THE CONSUMER IN THE RED
Wealth in government city
The hub of the federal government, public cash remains the base for a standard of living that makes of Brasília the third biggest market in Brazil
Angela Pimenta
In 1956, while stepping for the first time on the Goiás "cerrado" which would later be home to Brasília, President Juscelino Kubitschek was moved by an epic inspiration. He later wrote: "From this Central Plateau, from this solitude which will soon become the brains of the most important national decisions, I envision this dawn with unyielding faith and boundless confidence in its great destiny."
Earlier, in the late 19th century, Italian priest Giovanni Bosco, who never came to Brazil, had prophesied "a promised land where milk and honey will flow." The place he saw in his visions is precisely where the federal capital stands today. The grandiose dreams of JK and don Bosco, in a sense, have been realized. Nurtured by increasingly abundant funding from the Federal Government, Brasília is now a power hub that exudes wealth. Home to only 1.4% of the Brazilian population, it accounts for 4% of the nation's gross domestic product.
As the richest unit in the federation, Brasília and its 20 satellite towns enjoy a per capita income of 46,000 Reais, almost triple the national average. In total, 27% of its 2.6 million inhabitants belong to classes A and B, an elite that is proportionally higher than the 20% held by São Paulo, the most developed state in the country. Since the mid-2000s, Brasília became the third largest national consumer market among the nation's cities, trailing only São Paulo and Rio de Janeiro. "If the current trend is maintained, which combines economic growth with the high salaries earned by the civil servants, Brasília will only grow its share of the national income," says economist Tadeu Masano, the owner of the Geografia de Mercado consultancy firm.
Brasília also stands out beyond national borders. According to a survey carried out by British think tank Mercer, it is the most expensive capital in the Americas in terms of cost of living for foreigners. Washington, founded in 1790 to host the US government, is now far less expensive than Brasília. In Mercer's ranking, while Brasília ranks 33rd among the 150 most expensive cities, Washington appears in 108th. The bonanza in Brasília is easily noticeable on sunny weekends that mark the "candango" Winter.
It is estimated that at least 2,000 vessels, including sailboats, power boats and jet skis, toys worth anything from 40,000 to 1 million Reais, sail on the Paranoá lake, which was artificially created to provide a leisure area to Brasília. To its critics and to those disillusioned with the ills of politics, Brasília is known as a "fantasy island," an enclave where the milk and honey sorbed by the elite of the three branches of government are obtained at the expense of the tax burden that sucks-up 35% of the GDP. This perception has grown in recent years and is based on a reality that is not limited to the successive scandals involving profiteering with public money - scandals that certainly help explain the prosperity of part of Brasília's denizens. "From the historical viewpoint, the surge in buying power in Brasília is recent. It took place over the last decade due to increased government spending and to the major wage increases the civil servants have been granted," says Contas Abertas NGO economist Gil Castelo Branco. In fact, the comparison between the average wages paid by the Government and the private sector is striking. While among the leading companies
Weekend at Lake Paranoá: a parade of boats and jet skis worth between 40,000 and 1 million Reais
the average wage is 2,850 Reais, in the Executive Branch it is 7,000 Reais, but soars to 14,000 in the Legislative and 16,000 in the Judiciary. This massive circulating income has attracted international brands and some of the best restaurants of the Rio-São Paulo circuit. "After opening a branch at the South Wing, I was convinced that Brasília's fame of being a cemetery on weekends is nonsense," says Carlos Bettencourt, the owner of Portuguese cuisine restaurant A Bela Sintra, which opened in the federal capital in June and is twice the size of its headquarters in São Paulo. Renowned for its cod, a meal for two at the restaurant averages 300 Reais. But the competition does not lag behind. Located in the satellite town of Guará, next to the Pilot Plan, ParkShopping, which belongs to the Multiplan Group, will soon inaugurate a gourmet space worth 35 million Reais. The site will host branches of the Portuguese restaurant Antiquarius, of Barbacoa grill, and of French cuisine La Tambouille. The Iguatemi shopping center, meanwhile, which opened for business last year in the North Wing, already has a branch of the Gero restaurant, which belongs to the Fasano Group, and boasts brands such as Louis Vuitton, Gucci, Burberry and Ermenegildo Zegna.
WEALTH THAT FLOWS FROM THE COFFERS
This opulence comes from the public coffers. Founded 51 years ago to host the Federal Government, Brasília is a unique city, whose economy still orbits around the federal bureaucracy. According to the Industry Federation of the Federal District, services account for 90% of local GDP, 54% of which comes from work provided directly to the Union. There are 191,000 active civil servants, among federal and local government employees, some 600,000 jobs in private services, among doctors' offices, legal firms, hairdressers and gardeners, in addition to upwards of 200,000 jobs in trade.
Most young people dream of passing a civil service examination. Over and beyond the good wages, they are also attracted by job stability and full retirement. Driven by these benefits, five years ago administrator Paulo Henrique Pereira, a São Paulo native who is now 29
years old, passed an examination for a job at the Central Bank. A year after arriving in Brasília, his girlfriend, 28-year-old educator Juliana de Souza, joined him. She recently passed an examination for an elementary school teaching position in the Federal District. As soon as Juliana is hired, the monthly income of the couple, who plan to get married soon, will be around 15,000 Reais, enough to rank them on top of the socioeconomic pyramid. Pereira has already been promoted to coordinator of an internal audit area at the Central Bank.
"Before moving here, I had a negative image of Brasília, based only on what is said in the media," he says. "But I learned to love the city, which offers an enviable quality of life."
One of the couple's hobbies is cycling on the so-called "Eixão," an expressway that cuts through the Pilot Plan from north to south and where traffic is closed to cars on weekends. Although they belong to the new generation of the Brasília elite, Juliana and Paulo Henrique could not afford the luxury of buying an apartment in the Pilot Plan, where new real estate goes for 9,000 Reais per square meter, with a whopping appreciation of 560% since 2000. "We bought a three-bedroom apartment in construction in Águas Claras. It should be ready in 2013," said Juliana, referring to the middle-class satellite town located 20 kilometers away from the downtown area of the capital and where the square meter goes for half the price.
Real estate has appreciated so much in Brasília that it raises suspicion of perhaps being a housing bubble. "Property prices had an extraordinary surge in the last decade," says Leonel Alves, director of the Lopes Royal real estate brokerage firm. "But compared to other markets, there are two important differences in Brasília: the fact that 65% of the buyers are civil servants and the lack of land."
In recent years, in order to accommodate the swelling public administration, the Union has leased more than half of the corporate buildings built in the Pilot Plan. This is the case of the Parque City Corporate condominium, the most luxurious in Midwestern Brazil and now occupied by agencies such as the Ministry of Labor and the National Civil Aviation Agency. It is estimated that of the 37 ministries of the Dilma Rousseff administration, 20 rent rooms outside of the so-called Esplanada dos Ministérios, which houses 19 buildings. In 2010, these leases cost 180 million Reais. This is an example of how, in addition to the high wages paid to the civil servants, the city's wealth also feeds on a host of other state expenditures - duly supplied by the collection of taxes throughout the nation. In the eyes of millions of Brazilian taxpayers, the luxury of Brasília stems from the evil combination of the privileges, waste and corruption that thrive around power. In order for Brasília to change its image in Brazil, the only way is to improve the public administration - to the point of showing that the high cost of maintaining it is worthwhile for the taxpayer.
São Paulo couple Juliana and Paulo Henrique: attracted to Brasília by the availability of good government jobs and by the city's quality of life.