Freight Charging, Surveillance and Distortions: Back to the Past

Imagine two people: Peter and Paul. Paul is a "just cause": he is a driver who financed a truck for the ModerFrota Program, still has many years to pay, suffers from the competition of other truck drivers, faces the price of diesel more and more expensive and realizes that the purchasing power of your income is decreasing. It seems to be increasingly difficult to maintain the previous standard of living since you have to drive far more miles to maintain the standard of living you were able to achieve previously. Many are in solidarity with Paul, after all the life of a truck driver is not easy - as well as other workers in Brazil.

On the other side there is Peter. Pedro owns a carrier. The transport companies constitute a strong and organized group of interests in the country. One of the important examples is the National Confederation of Transport (CNT). Understanding market power, whether it is to hire truckers or to influence government decisions, many people see these companies in an unfriendly way. Pedro knows this and prefers acting behind the scenes and discreetly.

Paulo, the truck driver, went on strike, mobilized other colleagues of the category and fought for lower fuel costs and appreciation of his work hour - freight. After all, the company that monopolizes refining and distribution is state-owned - Petrobras - and there is no other possibility of choosing competitors who can offer fuel in a cheaper way. In addition, the tax burden on fuel is quite high - especially the ICMS, which is the responsibility of the states.

The mobilization led by Paulo managed to affect government decisions. Peter supported and worked behind the scenes to take Paul's ideas. Politicians were fearful of facing another strike and another shortage that would cost votes in the upcoming election. It is interesting to recall Freud's quote: "When Peter speaks of Paul, we know more about Peter than about Paul".

As an emergency and populist measure it was decided to establish a minimum freight price table. With this, the public sector is mobilized by the supervisory bureaucracy that has to show service and, ultimately, made the goods more expensive. Whoever paid is the price was the consumer, as always.

In addition, one of the most important sectors of the Brazilian economy, agribusiness suffered greatly from the measure. In a country that has been chosen by the state almost 70 years ago to prioritize the automobile industry, tire transportation and national integration through highways, the agrarian producer has to be given a unique way of disposing of production - transport road, the latter of which is chartered. Given the nature of agricultural production the prices of the products produced by it are formed in competitive markets of competitive character. It is only worth producing if rural producers are cost effective. Inside the gates, there is no doubt that Brazilian agribusiness is one of the most efficient in the world. However, if production is to flow, a lot of cost is added up and, after all, the return and reinvestment capacity of the agricultural producer has been affected.

Paulo, who led the protest had a fair cause and much of his anguish was due to the way the state interfered in the economy. One agricultural producer had another fair demand which is to produce and sell food in the most competitive way possible. Consumers, more than all, also had a just cause: they need to feed themselves, get dressed and consume goods at the lowest possible price.

After all who won it all? It was not Paul, he was not the agricultural producer, it was not the consumer, but Peter, who managed to increase his profit margin.

In economics the reported case is described by "The Theory of Baptists and Smugglers". A seemingly just cause confronted by well-intentioned people, namely the "Baptists", will ultimately benefit only the organized interest groups that can influence public policy, the "Smugglers." If this theory were not elaborated in the United States we would say that a Brazilian observing everything that happens around him was the author of it. It is a pity to see such a rich country, with the agribusiness sector so productive and with a population still with a middle income - which it needs to consume - to pay the costs of the inefficiencies generated by the state intervention and to be hostage of well organized groups of interest.