The Economist - USA (2019-11-23)

34 The Americas The EconomistNovember 23rd 2019

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three years of Mr Bolsonaro’s presidency

will play out. The release from jail on No-

vember 8th of Luiz Inácio Lula da Silva,

who was Brazil’s president from 2003 to

2010, gives the left-wing opposition the

leader it has lacked until now. Some ob-

servers wonder whether scandals sur-

rounding Mr Bolsonaro’s sons, who are giv-

en to anti-democratic rants, will bring his

presidency to an early end.

Optimists think that strife and chaos in

Brasília will not hinder reforms, and might

even help. A member of the government’s

economic team contends that Mr Bolso-

naro’s preoccupation with fighting culture

wars serves as a “smokescreen” that allows

Mr Guedes and Mr Maia to take the lead on

economic legislation. In congress there is

an “an unprecedented consensus that we

must make progress on the economic

agenda, independent of the government”,

says the lower-house leader, Mr Maia.

That consensus may not hold. This

month Mr Guedes proposed a trio of con-

stitutional changes, including one to make

it possible to freeze public servants’ pay in

a fiscal emergency. But he did not tell con-

gress which to prioritise. An overhaul of

the enterprise-crushing tax system is “nec-

essary”, says Aguinaldo Ribeiro, who is co-

ordinating one in the lower house, “but no

one can agree on the details”.

The mood may be shifting against the

state-slimming reforms favoured by Mr

Guedes. “No one is talking about health or

education policy,” says Tabata Amaral, who

belongs to a “parliamentary front” of first-

time legislators who defied their parties to

vote in favour of pensions reform. They

want action to improve social services. The

window for reforms is closing, warns Zeina

Latif of xpInvestimentos, a broker.

On measures to fight corruption it has

slammed shut. Mr Bolsonaro had raised

hopes by naming as his justice minister

Sergio Moro, who as a federal judge had led

the Lava Jato (Car Wash) investigations.

These led to the conviction of scores of pol-

iticians and businessmen. Mr Moro con-

victed Lula, the most prominent of the Lava

Jato miscreants.

But now all three branches of govern-

ment are working against the anti-corrup-

tion agenda. Mr Bolsonaro has lost enthu-

siasm, perhaps because his son Flávio, a

Rio de Janeiro senator, is a target of a mon-

ey-laundering probe. Mr Moro has been

hurt by revelations that as a judge he col-

laborated improperly with prosecutors.

His omnibus bill to fight crime and corrup-

tion is stuck in a lower-house committee.

“Moro’s agenda is dead,” says Eduardo

Cury, a legislator from São Paulo. It cannot

help that dozens of legislators besides Flá-

vio Bolsonaro are under investigation.

The judiciary itself has dealt Lava Jato a

blow. This month the supreme court ruled

that convicts should remain at liberty until

they exhaust their appeals, the decision

that led to Lula’s release. That threatens the

investigations, whose success is based

largely on plea bargains by suspects who

avoid jail by implicating other wrongdoers.

Now witnesses can put off prison instead

by appealing their verdicts.

“There’s little appetite” for Mr Bolso-

naro’s socially conservative agenda, says

Fernando Bezerra, the government’s leader

in the senate. In the face of congressional

opposition the president withdrew a de-

cree to allow millions of Brazilians to carry

guns. The legislature has also pushed back

against destruction of the Amazon. As

wildfires raged in September Mr Maia

pushed through the lower house a measure

to compensate small farmers and indige-

nous groups for preserving forest.

Congress’s more assertive role is among

the bigger surprises of Mr Bolsonaro’s sur-

prising presidency. “For the first time the

legislature is not just an appendix of the ex-

ecutive,” says Michel Temer, who was Bra-

zil’s president from 2016 to 2018. That has

helped economic reform. But congress

cannot be trusted to contain corruption.

Nor is it likely to still the chainsaws. 7

C

orruption, incompetenceand sanc-

tions have devastated Venezuela’s oil

industry, the country’s main source of hard

currency. But Venezuela’s economic crisis

has encouraged the growth of another: the

“farming” of virtual gold in the artificial

worlds created by video games. Venezue-

lans spend hours on end playing massively

multiplayer online roleplaying games

(mmorpgs) to extract gold coins (the cur-

rency in RuneScape) or crystal ones (Tibia).

They sell these for real money, via interme-

diary websites, to other gamers, who spend

them on such virtual valuables as weapons,

armour and magic potions.

Venezuelans playing RuneScape can

earn 500,000-2m gold pieces an hour by

mass-murdering dragons and mass-pro-

ducing runes. At current exchange rates 1m

coins are worth about 50 cents. A gold

farmer can earn $40 a month, a tidy sum in

a country where the minimum wage is

worth $7.50 a month. Some farmers trade

the coins for Bitcoin, which, though more

volatile than most conventional curren-

cies, is more stable than Venezuela’s bolí-

var. (The mining of real gold, some of it ille-

gal, is another source of income for

desperate Venezuelans.)

“Real-world trading” is not new. It be-

gan in the smoke-filled gaming rooms of

South Korea in the late 1990s. In China in

the mid-2000s perhaps 50,000 “gold

farms” harvested virtual gold round the

clock. The farmers collectively earned hun-

dreds of millions of untaxed dollars.

Game developers resisted. Gold farmers

are not really playing the game, they con-

tend. Some hack into other people’s ac-

counts and steal their virtual gold. Excess

gold farming can cause in-game infla-

tion—though less than the 200,000% that

the imfforecasts for Venezuela this year.

Some providers of free games sell virtual

gold themselves, and dislike competition

from unlicensed gold farmers.

After its heyday in the 2000s gold farm-

ing declined. mmorpgsbecame less popu-

lar. Game developers beefed up their com-

pliance teams. EBay, where gamers

auctioned virtual goods, banned gold

farming, as did South Korea. Lately,

though, mmorpgs have had a nostalgia-fu-

elled comeback, and gold farmers in crisis-

hit Venezuela have been quick to profit.

Their assiduity irks other players. It has

degraded the buying power of gold coins on

the Grand Exchange, a RuneScape market

Where paper currency is worthless, it pays to unearth digital treasure

Fantasy economics

Venezuela’s virtual gold rush