The Trouble with BRICS

[Valin]

Via Meadia:

Walter Russell Mead

Oct. 20 2015

 

The transition from “emerging” economic power to “actual” economic power is a lot more difficult than many pundits and prognosticators understand. Many developing countries are bedeviled by entrenched interests whose deadlock on policy-making prevents these countries from realizing their full potential. Brazil’s unsustainable and deeply unjust pension system is an example. The New York Times:

 

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Breaking this pension system and replacing it with something sustainable would require something like a revolution in Brazilian politics—and Brazil is not a revolutionary country. And the pension system is only one piece of a system, entrenched over decades, in which vested interests have paralyzed policy making and blighted development prospects for South America’s largest and most important country. The political parties are creatures of this system, by and large, and political struggles consist of battles between coalitions of vested interests over slices of the pie. Real reform is off the table.

 

India, China, South Africa and many other developing countries are hamstrung by similarly destructive and similarly entrenched deadlocks. It’s a classic political arrangement: band together to form a coalition that extracts resources from the state. Over time, society becomes addicted to the subsidies, and as people build their lives and companies build their business models around patterns of state patronage and subsidy, the structure becomes progressively more dysfunctional and less easy to reform.

 

(Snip)