Bloomberg Businessweek - USA (2020-06-29)

“It’s like we’re saying, ‘Let’s go out and

see just how bad the virus can get’ ”

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BloombergBusinessweek June 29, 2020

mildCovid-19cases.(Initswrittenresponse,theministrysaid

thatit’sfollowing“bioethicalprinciples”bymakingthemavail-

ableandthatBrazilianstreatedwiththedrugshavehadgood

results.)TowardtheendofMay,Bolsonarosharedsomegood

news:TheU.S.wouldbesending2 milliondoses.

TheeveofBrazil’sValentine’sDay,inmid-June,isoneof

thebusiernightsoftheyearattheVillaRomapizzeria,inSão

Paulo’supscaleJardinsdistrict.In 2019 tableswerebooked

solida monthinadvance.ButthisyearownerGabrielPinheiro

wasstandingalonewearinga blackfacemaskbehindthe

woodenbar,greetingdeliverymenwhocameoneata time

andventurednomorethan 10 stepsintotherestaurant.He’d

putouta bottleofsanitizer,nexttoa littlesigninstructing

themtocleantheirbagsbeforeputtingordersinside.Thetwo-

storywindowattheback,normallylittorevealthelushplant

lifebeyond,wasdark,whilethesecondfloorwasfilledwith

stacksofpizzaboxesandnew,simplifiedmenusthatareeas-

iertocleanthanthethickbookletstheyreplaced.Runninga

restaurantatthistimeofyear“isusuallysucha goodfeeling,”

Pinheirosaid.“Nowit’sdepressing.”

VillaRomahasbeenclosedtodine-incustomerssince

mid-March,whenSãoPauloGovernorJoãoDoriaJr.defied

Bolsonarotoimposewhatbecamea morethantwo-month

lockdown,thoughitwasonlylooselyenforced.Delivery

business,announcedbycomputerbeepsthatprompted

Pinheiroandhismanager,Carolina,toshoutordersintothe

kitchen,hashelpedtherestaurantstayafloat,if barely.Sales

haveplungedtoabout20%ofthepre-shutdownlevel,andof

30 employeesonly 10 arestillatwork.Desperatetocutcosts,

Pinheirorenegotiatedhisrent,askedsuppliersformoretime

tosettlebills,andtookontaskslikebuyinggoodsandhan-

dlingpayrollhimself.“We’reaboutbreakingeven,butit’svery

tough,”hesaid.“Moreandmorerestaurantsareclosing,and

thestateis notdoinganything.”

Pinheirois relativelylucky.Nationally,restaurantsandbars

hadfiredmorethan1.2millionworkersbyearlyJune,accord-

ingtoindustryassociationAbrasel.Theorganization’spres-

identinSãoPaulo,PercivalMaricato,saysthatwhileabout

80%ofownerstriedtogetfinancingtotidethemover,thevast

majoritywereunsuccessful.Banksaresupposedtobeprovid-

ingplentyofcash—Bolsonaro’sgovernment recently slashed

reserve requirements to give them more room to lend—but

bureaucracy, demands for collateral, and high rates have pre-

vented companies from getting it. Many restaurateurs have

simply run out of money.

Unlike in the U.S. and Europe, the Brazilian government

hasn’t been able to provide much direct help to companies

or individuals. Public finances were in severe trouble even

beforethepandemic,theresultofdecadesofoverspending

by politicians of all ideological stripes and the lingering effects

of a severe recession in 2015 and 2016. The number of public

employees has more than doubled in the past three decades.

Some are paid almost twice as much as equivalent staff in

the private sector and receive outsize retirement packages,

though Bolsonaro succeeded in passing a controversial pen-

sion reform last year. That kind of spending doesn’t leave

much for essential needs such as health care.

The centerpiece of Bolsonaro’s economic response is a

600-real monthly stipend for Brazil’s huge number of infor-

malworkers,accountingforthebulkoftheroughly 400 bil-

lionreaisspentonemergencysupportsofar.(Thegovernment

hasalsousedaninsurancefundtopayfurloughedemployees

andprovidedemergencyloanstostates.)Thestipend, recently

extended to run for five months, drew praise—but at a little

more than half the minimum wage it’s not enough for many cit-

izens to get by on, especially in big cities. Disbursements have

also been delayed by problems including crashing computer

systems and a shortage of bills for cash payouts.

Bolsonaro has argued in speeches and on social media

that, with millions of Brazilians living hand to mouth, a pro-

longed recession will be deadlier than the virus—and the only

solutionistoswiftlyrestarttheeconomy.That’snotreally

inhispower,buthispronouncementsstillhavea significant

effectonpeople’s willingness to endure, and comply with,

ongoing restrictions. “You have about 30% of the people who

still support him and are influenced by his decisions,” says

Doria, the São Paulo governor. Once allies, he and Bolsonaro

are now at odds, in part because of the president’s criticism

of his decision to lock down the state, which has more than

45 million people. “If he doesn’t wear a mask, why should

they?” Doria asks. “His insistence on opening the economy

is another layer of pressure.”

São Paulo began lifting its restrictions on June 1, gradu-

ally allowing retailers and other businesses to reopen, though

restaurants and parks are still off-limits. Health experts are con-

cerned that, even in the first place in Brazil to experience a

Covid-19 outbreak, it’s too soon. The number of people in inten-

sive care has declined, but cases and deaths keep growing, par-

ticularly in rural areas that were spared early on. “Reopening

now is a gross mistake,” says Pedro Hallal, the dean of the

Federal University of Pelotas, who coordinated a large-scale

study of how many Brazilians have been exposed to the virus.

(It estimated that half a million people in Rio de Janeiro have

antibodies, 10 times the number of official cases, and that rates

in some northeastern cities are much higher.) “It’s like we’re

saying, ‘Let’s go out and see just how bad the virus can get.’ ”

In the working-class district of Nova Iguaçu, 40 minutes by

car from Rio’s glittering beaches, there’s a construction site just

down the road from an evangelical church, between a soccer

academy and an aviation school. The building was supposed

to be a temporary hospital for Covid-19 patients, and the state

government had announced its opening in May. But a reporter