I am spending several days in Sao Paulo before going on to Vittorio to the north. I have been to Sao Paulo or SP as it is affectionately known many times before. Each time I swear that I will never, never return but, here I am. It is now a city of 20 million people in a geographic land mass that once held 5 million people with no room to spare. To house some of its people it has gone super high rise--including some low cost housing that is guaranteed to become an instant slum. The Brazilian government has promised its poor affordable housing. In SP it means high rise housing for people who were formerly living in a tin shack on the side of a hill. They have no concept of communal living and these high rises are becoming the source of very nasty crimes. The security situation is so bad that one of my contacts says that there is room for 1,000 bodyguards for the rich. The rich drive in armoured cars and fly to work in helicopters because driving poses too high a crime risk. I was told to stay inside my hotel at night. I could leave with a trusted cab driver (gypsy cabs abound--they get you into a cab and then either rob or kill you) who must see you to the door, wait for your return and see you to the cab. Who, I ask, would live in such conditions?
What everyone hears is how Brazil is one of the BRIC (that is Brazil, Russia, India, China) emerging economies. It's growing at a rate that the G8 countries can only dream about. Most of the revenue has come from rich oil reserves that were found off the coast of Rio. It has a thriving coffee trade and other agricultural products. Because of stable government a rising middle class has had an impact on consumer spending. Banks are so flush with cash that any reasonable project can be funded. It will soon enjoy the economic benefits of the World Cup Soccer and the summer Olympics. Inflation is reasonable (when you consider that 15 years ago it was 40% per month) and wages have increased beyond the subsistence living that workers got just 10 years ago. Brazil has high import duties (some over 100% but average out to 70%) and a stiff VAT ( because tax collection is sometimes iffy). The salaried worker gets hit hardest because of tax deductions at source. Social taxes paid by the employer averages about 100% of salaries. The Real, the local currency is holding stable at about 55 cents on the US dollar.
There are a couple of things that we can learn from Brazil. One is affordable housing. Lulu, the previous President promised 10 million housing units and the country is about 3.5 million into that promise. These are small homes and condos (about 1,100 square feet of living space) that are 100% government financed with mortgage payments tied to income. Aside from Sao Paulo where there has been indiscriminate social housing without socializing the inhabitants the rest of the country is booming with demand outstripping supply by about 40%. Builders work with a pre arranged price set by the government bank. The developer buys the land and starts construction. When the project is 20% pre sold the government bank starts advancing funds to completion of the project. Returns for the developer are reasonable so that many are in the marketplace. All the buildings are "green" with solar electrical power and recycled grey water. The builders compete on good design and amenities. It is an enviable public private partnership which we might adopt in Canada.
The country is generally clean. The streets are not littered. Cab drivers are required to dress with at least shirt and tie. They bear no resemblance to our Ottawa cab drivers who sometime look like ax murderers. Cabs are clean and, despite the crime, the cabs do no wall off the driver such as is done in New York. Many cabs are going to hybrid engines and the city is surprisingly smog free given its size. Hotel room light operate only when you put your plastic key into a slot. When you take the key out of the slot and leave the room the lights go out.
I will be glad to leave SP and get out of the rat race. Will post on my travels to Vittorio.
Bernie.
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