chapter  1
24 Pages

Austerity Under Different Political Regimes: The Case of Brazil

ByWerner Baer, Dan Biller, Curtis T. McDonald

Austerity programs to combat inflation usually require sacrifices in terms of economic growth, and the distribution of such sacrifices can affect the nature of a country's political regime, especially in the Third World. Traditional austerity programs constitute one method to deal with such a situation. The traditional belief regarding austerity programs is that their measures can achieve relative success only if carried out in a political environment characterized by an authoritarian/military government, as opposed to a democratic administration. Eventually various groups in society must be made to accept and absorb tremendous costs in the interest of correcting the distortions that made the austerity program necessary to begin with. The implementation and orientation of the austerity program fielded by Brazil's first military government after the 1964 takeover, in contrast to the experiences of the previous democratic governments, provides with a classic example in favor of the argument that austerity programs work only under authoritarian regimes.