Potential is not destiny

Brazil’s 7-1 semi-final loss to Germany last week followed by an uninspired 3-0 defeat against the Netherlands in the World Cup’s vestigial third place match on Saturday cast into stark relief the national team’s deficiencies relative to other world powers. Obviously, the 7-1 result was a sort of “black swan” event—a highly unlikely worst-case scenario—but no one watching Brazil’s first five matches in the tournament should have been arguing that Brazil, even with Neymar and Thiago Silva, was a better soccer team than Germany then. Except many were. And many spent the tournament treating Brazil like a team that was far more dangerous than the one actually on the field playing.

I mention this because it struck me throughout the tournament how similar a phenomenon the systematic overrating of Brazil’s national team was to the declarations in 2009-2010 that Brazil had finally “arrived” as an economic power. Saying that the Brazilian team is overrated or that it has not “arrived” as an economic power is a relative discussion; Brazil finished 4th at a tournament in which more than 200 countries try to qualify and its economy is the 6th largest in the world by certain measures. Brazil’s national team is among the best in the world, and with a couple more breaks, could have lifted the trophy this year. Similarly, Brazil’s economy is huge and dynamic, even as growth lags and inflation pushes up.

The problem in both instances was the process of evaluation. In 2010, Brazil’s GDP grew by 7.5 percent after a barely perceptible recession in 2009 following the Financial Crisis and the world decided this was the new norm. This analysis downplayed or completely ignored the structural problems like poor infrastructure and education as well as an inefficient bureaucracy and a rigid labor market, none of which was being adequately addressed and treated the commodity boom generated by China’s industrialization as something which would never end. A perfect example of this would be Larry Rohter’s Brazil on the Rise: The Story of a Country Transformed. While talking up Brazil’s future Rohter acknowledges many of issues that have come to mire Brazil in 1 percent GDP growth the past two years, but simply brushes them off, assuming that they would be resolved. Commentary during the World Cup followed a similar pattern; an acknowledgement that Brazil had not played well, followed by an assertion that Brazil would make the necessary changes and a declaration that they were still definitely the favorites.

The point is not to denigrate Brazil or to argue for blanket pessimism (just look how silly all those doom and gloom projections for the World Cup turned out). Simply to acknowledge the tendency to project what we think Brazil should be onto what Brazil actually is. Brazil has the potential to be among the most powerful countries in the world and to challenge for the World Cup every time. The key is to not treat potential as destiny.