.

But in Brazil, where inflation is again waging a war with no ceasefire in sight, the sum was worth her trouble and risk. Of the three of us waiting behind her. I was the only foreigner and the only one without a thread to my token.


In few countries have economics and politics been as closely intertwined as in Brazil. Now, with such sober men as J. William Fulbright warning us about the dangers to democracy of inflation, North Americans may find a review of Brazil’s recent history and its outlook instructive, even cautionary.

When the military command led by General Humberto Castelo Branco deposed the civilian government of João Goulart in March, 1964, a prime excuse was the unconscionable rise of costs that Goulart had permitted, the triple-digit inflation that had made the cruzeiro a sad joke on the world market. The new military commanders professed two economic priorities: to hold the inflation to a reasonable rate, no more than 20 percent annually; and to expand domestic production by 10 percent a year.

In Goulart’s last weeks, the currency had slipped in value by the hour. An orgy of consumer spending and persistent labor strikes left shops bare and shortages endemic.

As part of a new economic policycalled “monetary correction,”the military regime began to control wages, subject to an annual automatic raise. Retail prices were also fixed, with a provision that, when pressed, manufacturers could apply to an interministerial council for permission to increase them. Occasionally there have been traumatic adjustments, such as on the April morning in 1974 when housewives found that meat prices had jumped 60 percent overnight.

But usually prices edged up less painfully, and Brazil’s comprehensive system of controls began to attract favorable notice abroad. Milton Friedman, the conservative economist at the University of Chicago, called the method “indexation,” and while he thought Brazil had carried it too far, he recommended a modified version for the United States.

To encourage saving, the Brazilian government also instituted another “correction.” Banks would not simply pay interest on savings accounts; they would pay a second fee to compensate the saver for the inroads of inflation. The amount of the correction has generally run several times the amount of interest.

The government also made a determined effort to collect levies on income from a people who share the Latin insouciance toward the concept of taxes, with or without representation. (The campaign appealed strongly to patriotism, although one approach, copied from the United States, was short-lived. The slogan “Brazil: Love It or Leave It” was withdrawn when scrawled rebuttals began appearing: “Last One to the Airport, Please Turn Out the Light.”)

But the government’s main hope for prosperity was to encourage foreign capital with an array of tax exemptions and relief. Since the generals considered it essential to demonstrate the stability of their regime. strikes were all but prohibited. Labor leaders were harassed, enjoined from organizing, imprisoned. To prevent unfavorable comment, economics joined politics on the list of topics censored in newspapers and broadcasts.

The international response to the generous incentives was explosive. The mating of Brazil’s natural wealth (in coffee, iron ore, soybeans, rubber, sugar, and precious stones) with money from the multinational companies guaranteed fast, safe profits. So venture capital poured in from the United States, Canada, West Germany, and Japan to finance automobile factories, steel plants, and agriculture.

Brazil became the world’s largest debtor at the World Bank. And the government began to build through Amazonia a system of roads so vast that its proponents say it will be visible to the naked eye from the moon; its detractors claim that it will wreak incalculable damage on the earth’s atmosphere.

When I first came to Brazil, in 1967, the “Brazilian model” of economic growth had barely been launched. Returning during the next five years. I felt the national excitement, the sense that Brazil was achieving the destiny that had been so long and constantly predicted for her.

Paying a price

Despite some setbacks, there certainly was money to be made. One study showed that the real income of college graduates—admittedly a minuscule fraction in a country where one third of the people are illiterate—has gone up 50 percent in the last decade.

As the years went by, though, the government’s boasting about its “miracle” of a 10 percent growth rate began to wear thin. Even before the latest worldwide round of inflation struck Brazil last year, there were indications that the same foreign investors who had fed the boom were its prime beneficiaries. The automobile industry, for example. was flourishing, exporting cars throughout South America. But it was owned entirely by foreigners, who used the low-paid, unorganized Brazilian workers but took the profits out of the country.

Opening Amazonia had turned out to mean merely that the choice real estate along the highways went either to foreigners or to the major banks of southern Brazil. Because of protest by the large landowners, an ambitious plan for redistribution of uncultivated farmland had been suspended, and an independent study showed that for working Brazilians, real wages had declined significantly from 1960 to 1972. Finance Minister Delfim Neto, who had overseen the boom, admitted that it would be ten years or more before there would be significant change in the distribution of national income.

Following that bad news came international inflation. Prices rose on copper, zinc, aluminum, and lead, all of them commodities Brazil needs to import. Worst of all, the Arabs found that they could turn oil into gold, and Brazil, which imports two thirds of its oil, joined other Western nations in paying a price for its past support of Israel. Until the oil increase, Brazil had been second only to Venezuela in its foreign exchange surplus: $6,162 billion in July, 1974. By the end of the year, its oil imports had Brazil running a deficit of $7 billion.

Then, too, the United States, which had been an avid market for Brazilian exports, attached a stiff surtax to Brazilian shoes (protecting the elephant from the mouse, one newspaper called it).

The Brazilian military, while relentless against leftists at home, felt moved to trade ambassadors with the People’s Republic of China and to broach recognition of Cuba. But such long-term diplomatic moves, aimed at easing the trade deficit, won’t bring immediate relief. Like Europe and the United States, Brazil will have to become less dependent upon imported oil. New offshore strikes have given the leadership reason to hope that by 1980 the country will be able to supply most of its own fuel.

“Hope and wait”

Meanwhile, the average Brazilian may be excused for feeling that he has the worst of two worlds: a military regime that has suspended liberty in the name of progress, together with a return to the punishing inflation that the generals had used to excuse their extreme measures.

One needn’t be an economist to note the indicators: shorter queues at movie box offices, where prices have gone up 67 percent over the last year (an exception is the regular long line for Once Upon a Time in Hollywood, In the United States, it is called That’s Entertainment! and the Brazilians seem to agree that they need it now) . . . Incipient madness. In a corner cafe the other day, a glazed but sober man was muttering, “It’s splendid, it’s splendid.” over and over: no one could persuade him to stop. Downtown, a black man was barking like a dog as he pushed his car through the street.

But the hell-bent buses continue to give good value: they cost less than a dime on most routes, and they racket along crammed with people. Since Brazilians acquired a ritualistic fetish for soap and water from their Indian and black ancestors, the buses remain pleasantly fragrant on even the steamiest days. Traditionally, bus conductors have let children ride for free if they could slip under the turnstile. Lately, I’ve seen parents urging burly adolescents under the spokes; one, a stout girl, became trapped and had to be booted free.

In three years, taxi fares have gone up 300 percent. By New York standards, the base is still cheap enough, a little under 50 cents when the meter starts clicking. But since the minimum wage is 40 cents an hour, few workers are hailing cabs.

Even so, for the average family it’s cheaper to go calling by taxi than to pick up a telephone. Private telephones in Rio cost about $1000. For that price, the buyer owns the equipment and the line; if he decides to sell it later, he is usually able to turn a profit. But as the example of the girl with the red thread suggests, very few Brazilians can meet the free-market price. So the state-controlled telephone company offers another approach, one aimed straight at the Brazilian heart. The customer buys stock in the telephone company. Every month he sends off 150 cruzeiros, about twenty dollars, for which he is promised a telephone, but no guarantee when; “sometime within the next three years.” This lottery aspect exerts so much appeal that thousands have enrolled.

For years, any three dozen men and women who wanted a Volkswagen banded together in a consortium. Each month, they paid one thirty-sixth of the price and held a drawing. The luckiest number drove off with his car the first month, free of interest charges. The least favored waited the full three years to get behind the wheel.

This willingness to pay and take one’s chances explains the popularity of the national lottery, with its weekly promise of untold wealth for a few cruzeiros. Since Brazilians use the same word for “hope” and for “wait.” I wasn’t surprised to read in an international Gallup poll that they rank very high in their supply of optimism. But even allowing for national hopefulness, people who leave so much to chance very likely believe that there are ways of tilting fortune in their favor. In Brazil, the most common way is to appeal to the spirits through a ritual called Macumba.

I had spent time in Rio and upcountry with practitioners of the magic, and recently I went to call on a white witch in Copacabana to ask how the inflation was affecting her circle of worshipers. A handsome blond woman of Swiss parentage, she received me graciously. Other days, when her Indian spirit took possession of her body, she looked fierce and spoke in a rough growl.

“What are people asking for now?” I began. “Still love?”

“Always love.” she said. “Money, too.”

“Do the spirits understand about inflation? Have they trimmed the amounts they ask for? Five cigars, instead of seven, for the sacrifice in the street?”

“No, the numbers are sacred. But the saints have never demanded expensive tobacco, the best wine.”

Going up

She was right, and yet the price of even the cheapest tobacco has edged upward. Cigarettes sold by Souza Cruz (a British corporation hides behind that name) went up 32 percent in 1974, to sixty cents a pack.

According to the government, that increase about matched the overall national inflation rate for 1974 of 34.5 percent. But I know a family who keep their own records, and their figures put the increase in their house at 43 percent. One thing their calculation has in common with the official figures: both show that the poorest families have been the hardest struck.

Milk went up 70 percent last year. Cooking gas rose 53 percent. Some Brazilians are capping the pilot light on their water heaters and using matches; they save $1.05 a month. And rice, the sustaining food of a poor brasileiro, headed the list of increases: it went up 156 percent. Even a cafezinho, that little cup of coffee freighted with sugar that helps a Brazilian through his day, rose from thirty-five centavos to sixty.

So some Brazilians drink less coffee and others simply starve. For years, an American here has given coins to a beggar woman and her three children in downtown Rio. Recently the woman disappeared for a month. When he saw her again, she had a new baby in her arms.

“Ah.” he said, smiling into its wrinkled black face.

“Take it,” the mother said. “Here, take it.”

Appalled, he drew back, gave his customary coins, and hurried off. Two weeks later, he saw the woman’s four-year-old daughter and asked her where the baby was.

“Dead.” the child said stolidly. “There was no food. It died.”

One news report claimed that in the city of Recife, in barren northeastern Brazil, more than a third of the children who did not survive their first year had died of hunger. The government’s own studies show that in the prospering industrial city of São Paulo, infant deaths from all causes have increased 25 percent in the last decade. This same government, which opposes birth control, has cut its federal health budget by two thirds since 1968.

Analysts of the economy claim that the unemployment rate has now passed 10 percent nationally. In the northeast, it is estimated to be as high as 35 percent, and even that figure may be low since it doesn’t include the underemployed.

In a town where I once stayed, a speck on the map called Camamu in the state of Bahia, the mystery to me was how the people lived at all. Ailton, a fifteen-year-old natural fixer, might have grown up in the United States to be a Bernie Cornfeld or a Robert Vesco. In Camamu, he sold lottery tickets around the town, and in a good week he netted seventy cents. At last his father sent him to work on a plantation, where, when there was money to pay him, he’d get a dollar a day.

Rui, about twenty years old. also had a job, so he too wouldn’t be officially counted as unemployed. All day Saturday he squatted in the Camamu market amid dusty shirts and sandals, hawking them for a merchant who hauled them in from a larger town. If Rui was luckyenough to make ten cruzeiros, that would buy three beers.

Lives like that test even the Brazilians’ optimism. Perhaps, as the government claims, it again has inflation under some reasonable control. At least commodity prices have dropped since January, and the cost of some industrial imports with them. But the price of fertilizer continues to rise, and the cost of planting for the next harvest is expected to increase 20 to 30 percent for coffee and wheat and maize and soybeans.

Curses and sighs

As shown by the fair sweep that the Brazilian Democratic Movement (MDB), the opposition party, made in the elections last November. Brazilians have begun to turn a caustic eye on their military rulers and the governing party, the National Alliance for Renewal (ARENA). The vote was largely ceremonial, but it demonstrated that voters knew whom to blame for their distress.

In living rooms, among passionately apolitical people, I’ve been hearing the regime of President Ernesto Geisel compared to the Nazis. That seldom happened three years ago, when the harsh rule of his predecessor. General Emilio G. Medici, was drawing protests from clergymen and civil rights groups around the world.

How this new president (Geisel began a five-year term in office in March, 1974) will respond to the discontent—how his military colleagues will allow him to respond isn’t yet clear. In his first speech to his Cabinet, Geisel pledged himself to a fairer distribution of national income. Before his address was released to the newspapers, that passage was cut by the military censors.

Heading the censors’ list of forbidden topics is Dom Helder Camara, Archbishop of Recife and the most stinging critic of the military rule. Dom Helder’s friendship with an American, Fred B. Morris, led to Morris’ arrest last October. On his release, Morris, a Time magazine stringer, gave a harrowing account of his torture at the hands of the Recife police.

It was the sort of savagery the world has been hearing from Brazil since 1968: electrodes clipped to the nipple and the penis; shocks and beatings by the hour. All of it, by this time, well documented, indisputable. And yet so foreign to the Brazilian character as I’ve come to know it that I could almost believe that Exú, the devil god of Macumba, had taken possession of the torturers’ bodies.

Journalists here waited to see whether police would confiscate the issue of Time with Morris’ account. When the edition went on sale without incident, they concluded that Geisel himself had intervened, as a warning to the provincial police that he opposed their methods. That interpretation may be just one more instance of incorrigible Brazilian hope.

But the torture is now being discussed openly. At the same time, the economic “miracle” is being widely understood as something less than manna for the worker. A recent United Nations commission reported that half of Brazil’s working population still receives only 15 percent of the national income. Another study, by the respected Vargas Foundation, showed that the 5 percent of the population who were earning 27 percent of the national wealth in 1960 were receiving 36 percent ten years later.

So there are documents to indict the existing system. And there is the slight relaxation from repression that history suggests may precede a growing demand for freedom. And yet, beneath the curses and the sighs, I find no indication that a rebellion is likely.

In another country in this hemisphere. after all, the distribution of wealth and power is even more inequitable than in Brazil. There, 5 percent of the population owns 86 percent of the corporate stocks. There, the poorer 50 percent of the people receive only 5 percent of the nation’s wealth.

That country—the statistics come from Business Week—is the United States. Unless our inflation soars and our economy plummets beyond former Senator Fulbright’s worst projections. America is scarcely on the brink of a revolution. And we don’t have the distractions of Macumba to excuse us, or a national lottery, or the tango.