Modern Day Brasil & The U.S. 100 Years Ago

As surely as the sun will rise tomorrow, there will be another political, economic, national or existential crisis in Brasil. Last week’s revolved around an appellate court’s decision to shutdown Facebook owned WhatsApp, the messaging service for 100 million people residing in the country and accounting for 10% of its 1B global users. This marked the second time in less than 6 months that the messaging service has been shut down by the courts. A battle is brewing between technology companies, the government and the people over free speech and the use of tech to promote it (for more, read Glenn Greenwald at the Intercept).

Free speech issues, institutional corruption, governmental corruption, an economic crisis that is spilling into its second year, 10% unemployment, a pending depression, draughts and a deadly virus…what the hell is going on? Why is a country with a $2.4T+ economy and a rising middle class population having so many problems? A look at the United States 100 years ago may provide some clues.

What I’m about to say may come as a shock to a certain reality TV star turned “politician”, the United States was not always a superpower. If one looks at the U.S. from 1915–1935, it was very much an emerging country. Even after it took its position as the global economic leader after World War I, cracks started to form in its foundation in the recession of 1920–21 and the ultimate crash of 1929, which led to the 10-year Great Depression. Production declined as much as 47%, the unemployment rate rose to 20%+, credit vanished, and millions lost their homes in the worst economic contraction in U.S history. Similarly, Brasil is currently experiencing some of the same problems, a proverbial clusterfuck of economic decline and potentially the worst economic crisis in its history.

Economics is one part of the picture, but if one looks at the political landscape at the time, you start to see similarities to modern Brasil. President Warren G. Harding’s Tea Pot Dome Scandal, in which his Secretary of the Interior, Alfred Bacon Fall (he had no chance with that name), was found guilty of accepting bribes in exchange for directing federal oil reserve land to select companies.

Corruption ran rampant on a national, state and municipal level, which led to growth in organized crime. The distinction between criminal and politician was often blurred as the failed experiment of the Volstead Act, a prohibition on alcohol, was enacted in 1920 and then later repealed in 1933. This lead to the extensive corruption of law enforcement, prosecutors, judges and politicians, much like the level of corruption seen today in Brasil.

Regarding free speech, the Espionage Act of 1917 “authorized the state to punish all individuals who engaged in expression which supposedly undermined the United States economic and political policies”, thus authorizing congressional censorship of private citizens.

Remember that the telephone was a relatively new invention at the turn of the century and this new technology were being used as a mechanism by the government to limit speech, including illegal surveillance, wiretaps and warrantless searches of anti-communist organizations or individuals. This activity was exacerbated by J. Edgar Hoover throughout the 1920s as he became the director of the young Federal Bureau of Investigation.

Other parallels include a 1918 flu virus pandemic that claimed an estimated 675,000 lives in the U.S., a historic draught that led to the dust bowl, and even a U.S. hosted Olympic games in 1932 that suffered a financial loss due to little event revenue.

What the United States had 100 years ago that Brasil does not have today is the collective strength of its institutions to provide checks and balances on the whole. However, even with all of these pervasive problems woven into the very fabric of society, it is smart to be bullish on the future of Brasil. Opportunity does exist for investment, development, partnerships and collaboration. Things will get better and the people’s collective will for change is starting to grow.

Until that change happens, proceed with caution.

Stephen D. Marks is the principal partner of Emmersion, an international marketing and business development company with operations in both North and South America. -@stephendmarks