World-Wide Matel

My area studies today featured religion in Brazil. These are some notes and impressions.  

Max Weber, one of the fathers of sociology, thought that religion would disappear and that Protestants would lead the way, since they embraced rationalism that would come to make religion redundant and expendable. Students of sociology and political science still study his ideas those they spawned & there are lots of good ideas. But embedded in the classic sociological system is the assumption, common in intellectual circles in at the turn of the last century, that religion was old-fashioned and in the future would atrophy. Max Weber died in 1920 from complications from the Spanish flu. Religion has shown no signs of dying out and among most dynamic and expanding types of religion are the charismatic protestant denominations.  Maybe the reports of the death of religion have been exaggerated. 

One of the most interesting places to watch the religious dynamic is Brazil.  Brazil remains the world’s most populous Catholic country.  This doesn’t surprise most people for a mostly Catholic country with a population of 190+ million.  More surprising, perhaps, is that Brazil is also home to the world’s largest community of Pentecostal Christians.  The numbers of protestants in Brazil is has been growing rapidly. A couple generations ago, there were almost no Protestants outside immigrant communities in the south. Today some surveys indicate that Protestants make up as much as 30% of the population and their numbers are growing rapidly.

The Protestants are also among the most active.  As I mentioned above, Brazil has the world’s largest population of Pentecostals.  They currently make up between 15-21% of the population, but they are very much involved in their religion. They attend church services in very large numbers and account for around 40% of all contributions to churches in Brazil.

Many of the new Protestants come from the poorer parts of society. The church gives them not only spiritual guidance, but also social benefits. The church provides social networks and encourages members to stop drinking, gambling and cheating on their spouses.  All these things translate into generally better life outcomes on earth as, presumably, in heaven. Compared with others in similar social-economic circumstances, Brazilian evangelicals have higher incomes. Americans would recognize some of the methods Brazilian evangelicals use to reach potential converts and keep in touch with the flock. There are what we would recognize as mega-churches, but more often the secret of success is to be local and close to the customers, as illustrated above.  The new churches know their communities and satisfy both their spiritual and social needs.  Brazilian evangelicals were among the first to take advantage of television.  One of the biggest denominations,  the Universal Church of the Kingdom of God (Igreja Universal do Reino de Deus)  owns a television network, Rede Record. Brazilian evangelicals are having significant effects overseas, especially in Africa.

What marketers might call closeness to the customers is a big advantage that evangelicals have over the Catholic Church, which tends to be a little more distant. Catholic priests are also thin on the ground.  There is only one priest for every 8600 Brazilians. With that kind of ratio, it is hard to get close and personal.  This is exacerbated by the fact that many priests in Brazil are foreign born. Brazil doesn’t produce enough of its own.  The Catholic Church is trying to counter the loss to the charismatic Protestant churches with its own version. The leader of this movement is a priest called Marcelo Rossi. Despite these efforts, the Protestant numbers continue to grow.

For now, it is the Protestant charismatics who are reaching the poor. They preach a personalized salvation, as opposed to the “liberation theology,” which was the largely unsuccessful attempt to reach the poor a generation ago.  That does not mean that the Protestants stay out of politics, however.  Leaders have learned to deploy their numbers as swing voters.  In recent elections, they have supported the left leaning PT (Lula’s party) but not reliably (hence the swing vote status).

Those of us who graduated from secular-based programs in secular universities have a little trouble understanding the power of religion in motivating people. Our world view just doesn’t include the power of faith. We tend to look beyond the religion and seek secular explanation based in sociology or psychology. These factors probably have some validity, but maybe religion is a big part of some people’s lives because they really believe it is true.  IMO, we need to respect that a little more than we do and treat beliefs as a goal in themselves, not merely a means to achieve some material goal. 

BTW – I have sometimes used the term evangelicals. This does not mean exactly the same thing to Brazilians as it does to us. In its Portuguese version, it is more inclusive of all Protestants, but it is true that the fastest growing portions are those that might fit in well with our connotations.

You can find more about Brazilian statistics at www.datafolha.com.br.

Mudslides in Brazil have killed around 900 people in the last few months. These are not natural disasters. Although the proximate cause is heavy rain, it is the deforestation and the uncontrolled building on steep hillsides that turned weather events into deadly disasters.  Brazilians understand this and have been looking around to other countries that have done better.  The most current example is Australia, which suffered the worst floods in decades with significantly less loss of life.  But Brazilian TV has also gone to New Orleans to assess the successful American response to Hurricane Katrina.

One of the hopeful aspects of the recent Brazilian disasters was the response of Brazilian society.  There were more volunteers to NGOs than could be used and people were lined up to donate blood for the victims. This may seem unremarkable from the American point of view, but this is an evolution in Brazil.
Until recently, Brazilian civil society was relatively weak with a centralizing government taking the predominant lead in most situations. The fact that the government by itself was often not up to the job did not discourage the belief that it should do it all. Like most developing countries, Brazil was thick with laws and rules, but there was often little enthusiasm for following or enforcing many of them.  There was the tacit agreement that the network of rules could not work and finding a way around them (Jeitinho Brasileiro) became a fine art. This had the beneficial effect of keeping things working, but also contributed to lots of trouble.  The uncontrolled building and deforestation that caused the recent disasters, for example, was almost all illegal, but laws could not be enforced.  In some ways, the laws were “too good.”  Their provisions were not executable by actual people in real situations.

What impressed the Brazilian television reporters about New Orleans was not the government’s response, which remains inadequate in many ways. The success in New Orleans is Make it Right, a non-governmental organization spearheaded by actor Brad Pitt.  Make it Right is doing innovative things quicker than any government bureaucracy could manage. Rather than building cookie cutter projects or maybe not really building much of anything at all, as is often the government response, Make it Right is constructing homes that different and unique. They are adapted to the environment, so that when the next flood comes, these homes will survive.   

The lower 9^th Ward of New Orleans is becoming a place where homeowners can experiment in new ways of building environmentally sustainable communities, not just individual homes, but whole communities with local vegetable production, rain gardens and open space. The unique thing about all this is that it is not top-down, nor really bottom up. Rather it is a partnership with ideas moving both ways. This is a development to watch.It might seem that I am critical of government because government has “failed” to do what Make it Right is doing. On the contrary, the beauty of the system is a government that allows, enhances and encourages  the efforts of private individuals and groups. The government cannot do these sorts of things and a wise government recognizes that it does not have to. The total society response is what counts; government is only one part of total, sometimes the most important part, often not.

Government contributes in a particularly American way based the choices of the people and on our tax code. For example, I decided to contribute money to Make it Right, and because of the nature of our tax system – i.e. the tax exempt status – government essentially matched part of my contribution. After granting tax-exempt status, no bureaucrat needs decide which charity is worthy. The individual Americans decide with their preference, knowledge and with their own money. This distributed decision-making is a total society response with a role for business, government and individual Americans. Balance is important.

Government doesn’t have to and should not try to do it all. We fallible human beings don’t know what a perfect society would look like, so we can’t empower government to create one. We can create a government that contributes to conditions that help citizens prosper. A good society doesn’t solve all problems; it enables citizens to do the right things & make their own choices. 

I remember going up to the Vale dos Sinos with George Lannon, the Consul in Porto Alegre.  Our mission was to talk to Brazilian shoe makers there.  There was a trade dispute back then. Brazilian shoe makers, many located in the Vale dos Sinos near Porto Alegre in Rio Grande do Sul, were producing inexpensive, good quality shoes that were beating the domestic producers in the American market. This was more than twenty-five years ago.
I recall hearing the competition talking about the various “unfair” advantages the Brazilian shoemakers enjoyed.  They were close to inexpensive sources of quality leather, because of all the cattle raised in the region; they had the advantages of cheap labor and a low exchange rate; some people complained that labor conditions were oppressive.  (At the factories, BTW, we found working conditions were good.  It reminded me of Germany in many ways, since many of the people there were of German descent and they seem to run their businesses on that model.)  On top of all that, they made good shoes  because the firms were well managed and the workers skilled.  They studied and brought back skills from the premier leather processors in northern Italy.  I really had to respect their initiative and follow through.

Times change. I understand that. Nevertheless, I was surprised to learn that many of those thriving factories were closed or suffering mightily, not only Rio Grande do Sul, but all over the Brazilian leather industry. They could not compete with the cheap imports from China.  Brazil tried to protect its leather industry, but the Chinese figured out ways around the barriers and their price advantage was just too overwhelming.  Nobody has a permanent advantage and the apparently monumental Brazilian advantages evaporated in the last quarter century.  The Brazilian shoe makers complain that the Chinese have unfair advantages. They have access to cheap leather, a low exchange rate and labor that works under oppressive conditions. They might be right about some of these things, especially about the exchange rate, which the Chinese keep artificially low, but it doesn’t change the outcomes.

When American firms were faced with competition from cheaper products, one of the responses was to move to higher value added products.  Some of the Brazilian firms are doing that too. A report on Brazilian TV explains how Brazilian firms are making very high quality, customized products.  

Ironically, many of their most expensive shoes are aimed at the Chinese market. They evidently found a niche there among rich Chinese, who are willing to pay high prices and are impressed by the outward signs of quality as well as the snob appeal of having something expensive and custom made. 

People who study these things call them “positional goods” and refer to things that are valued less for their qualities than for their exclusivity. A rich person can only eat so much, drink so much or wear so many sets of clothes. In our modern world, even relatively poor people can partake in the luxuries once the exclusive domain of the rich. It makes it harder for the rich to express their status. The availability of tangible goods can expand. Everybody, or almost everybody, can have a refrigerator, good shoes or clothes of decent quality, but relative status is limited.  Status seeking rich guys look for things that are limited.   Returning to the example above, everybody can have good shoes these days, but the exclusive, handmade shoes are rare and so status enhancing for those who care about those things.   Thorstein Veblen wrote about this a century ago when he coined the term conspicuous consumption in his “Theory of the Leisure Class.”

For the time being, this redounds to the benefit of the Brazilian shoe makers.  The Chinese keep their currency artificially low against the Brazilian Real (against the dollar too, but that is another story), which makes Brazilian goods more expensive in China than they would otherwise be. But in the case of conspicuous consumption goods, price doesn’t matter.  In fact, the higher price, which keeps poorer people from owning the goods of desire, may actually heighten their attractiveness.  So the shoemakers get benefits from the high price they can charge enhanced by their overvalued currency, when they collect even more money from the Chinese fat-cats. 

Nevertheless, they should not rely on this situation lasting forever.

I have been following business stories for more than twenty-five years. I read about the decline and fall, and sometimes about the rebound and success.  Today’s hero may turn into tomorrow’s dog, as good times are followed by bad ones. But wait, you might make a comeback. Continued success depends on continuous adaption. The game is never over; there is no finish line. This is bad news when you are on top, but encouraging if you are not.  Veblen has an insight about this too. He talked about the advantage of borrowing and the penalty of taking the lead.  When you develop something that works, others can copy what works, leave behind the mistakes & then innovate some more. The Brazilian leather workers did this a quarter of a century ago, when they learned the best techniques from places like Italy & the U.S.  The Chinese did it after that. Everybody can do it, but we need to pay attention and be open to change.