[The Wall Street Journal]
August 21, 2002
[Image]
Brazil's Leftist Candidate Gomes
Taps Princeton Academic for Boost
By JONATHAN KARP
Staff Reporter of THE WALL STREET JOURNAL
SAO PAULO, Brazil -- Can the appointment of a
prominent Princeton economist with BRAZIL ELECTIONS
free-market credentials reassure investors
about a leading Brazilian presidential
candidate who told businessmen last week that ¥ Brazilian Candidates
he didn't "give a damn about the market"? to Honor Terms of IMF
Loan2
Crafting a coherent economic [Scheinkman] 08/29/02
program is the task ahead for
Jose Alexandre Scheinkman, the latest ¥ Serra Enjoys Major
U.S.-based Brazilian intellectual to join the[Image]TV Airtime Advantage3
campaign of Ciro Gomes. To achieve that, Mr. 08/19/02
Scheinkman will have to reconcile his views
with those of Mr. Gomes's mentor and campaign ¥ Rally Ends as Polls
strategist, Roberto Mangabeira Unger, a Show Serra Lost
Harvard Law School professor who dazzles Ground4
listeners with his command of political
theory but alienates some investors with 08/12/02
antimarket remarks and vague policy
prescriptions.
Mr. Gomes has soared to a strong second place in opinion polls ahead of
Brazil's Oct. 6 vote, positioning himself for a run-off election against
fellow left-of-center opposition candidate Luiz Inacio Lula da Silva. By
advocating change in Brazil's economic model, both candidates have rattled
foreign investors, but Mr. Gomes is widely viewed as less predictable. His
Labor Front coalition is eclectic, and Mr. Gomes continues to withhold
explicit support for Brazil's $30 billion rescue package from the
International Monetary Fund.
Mr. Scheinkman's familiarity with international finance will fill a gap in
the Gomes campaign. Now at Princeton University in New Jersey, Mr.
Scheinkman previously headed the Nobel Prize-laden economics department at
the University of Chicago. He gained direct experience in the markets as a
vice president for financial strategies at Goldman Sachs & Co.
[Unger] At a moment of heightened campaign rhetoric bemoaning the power
of foreign capital, says Mr. Scheinkman, from his New York home,
"I am someone who understands the usefulness and limitations of financial
[Image]markets."
Just as important are his ideas for greater economic openness to spur
growth and reduce Brazil's vast income discrepancies. Mr. Scheinkman
favors trade liberalization, rather than state-driven industrial policy,
to double Brazil's exports. He believes that even under IMF constraints,
Brazil can steer more government money toward investment and education,
particularly for research in science and technology, replicating
internationally recognized university programs, such as the genetics
program in Sao Paulo. "Creating centers of excellence like this should be
the core of any industrial policy," he says.
Mr. Scheinkman says Mr. Gomes has assured him that, if elected, he won't
default on Brazil's debt. Investors say they hope that Mr. Scheinkman's
contribution will be meaningful, not just a foil for the populism that
many see in Mr. Gomes and his Harvard mentor. Mr. Unger is a longtime
critic of so-called Washington Consensus policies and often calls for the
developing world to defy international capital. Asked recently why
investors were skeptical of Mr. Gomes, Mr. Unger shocked a group of U.S.
fund managers by replying, "Sometimes markets don't know what's good for
them."
Mr. Scheinkman acknowledges the "inconsistencies" between himself and Mr.
Unger but says, "Both Unger and I come from a tradition of having ideas,
discussing them and letting the best ideas win."
