Jon Jeter: journalist and author biography

Brazil Recession

The Reality of Jon Jeter's Flat Broke in the Free Market: Extreme Stories and Actual Economics

It can be difficult to appreciate the real human consequences of economic events and concepts, which often seem to take place on a sphere largely removed form the day-to-day lives of many people. This is perhaps especially true in the developed countries of Europe and North America, where poverty has a very different definition, and economic hard times do not mean homelessness and starvation to the same degrees that they do in less developed part of the world. A recession here might mean needing to move out of a three or four bedroom home and into a two bedroom apartment, but it will not generally mean needing to move your family out of a single-room dwelling and into a tent somewhere in an undesirable part of town, and these are the economic realities that often must be experienced in order for the true economic consequences of various actions to be appreciated.

In his book Flat Broke in the Free Market, Jon Jeter examines several different situations created by various economic downturns and hiccups, describing both the macroeconomic factors and the human stories that developed from these incidents. He is largely successful at making the real effects of such economic changes on the people that ultimately make up any economy feel palpable to the reader, but his assessment of the economic events themselves might not be wholly on target. All in all, it appears that the human story often takes over and serves to exaggerate the economic realities of the events Jeter outlines.

One of the events Jeter describes in his book is the Brazilian recession that occurred in 2003, largely in response to -- according to Jeter and several other sources -- the extremely high interest rates that international traders pressured Brazil's central bank, using the methods available to the World Bank and the International Monetary Fund, into establishing (Jeter 54). He begins his chapter dealing with this event by describing the scene of countless Brazilians streaming to the coastlines towards the end of 2003 and casting off a flotilla of gift-laden toy sailboats, meant to bring better luck for the individual that sent the gifts n the coming year (Jeter 52-3). The numbers taking part in this ritual grow in years if tough economic times, according to the author, and though there is no doubt that 2003 was not a good economic year for Brazil, it was not necessarily as bleak as Jeter suggests.

The IMF Report and other Economic Inidicators

Fears of a continuing Brazilian recession were fueled by the leaking in August 2003 of a report by the International Monetary Fund downgrading Brazil's predicted growth rate for the year from two-point-eight percent to two-point-six percent, a drastic reduction for a country with as large and expanding a GDP as Brazil's (MercoPress 2003). This came amid many other indicators that the country was head for a recession, including a major contraction of the GDP, a shrinkage in the level of industrial production by over three percent, and certainly political stresses that were not directly related to the economic situations but that nonetheless heavily influenced -- and was influenced by -- economic confidence (MercoPress 2003).

Jeter describes the utter economic turmoil that is Brazil at this time, and the dire future that the country seems to face, and all at the hands of the international greed mongerers who forced Brazilian interest rates up so they could make a quick buck (Jeter 55-7). There is some truth to Jeter's assessment, and the rules of international finance adhered to by the World Bank and the International Monetary Fund due tend to favor the rich and already-developed nations, but this is largely a natural part of the capitalist system -- the agents assuming risk by making capital available are the ones who need to stand to make out better on the deal should it pan out, otherwise there would be no incentive to invest. There are ethical limits to the types and mount of influence that should be wielded due to this imbalance, and though both the World Bank and the IMF might at times exceed these limits Jeter does little to demonstrate that they did so in this case.

Jeter's assertion that "debt is merely exploitation by another name, a way for party a to get over on party B," is overly-simplistic and inflammatory enough to cause one to doubt that rationales of any of his arguments (Jeter 56). While debt certainly can be constructed in such a way as to create usurious processes whereby the borrower is in constant debt to the extreme benefit of the lender, in other instances it is a valuable economic tool that many individuals and businesses depend on. Very few families would be able to buy homes without incurring debt; few small business could get started and even major corporations would have trouble operating continuously without available capital.

The Recession's Aftermath

The most egregious oversight in Jeter's account of the recession that Brazil experienced in 2003 is the fact that he ignored all of the positive economic indicators that existed at the same time, as well as the turn that the country's economy took the following year. Interest rates were being lowered by Brazil's central bank beginning in the middle of 2003, long before the gift-sending sail boat expedition described so emotionally by Jeter, and the agricultural and certain export sectors continued to grow healthily during the recession, leading to a positive outlook for many investors (MercoPress 2003). This was all occurring during the period Jeter is writing about, and in fact occurred before he gathered much of his direct on-the-ground information in Brazil, yet it fails to receive any mention in this chapter, with Jeter instead focusing on the human stories of unemployment and hard times that he is able to find, with anecdote standing in for evidence.

It should also be noted that, in addition to the rosier economic indicators occurring during and prior to Jeter's primary research into the Brazilian situation, he is writing form the vantage point of more than five years in the future. This means that he is presumably fully aware the Brazil's economy experienced record growth in the five years between 2003's minor recession and the global recession that occurred in 2008 (Loudiyi). One would assume that Jeter has access to the fact that Brazil's extreme poverty rate was reduced by more than two percent in each of these years, and that it remains on target to eradicate extreme poverty by 2016 (Loudiyi).