Sorry, I'm late.
I had to stop by the Wax Museum again and give the finger to FDR.
We know Al-Qaeda, Zawahiri, is supporting the opposition in Syria.
Are we supporting Al-Qaeda in Syria?
It's a proud day for America.
And by God, we've kicked Vietnam syndrome once and for all.
Thank you very, very much.
I say it, I say it again.
You've been hacked.
You've been took.
You've been hoodwinked.
These witnesses are trying to simply deny things that just about everybody else accepts as fact.
He came, he saw, he died.
We ain't killing they army, but we killing them.
We be on CNN like, say our name, Ben, say it, say it three times.
The meeting of the largest armies in the history of the world.
Then there's going to be an invasion.
All right, you guys, introducing Jim Epstein from Reason Magazine.
Welcome to the show.
How are you doing?
I'm great.
Thank you for having me on.
Long time listener and I'm a big fan of your book on Afghanistan.
Oh, great.
Well, thank you very much.
Happy to hear that.
Listen to it on Audible, which I appreciate that you read it yourself, which is always something I like.
But wow, what a depressing book, but great book.
Cool.
Well, thank you very much for saying so, Jim.
Very kind of you.
All right.
So listen, I like this thing you wrote.
How do you like that?
Thank you.
Reason Magazine, Reason.com.
Libertarians forge an alliance with Brazilian President Herr Bolsonaro.
Was it a deal with the devil?
Wow, I think that question already answers itself right in the title.
But so, you know, I don't know.
I don't know too much about Brazil, only a little.
America used to back a dictatorship in the bad old days there.
And I know that left wing lady was recently run out of power there by her political enemies.
Well, interestingly, that was President Dilma Rousseff you're talking about.
And she was actually run out of power largely or instrumental in that was Brazil's libertarian movement.
I was in Sao Paulo in I guess it was about 2016 for about a week just to meet these guys.
It was particularly a group called the Free Brazil Movement.
And the liberal is what they call it there.
They still use the classical liberal name.
But the libertarian movement in Brazil has had enormous impact.
And in really starting in about 2012 when it was really unheard of, it has just absolutely surged into the mainstream.
I remember seeing protest signs that said less Marx, more Mises and this kind of thing.
That's right.
And that was this group called the Free Brazil Movement, which is a group of young 20, mostly 20 something political activists, kind of hipster guys who, you know, have really tried to rebrand libertarian ideas and create this kind of cultural identity that people can climb onto.
And they have had, you know, if you look at their Facebook followers are in the millions.
They have a lot of influence.
And I mean, part of my story also is their chief spokesman, Kim Kataguri, is now in Congress and is having a lot of influence as well.
All right.
So keep going with the good news then before you get to the bad news.
Well, so the Free Brazil Movement played this big role.
Another thing is Students for Liberty, which maybe some of your listeners know is the big libertarian students group.
The Brazilian chapter is the same size as every other chapter in the world, including the U.S. combined.
And it's going to eclipse that soon because it's growing so quickly.
And these ideas are catching on so quickly in Brazil.
And it's an interesting question as to why.
And we can get into that later if you want.
But really, my story in this piece begins in March of 2016.
Right about when the libertarian movement was really starting to break through.
And there was also a presidential election coming up and a presidential candidate, a longtime congressman named Ger Bolsonaro, who had been an army officer, not a very distinguished career, not a great career in Congress either, hardly passed a bill, famous for these just really awful comments in the press about gays and women and so forth.
Yet he was kind of catching on with voters in a populist sort of way.
You know, he would show up at an airport and there would be throngs there to greet him.
But the mainstream was really, you know, he's really, really being treated as a fringe figure.
But it was in March of 2016 that a man named Winston Ling, who's now today's about 63, I think.
And he is one of the—he's a wealthy libertarian philanthropist who's paid to actually translate a lot of the works of Ludwig von Mises and Hayek and Rothbard into Portuguese for the first time, and is really one of these foundational figures who, starting in the 80s, founded a few think tanks and really kind of planted the seeds that has become this very successful movement today.
And Winston Ling met with Bolsonaro in March of 2016, and they forged an alliance.
Ling was incredibly frustrated at this time because the economy— Brazil was in the midst of its worst economic downturn in modern history, really.
The unemployment rate was at about 12 percent.
And he really wanted to find a way to get some of his free market ideas that he has championed for so many years to, you know, make them a reality.
And he saw that forming an alliance with someone like Bolsonaro, who certainly is not a libertarian, in many ways is the opposite of a libertarian, but was willing—telegraphed that he was willing to sort of cede anything having to do with the economy to someone else.
He would pursue other things.
And therefore, if someone like Ling could help to gain him some respect and help him gain a little bit of respect from the mainstream.
So Ling gave him a copy of two books, one by Mises, and then a copy of Bastiat's The Law at a partnered company.
And Ling promised that he would help Bolsonaro find a council of free market economists to become advisors to his campaign.
And Ling went home, started working through his Rolodex, and found that nobody would answer the phone or want to talk to him, or wanted even their name associated with Bolsonaro because of his fringe reputation.
And that was until, after a while, Ling reached a man named Paulo Guedes, who is a University of Chicago-trained economist, has spent most of his career in finance, and is a real free market economist with very good contacts.
And he's actually a real Hayekian to some degree.
His University of Chicago credential is a little bit misleading.
He has also played a role in some of these libertarian think tanks.
In Brazil, though, and he's someone who is often quoted in the media, but has never really held any public office.
But at this time, he also was getting incredibly frustrated with the state of the Brazilian economy, and about 13 years of left-wing Workers' Party control, and was looking for a way to get his ideas through as well.
He actually briefly considered partnering or backing the candidacy of a game show host in Brazil named Luciano Huck, who was really popular and had all these followers on social media.
And that sort of he would attach himself to Huck and become Huck's Minister of Economy and so forth.
That ended up falling apart.
But when Winston Ling called Paulo Guedes, Guedes was interested.
And he agreed to meet with Bolsonaro.
They had a very long sit-down.
And basically, Guedes said, here are my terms.
I get carte blanche.
Everything economic comes through me.
And if you agree to that, then I will sign on as a campaign advisor.
So they cut a deal, and Bolsonaro made it public.
And as soon as he did, he surged in the polls.
He was suddenly taken seriously by the business community and the mainstream, people who really did not want the Workers' Party candidate to be elected, and yet did not, you know, were, you know, they didn't see Bolsonaro as a particularly good option either.
But if Bolsonaro could be a way to bring free market reform, you know, they would sort of hold their nose and vote for him.
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And so what kind of free market reforms, then, have these guys been able to implement in his government?
Well, I mean, it's early, and mostly it has been— they have been trying to chip away at what we'd call the administrative state.
Brazil is an incredibly bureaucratic country.
It's actually—it was ranked dead last by the World Economic Forum in the category of burden of government regulation.
It is—it takes a long time to open a business in Brazil.
Famously, you need to go to a notary to get— even the most basic function in Brazil having to do with government, you have to show up physically in a place and get a document notarized.
There's some kind of an old saying that a death certificate means more than a dead body in Brazil.
I mean, it is an incredibly dysfunctional government.
And what Guedes' team—Paulo Guedes is now the minister of economy, and he's brought in all of these radicals like— I mean, people who come out of the libertarian movement, some anarcho-capitalists, real free market radicals are suddenly in the ministry of economy overseeing large staffs, particularly a character of 40-year-old named Paulo Weber, who when I spoke—I interviewed him for my story, and really he said his goal is to make life easier for the entrepreneur.
And he realizes that legal changes that need to be pushed through Congress are going to be very hard to make those happen.
There's incredibly powerful special interests, but that there's a lot that they can do in terms of reforming the administrative state.
And they've said about doing it, it's a little bit early to know if they're successful, if they're going to be successful, but there's some reason for optimism.
However, and really a focus of my story is, you know, sort of aligning themselves with someone like Bolsonaro, who at the same time, you know, as I said before, he's in many ways the opposite of a libertarian.
I mean, his biggest policy initiative has been this anti-crime package that would make it easier for cops to kill civilians with impunity, which is already an enormous problem in Brazil.
In 2017, law enforcement killed 4,144 civilians, or 14 per day.
Many of these are extrajudicial executions.
And Bolsonaro's actions, this bill, would only make matters worse.
And he has allied himself with Steve Bannon.
He, including his foreign affairs minister, which is basically a secretary of state, talks about cultural Marxism.
I mean, they have the rhetoric of sort of paranoid nationalism.
The other thing is that, and this is, I mean, to some degree, it's an old story with libertarians.
Does it make sense to ally yourself with someone who does not really share your views, and in many ways backs positions, and does things that are morally abhorrent, because it can help you push the needle, get some of your agenda through?
And that's sort of the question that a lot of these libertarian activists and policy people in Brazil have had to deal with, and that they have confronted.
So, you know, and something that comes out of that, a question that arises from that is, how much can they really get through if Bolsonaro doesn't really believe in their principles?
So, already we've seen Bolsonaro waffle on issues of free trade, for example.
Brazil is incredibly protectionist.
It is, I mean, their tariffs are outrageous, and they're hard to get rid of because they're protecting, you know, all kinds of industrialists and agricultural interests, and to really bring those down and defeat them, Bolsonaro would need to spend a lot of political capital, and he seems unwilling to do that, to actually do that.
Well, and, right, I mean, this is really what happens, right, is they end up giving, libertarians end up giving, quote, unquote, free market ideological cover for what is, in essence, just conservative business cronyism in a state where, as you say, everything is already regulated completely to the nth degree, i.e., therefore, cartelized and all that kind of thing.
So, it may not look bad, but without really accomplishing anything other than helping make rich people richer.
Right, I mean, so, right, there's the public relations problem, which is, and this is what the guys from the Free Brazil Movement told me, that they're wrestling with now, which is, they decided to back Bolsonaro towards the end of the campaign because they realized that he was the only way to beat the Workers' Party, and they hate the Workers' Party, and their followers hate the Workers' Party.
So, they threw their support behind him, and now they're saying, when I last spoke with them, sort of the, they're concerned that Bolsonaro's going to fail, that his administration is going to be deemed a complete failure, and that their free market ideas will become associated with him.
So, it will damage them.
So, that's one concern, and, I mean, another, so, in my story, and Paulo Guedes, who's really the central figure in this, he, earlier in his career, he was at the University of Chile, and he was trained at the University of Chicago, and he was in Chile during the military dictatorship there, and, sort of, that's a way of getting into talking about the story of Chile, which is this same theme, although in a much more extreme case, and, you know, I don't, it's not fair to draw any kind of a comparison between Bolsonaro and Pinochet, who was a torturer and a murderer, but that is, in recent Latin American history, that is probably the most extreme example of, you had these free market economists, trained at the University of Chicago, like Paulo Guedes, who allied themselves early on with Pinochet, pushed through, successfully pushed through a lot of free market reforms, and yet, looked the other way as Pinochet was murdering and torturing people.
Well, and we all are tarred with that to this day.
The fact that some guys from the University of Chicago went and advised Pinochet back then.
This is something about libertarians.
Oh, yeah, you love dictatorship sometimes.
Milton Friedman was heckled during his, like, Nobel Prize ceremony, right?
Even though Milton Friedman actually didn't have anything to do with Pinochet, but Hayek did.
I mean, Hayek visited Pinochet, and he said some positive things about the Pinochet regime, right?
So, you're right, yeah, it's a black eye.
And it is kind of a matter of spin, because Milton Friedman went and advised the Chinese, too, that, hey, guys, this is how prices work.
You've got to get over this Marxism thing.
It's stupid.
And they listened, and it worked.
And thank God for that, you know?
Compare the standard of living for the average schmuck in China now to then, and it answers itself, so.
Well, compare the average standard of living for the average schmuck in Chile to the average schmuck in Brazil.
I mean, Chile has done— I mean, this really happened in particular after the democratic governance was restored, and I think it was 1989 in Chile.
They continued many of these free market policies, and Chile is the golden child of Latin America.
And it is— You know, while on one hand you have Venezuela and Brazil, I mean, Latin America is still a bastion of Marxism, and Chile has surged in terms of its GDP and its standard of living, and it has to do with the policies put in place at this time.
But, you know, Pinochet is a villain.
Sure, and of course those things, like everything, black and white and gray and all kinds of different stuff, but certainly in terms of the libertarian movement, it's a pretty bad association with a coup leader and a military dictator, you know?
But now back to other comparisons, then, because the comparison is obvious, although, as you say, Pinochet is far worse than Bolsonaro, at least so far.
But on the degree of the reforms, I mean, I think one thing that's going to reflect on the libertarians here, as well as on Bolsonaro, is the degree to which they're actually able to roll back the state that prevents regular people from going into business and improving their lot, and that that's where the rubber really meets the road as far as all that goes.
And so, I guess in the case of Pinochet, you know a hell of a lot more about it than I do, that he really was able to do whatever the hell he wanted, and that did mean roll back a lot of government intervention in the market, especially at the lowest end for regular people.
But so, how's that going here?
How's it going?
Well, again, I think it's too early to tell in terms of whether they're going to be successful.
Although, I mean, I think in terms of the administrative state, I think there's definitely going to be some degree of success.
I mean, Paulo Weber is pushing very hard to make a lot of these government services, bring a lot of them online, simplify them, etc.
I think he'll be successful.
I think he'll be successful in terms of replacing a lot of government employees with websites.
What's not going to happen, though, is those same government employees are going to stay on the payroll because you can't fire a government employee in Brazil.
Reform is very difficult in Brazil in part because Brazil actually has one of the largest constitutions in the world.
I think it's actually the third longest with about 65,000 words.
That's because so many of these special privileges are actually written into the constitution, which makes legislative change very difficult because you actually need to change the constitution.
It's a truly dreadful constitution.
So that has really undermined the rule of law.
The Supreme Federal Court in Brazil is overwhelmed with 80,000 cases a year, and it's highly political with constantly shifting interpretations.
So it's very dysfunctional in that sense.
So to get through the type of reform like making it easier to fire federal workers who are not performing well, for example, I don't see that happening.
A big question is actually the issue of Social Security reform.
Brazil's pension systems, it's multiple systems, they're devouring the economy.
It's worse than in the United States, if you can believe that.
By 2050, about a quarter of all GDP in Brazil will go into its pension system.
It's also an incredibly regressive pension system.
It pays out much more to wealthy middle-class people.
And this has been a problem for decades.
And every attempt at reform has failed.
And I think a really big question for Guedes and for Bolsonaro, a really big question that's coming up now and is really in the news is will they succeed in bringing reform to the pension system?
Because that absolutely has to happen for Brazil's economy to survive.
Yeah.
Well, I can certainly see why libertarian-minded folks would be motivated to despise the left and attempt to roll back everything that they have set up in their time here.
But then, as you say, they don't have a Ron Paul running.
They only have a Donald Trump.
So they support him.
And then he's just as bad on some things as he is trying to be good on a couple others.
And so I guess we'll see how it shakes out.
Well, I mean, they do have a Ron Paul running in the sense that there are real libertarian candidates.
There was in the last election, there's a party called Partido Novo, which is sort of like the libertarian party here.
And actually, Guedes, much earlier in his career, he helped to craft the economic platform of a guy named Guilherme Afif Domingos, who was running on the Liberal Party ticket and was a real free market reformer.
But guess what?
He finished sixth.
So it was like a guy like Paulo Guedes and Winston Ling, who are in their 60s.
At this point in their career, they were just tired of waiting.
They wanted to figure out a way to bring some free market reform.
And they thought seeing the state that Brazil was in with its 12% unemployment rate, they thought that they had to do whatever it took.
Yeah.
Well, I guess we'll see how that goes.
But all right.
Well, thanks very much for the briefing here.
Was there any important point I missed to ask you about here?
I think we about covered it.
I'm sorry.
I wish I knew more about it so I could ask you more things.
I know.
I'll ask you this.
The thing about the getting rid of the previous lady there, I guess I had read some Greenwald saying that there were recordings of the guys in the Congress who got rid of her saying, oh, because she was investigating them, and so had the recordings and leaked the recordings of them saying, we've got to get rid of her before her government prosecutes us for all those crimes we committed, and this kind of thing.
Is that anything like your version of what you understand of the story there?
Well, I think you're referring to what's in the news today, which was – Oh, I didn't see that.
Oh, yeah.
I mean the Intercept has found a leak.
Brazil has had this sweeping corruption investigation called Operation Car Wash, which brought down a lot of people on all sides of the left and right, but particularly has hit the Workers' Party.
And there's leaks now that indicate that Sergio Moro, who is now in the Bolsonaro administration, who led it and was really very well respected, showing that he was in part driven by politics in terms of who he decided to target or not target.
I have not read – I mean I read the news article.
I haven't really delved into this.
I wouldn't doubt it.
That doesn't mean that the Workers' Party wasn't absolutely terrible for Brazil and that there wasn't a lot of corruption in the Workers' Party.
And Dilma Rousseff was utterly incompetent as a president, and ultimately what led her to be impeached was she violated a law that – it was fiscal impropriety.
She was moving – I think it was moving money from a state-owned bank to balance the budget.
And of course it was people like Greenwald, like Glenn Greenwald would say, oh, well, it was largely political.
Like in this country, impeachments are indeed political.
I mean had she – if she didn't have political enemies and if groups like the Free Brazil Movement weren't out to get her, she wouldn't have been impeached.
But she was guilty and she was dreadful for the country for sure.
Yeah.
Well, it is a desperately poor country.
Not much of a middle class, right?
Sort of the rich and the barrio?
Well, it's a desperately poor country, but it is – it's the world's ninth largest economy.
It is – there's certainly wealthy people and a real middle class in Brazil.
It has enormous resources.
I mean there's a lot of wealth.
There was a lot of optimism in the 90s.
I think journalists used to always talk about like the sleeping giant of Brazil, that if we could just fix some of these policy issues that Brazil would become this incredible player on the world stage.
And to some degree they did in the 90s.
They tamed the inflation.
There was some improvement.
But still it's – there's still just enormous problems that Guedes' guys are trying to tackle.
And the question is whether they'll succeed or not.
Yeah.
I mostly only know from documentaries about the pro skaters because so many pro skateboarders come out of Brazil.
Oh, really?
I didn't know that.
Yeah.
Well, and part of it is because they are such hard ghetto kids that they're perfectly brave, and you know what I mean?
They're hard kids.
It makes a good skateboarder.
And I've seen they've got some really sketchy ghettos there.
Some of these guys, I saw a documentary where the guy takes them back to the old neighborhood.
And you're talking about the worst kind of cardboard shanties stacked on top of each other in the fourth world fashion that you could think of.
And like you're saying with the cops killing two or three times as many people as they're killing even here in the U.S., which I thought we had the world record.
That goes to show, right?
That's just a fraction of the people killed every night are the ones killed by the cops.
They send bulldozers or dump trucks around to collect the bodies and stuff like that, I've read.
Wow.
Yeah.
So it seems like, yeah, they could use some economic reforms of some kind.
And, you know, hey, it's just the same as anywhere, right?
You know, the cronies and the business interests collapse the economy and make people even more desperate for even more handouts and more socialism, which just undermines the economy even more and leaves everything so stuck, but also makes it unthinkable that you could ever get rid of it all.
Like when you talk about all these pension programs, reforming a pension program means taking money away from a poor old person.
Talk about intersectionality and stuff like that.
You can't do that.
And so things just get so stuck.
Well, I mean, there's also you could draw an analogy to the Trump administration to some degree as well or to really any U.S. president in terms of, you know, Trump because Trump has actually brought some real libertarian radicals into his administration who specifically- Which one?
I'm sorry, what libertarians are in the Trump administration?
I mean, the head of deregulation was Naomi Rao, because now she was just appointed to the circuit court.
Oh, I don't know about that.
But she was in the White House, you know, specifically charged with cutting regulation.
We did an interview with her at Reason.
I mean, in terms of the, like, real administrative stuff like the housing and certainly in the federal courts.
I mean, that's probably the biggest area.
I mean, there have been some excellent appointments.
Actually, Neil Gorsuch would be the best known.
But even below that, people you hear less don't really hear because Trump has really ceded decision-making over who to appoint to the Federalist Society.
And some of the people have been terrific.
I mean, that's not- A judge isn't really serving in the administration, but there are certainly free market reformers in any really Republican administration that we'll have to wrestle with.
Do you join a president who may be pursuing a terrible foreign policy, but you're going to be his housing policy guy, right?
And are you going to lie yourself with him because you can do some good?
Yeah, well, and you know, it's funny because the Federalist Society, boy, compared to the living Constitution guys, they're constitutionalists, strict constructionists.
And then at the same time, though, I was just talking with Jim Bovard about Barr, Attorney General Barr, and that whole tradition out of the Federalist Society that agrees essentially with David Addington and Dick Cheney that presidents can do whatever they want.
And it goes right back to this sort of right-wing populist thing that might have some good economics with it, but it also has a level of cop worship that is, you know, unbelievable and extremely detrimental to the rights of average people in this country and in Brazil.
And that's just one example, right?
Yeah, I'm not sure of all the Federalists.
I don't know.
I'm sure there have been lousy appointments by the Federalist Society as well, but there have been some real libertarians as well.
So, you know, I mean, I think Gorsuch is probably one of the best Supreme Court justices as one example, and he's a Trump appointee.
Another, Mark Calabria was just made head of the Federal Housing Finance Agency, which is regulating Fannie and Freddie.
And Calabria is someone who I believe he comes from the Cato Institute.
He would love to do away with Fannie and Freddie.
You know, I mean, the libertarian loves to see an agency head appointed who wants to just, you know, end the agency that he's been put in charge of, which has certainly happened in the Trump administration, so.
That's cool, yeah.
I mean, we should always be suspicious and look out for just, you know, hookups for cronies because that's, you know, essentially, he's not going to be able to abolish that agency, but he's going to have to do something with it, and it's probably going to help friends of the administration and hurt people who are not friends of it, in all other things being equal, even in the hands of a libertarian.
Then we have our penis-shaped problem again, where we're cozying up to Trump, responsible for his failures and without too much to show for it, but.
Right, absolutely.
Yeah, well, all right.
Anyway, very important stuff, and like you say, lots of metaphors and analogies from comparing our country and Chile and Brazil and all these things here, and lots to think about, so I really appreciate it.
All right, thank you.
Thanks for having me on.
Yeah, very happy to have you on.
Jim Epstein, everybody, from Reason Magazine.
The article is called Libertarians forged an alliance with Brazilian President Jair Bolsonaro.
Was it a deal with the devil?
All right, y'all, thanks.
Find me at libertarianinstitute.org, at scotthorton.org, antiwar.com, and reddit.com slash scotthortonshow.
Oh, yeah, and read my book, Fool's Errand, Timed and the War in Afghanistan at foolserrand.us.
