Why is BRAZIL so EXPENSIVE? – VisualPolitik EN

Brazil is the country of the future… and
it seems to keep being so forever. Lately we’ve heard a lot about the country’s
corruption scandals, the economic crisis it is going through or the street violence in
cities like Rio de Janeiro. But there is something even more important
about this country! Something that doesn’t appear very much in the media. Brazil is the MOST expensive country in all
of South America. Yep. You heard that right. If you go Shopping in a city like Sao Paolo
or Rio de Janeiro, you’d better be ready to clean your wallet because it will be as
expensive as New York or London. The Brazilians even have a name for this.
They call it ‘CUSTO BRAZIL’. This is the especial overcost you have to pay for living
in the country of samba and carnaval. Here is an example. The Big Mac Burger you
get from McDonalds. If you’ve been subscribed to VisualPolitik for a long time, you already
know that the economists use the so called BIG MAC INDEX to measure the cost of living
in a country. For example, in SWITZERLAND, one of the wealthiest
countries in the World, a Big Mac costs the equivalent of 6.75 bucks. Nonetheless, in PERU, a poorer country, the
burger costs only 3.23 dollars. Fair enough, right? Well, in Brazil, the Big Mac costs
5.10 USD. It’s more expensive than in Denmark, UK or Canada. According to EXPATISTAN.COM, a website, Sao
Paolo is the most expensive city in South America, with prices as high as those of Houston,
Texas, or Berlin, Germany. And now you might wonder… Given the high
cost of living, how high are Brazilian salaries? Are they wealthier than, say, Colombians or
Chileans? Absolutely not. The average wage in Brazil is less than 600
USD a month. Argentinians and Chileans are better off in this regard. So the real question here is Why is Brazil
so expensive? What are the reasons why a middle income country has the prices of a wealthy
one? Today we are going to answer this question.
And believe me, this explains, partly, the Brazilean crisis too. Let’s take a look
at this. AN ISOLATED ECONOMY Many of you might think Brazil is a country
open to foreign trade, right? At the end of the day, many foreign companies like MasterCard
or Barclays have a strong presence on this country. Nonetheless, Brazil has the highest tariffs
in South America. And what does this mean? Well… imagine we have a cell phone manufacturer
in America and we want to sell in the Brazilian market. Since our product is made abroad,
we must sell it with a special tax that can reach up to 35% of its market price. As you can imagine, this kind of policy has
a big impact on everyday life… Nintendo exits Brazilian market due to high tariffs Yep. You heard that right. During those years,
Brazilians who wanted to buy a WII or a Nintendo DS had to travel to Uruguay in order to find
one. Interestingly, this was a great advantage
for Nintendo’s biggest rivals, especially Microsoft and the XBOX. Do you know why? Microsoft
has a factory in Brazil where the XBOX ONE is made. This means, they don’t have to
import it and, therefore, it don’t have those high tariffs. And yes, I know what you are thinking! High
tariffs are cool because they force companies to build factories in your country and employ
your citizens, right? Well… think twice! When Microsoft opens
that Brazilian factory, they still need to import all the machines and materials needed
to manufacture that XBOX ONE. Plastics, semiconductors, robots… many of
which are made somewhere else. And, if they are made somewhere else, they
have those special tariffs. And guess who pays for this overcost? The
final consumer! This explains why so many products manufactured
In Brazil are so expensive. Want an example? Take the VOLKSWAGEN GOL. In Mexico City, this car costs around 15,000
USD. In Sao Paolo, it costs 25,000 USD. All of this, despite the fact that this specific
model of automobile is manufactured in Sao Paulo. But wait a minute because this is not the
only reason to explain this CUSTO BRAZIL! LOGYSTIC “CUSTO” Imagine a SOY agriculture in the state of
PARA, in the North of the country. If he wants to send his SOY to Sao Paolo, he must carry
it on trucks through the highway BR-163. This highway has over 1000 kilometers… and 100
are not even paved. A simple rainy day is enough to keep those trucks stuck in the mud. And this is just one example! In fact, Brazil
has some of the worst infrastructure on the planet. Even INDIA has better roads. So, to make a
comparison, anytime an American farmer sells 100 USD in Soy, he has to spend 9 USD in transport. The same farmer in Brazil would have to spend
25 USD. Since they have no good roads, Brazilians
have to invest in expensive trucks that break down quickly and make the cost even more expensive. And, of course, all of this means higher and
higher prices for their Brazilian customers… But now you might wonder… Why is the Brazilian
government so reluctant to pay for infrastructure? At the end of the day, Brazil has state of
the art engineering companies. Companies like… ODEBRECHT group. If you see this video from a South American
country, I’m sure this name will ring a bell. Odebrecht was the biggest engineering and
construction company in the region. And I say ‘WAS’ because they had the biggest
corruption scandal in the history of the continent. So now the future of this firm is pretty dim. But this story explains pretty well why Brazil
has such poor infrastructure. At the end of the day, part of this money
goes toward bribes and corruption. But not only that! When the Brazilian government
wanted to modernize their country… what did they do? Exactly! The Olympic games and
FIFA world cup! So… today, Brazilian cities can congratulate
themselves for having the most beautiful sport arenas, with high end technology and luxurious
decoration. Taking a walk in the center of Sao Paolo feels
like being in a sci fy movie. But outside of this metropolis, the railroads
are abandoned, the highways are unpaved and several neighbourhoods don’t have a single
bus line that connects them with the city center. Brazil’s woeful infrastructure costs the
economy as much as 48  billion USD  per year Of course, this affects the prices for Brazilian
consumers but also for Worldwide consumers who want to buy Brazilian goods. But we will talk about this in another video. Because now the question is… How can someone
who makes 600 bucks a month spend 25 bucks on a pizza at an average restaurant in Sao
Paulo? Well… I’ll tell you how… CREDIT-A-HOLICS For decades, Brazil had some of the highest
inflation in the World. During the 80s and the 90s, they had more
than a  6000% inflation rate. This means if you had a beer at a Rio de Janeiro bar,
in 1980, you would pay 100 CRUCEROS. The CRUCERO was the Brazilian currency back then. One
year later, that same beer would cost 600,000 CRUCEROS. As you can imagine, that hyperinflation
created unique consumer behavior. Something different from the rest of the world. In order to survive, Brazilian shops got used
to selling with installments. And this is still a thing today. If you go to any Brazilian shop, you can see
that, next to the price, it says something like 10x, 12x or 20x. This number and this
x means you can pay that product on 10, 12 or 20 installments. In other words… the question many Brazilians
ask themselves is not whether this TV or this suit is more or less expensive, but if they
can pay for it during the next 2 years. And, as you can imagine, when you buy something
in instalments, it is more expensive. For example, on the screen we are showing you
a smartphone on a Brazilian ecommerce website. If you buy it at once, it costs 632 RAIS,
which equals to 202 USD at the moment we made this video. Nonetheless, if you buy it with instalments,
it costs 217 USD. That’s 7% extra that we have to add to the rest of the costs we already
mentioned. So as you can imagine, your average Brazilian
is in debt all the time. And this has a consequence.  
Nearly 60% of Brazilians in Installment Debt But wait a minute because this is not the
worst of it! In the latest year, something has happened in Brazil that has turned CUSTO
BRAZIL into a real nightmare. CREDIT CARD HELL At the beginning of the 2000s, Brazil was
the perfect market for foreign banks. Big financial firms like SANTANDER or CREDIT SUISSE
started investing in the country. Don’t forget we are talking about a 200
million person country, that was on the rise, where prices were high and people were used
to paying for things on instalments. In other words, Brazil was a paradise for
selling credit cards. “Since 2005, the brazilian credit card market
has grown more than 20% year after year” By the year 2012, Brazilians had an average
of 2 credit cards per person. And oh boy! They knew how to use them! Brazil was the country with the most credit
payments all across South America. Nonetheless… the happiness didn’t last long.
  Brazilian consumer default on credit cards
has reached 27% in April 2012 In that very same year, 2012, the alarms started
to sound in all those Brazilian banks. The country was in the middle of a crisis,
with rising unemployment and declining salaries. And that made it hard for Brazilians to pay
back their debts. So… what happens when a bank is afraid of
getting defaulters? Exactly! They raise the interest rates. This is why, since september 2014, the interest
of those credit cards has reached figures around 400%. So imagine you use your credit card to buy
a TV screen that costs 1000 USD. You pay it in 12 instalments. Well, at the end of the day, counting the
interest rate of the credit card, the TV costs around 5000 USD. Impressive, isn’t it? And, don’t forget that the average wage
in Brazil is less than 600 USD a month. In other words… despite those anti poverty
measures made by the government… most of Brazilians are struggling to survive. And
worst of all, since they can’t save money, losing a job can be a real tragedy for many. Homeless population in Rio de Janeiro increases
150% in three years. So here is the question now… Can Brazil
get over this situation? Who could possibly reform this country? Please, leave your answer
on the comment section below. Also, don’t forget to visit RECONSIDER MEDIA.COM,
the podcast that provided the voices on this video that are not mine. And also don’t forget that we publish brand
new videos every week so, please, subscribe to VisualPolitik so you don’t miss a post.
If you liked this video, give us a thumbs up and, as always… I’ll see you next time.

  1. Man, I`m Brazilian and you sad true. Most Brazilians are accustomed to welfare. They do not understand that this can be expensive for the Brazilians, another factor and that socialism (leftist party) dominated all the media and cultural media. Today people are slowly becoming interested in politics. Now that conservative people have emerged and our future president Jair Bolsonaro, he is like Donald Trump in Brazil. Brazil is selling its reserves like NIOBIUM, PETROL, GRAPHENE, at low cost to China, because politicians believe in chinese (comunist) ideology … Brazil was the fastest growing country in the world in the military regime and in the imperial time. But Brazil suffered a heavy blow, driving the royal family out of Brazil.

    Thank you so much for this video.

  2. The role of the media in Brazil is to put fear in the people, with violent news, and fill with fantasy, with novels, with the purpose of deflecting the focus of what really causes disgrace in this country, the highest interest in the world, paid to the bankers . The Brazilian people are already a slave and do not know! Public debt of 3.5 trillion and annual interest of 400 billion into the pocket of the true financial elite! And they want to blame the retirees !!! Lack of health, education, structure, security, are consequences !!!

  3. Well, as a brazilian, I must say: it isn't like you north americans guys have an actual understanding of what it is to live in Brazil. It is a great video, of course, and the topics are very accurate, but they have different reasons than it seems. A Nintendo isn't really necessary. We need jobs. That's why we have high tariffs, so the companies have to invest in opening local factories. The Xbox is made at the country's north, an extremely poor region. This factorial area is important to maintain jobs so the people can survive. Our poor infrastructure was stimulated by american and european carmakers, which started investing a lot in the country during the 50's. That's why we stopped investing in railways. Also, investing in that kind of stuff demands money, what isn't really avaible for our government. That's caused by the regressive status of the taxes: the richest don't pay taxes on it's profits, while we spend a lot with our judiciary, for example, whose's salaries may get to 25,000 dollars a month. When it comes to the interest rates, all I can tell is that we have world's second bigger difference between the basic interest rate and the one that is actually charged by the banks.

  4. Because really nobody wants to go there! It has nothing to offer me! Berlin or Germany?? Ummm isn't Berlin te Capital of Germany? A big Mac here in Aus cost $5.25 aud.

  5. Brasil isn't for begginers guys. Our lowhouse president have used eletronic 'foot chain', and is going to be reelected. Google it, his name is Jelson Renier

  6. Guys, your channel is awesome. Thank you for doing this unique videos. My only complaint would be the limited bibliography and sources provided in the description. Since you do use them during the planning of the video, could you please add it?. Thank you very much

  7. I must agree. Incredible speech, great point. Unfortunally on Brazil the "ist" politics are taking us to the mass economic destruction and moral inversion of values. Sorry about my terrible enlgish 🙂 . So, the point is: here, the people, needs to pass on a exam called "concurso público" to work, it's like a "brazillian dream" comparing with "american dream" expression. This exam, after ingress, gives to you unprecedent powers, like emplyment stability(you will almost never be worred about be fired on governement jobs, working too much or or doing nothing). We're stressed about this. The governemtent, take us to 2 ways…1 try to open a business(you will crash), 2 pass on exam(concurso público) and marry, have a ton of sons and live calm bcause your job is safe and you will not be fired working too much or doing nothing…God, terrible idea. The LULA(left governement) inserted this on the brazillian heads not like a idea, but like a brain implant. Please, Americans, don´t make the same mistake. Brazil is finished if the left party win the elections.

  8. Why didn't you address the whole nanny State backed up by liberty crushing taxes? You know the government here love people that don't work and have babies years in a row, not to mention the Brazilian Dream! Which is making money in the government tities.

  9. You have a bitchy undertone and your sideways mouth thing kind of pisses me off. No i will not subscribe, but I will watch your vids

  10. One of the biggest problems of brazil is our enormous state that control our economy, and we also have a lot of state companies that have de monopoly of the market, because of that we don’t have free market and it doesn’t help the companies to start a business in Brazil.
    We have the most stable financial system in the world, and the most rentable financial system in the world, but our taxes doesn’t help the banks too.
    And because of that we cannot support a big infrastructure project, that could help Brazil to grow

  11. The worker party(Pt) is responsible for Brazil to be so expensive. Very bad government. But we hope in 2019 with the new president Bolsonaro Brazil get better. He want open the market, low tariffs, reduce the size of the government.

  12. About the use of credit cards and the amount of interest in Brazil, I can say this: 1) interest rates are very high indeed. If you don't pay your credit card bill at all, then it will go up to 414% per year. That is, 12 months without paying your CC bill, I mean. 2) Usually, the price you see on the price tag is the same you would pay in 1 payment (total) or on 4 or 5 instalments. Mathematically speaking there is no interest, because the totals are the same. That doesn't mean the price is right, though. Brazilians are forced into a situation where the real price is distorted, extra is added to the price and that becomes the price on the price tag. Why would you ask for a discount if you will pay the entire sum in one down payment? That is because we are engulfed in an "instalment" culture, where companies want to make more money by "selling" credit than selling goods. Many times, car salesmen will try to force you to buy a car in instalments because they get many benefits from credit companies. So… Other than that the video is precise about Brazilians being more interested in buying (affording) something, no matter the real cost at the end.

  13. This proves that it s an advantage to have a smaller country to build a better infrastructure: it s obviously less expensive.

  14. wow …..wow …….speechless……..seriously …….those living there like debtor ……..seriously OMG……….now i know why Ronaldinho luv stay Europe or CHina or others place just for the sake don't wish his hard earn money all suck by the Brazil Gov.

  15. I don't understand why americans keep saying Brazil is the country of the future. No Brazilians say that and it s annoying. Brazil doesnt need to be a superpower, only a developed country.

  16. I am Brazilian living in Canada for 2 years. And Canada is way more expensive to live than Brazil lol

  17. You're saying cruzeiro wrong simon. Portuguese doesn't have that Spanish sound you did with the z. Just say it like it was English and you would be closer.

  18. For Brazil to change and qctually become the country of the future it would have to stop being Brazil. The corruption would have to end, the sky high crime would to end, and the general over regulation of everything would have to end. It would also help if their piss poor education system was completely replaced. In short, it would have to fundamentally change its entire cultyre and economy and I doubt they can do it.

  19. What's up with this guy constantly bringing up India in this video? Does he have some sort of beef against India?

  20. Amei visualizar um ponto de vista estrangeiro da então situação do meu país. Um verdadeiro caos que até o momento não tem data precisa de quando será resolvido, espero que nos próximos anos esse cenário seja solucionado, com as reformas que devem ser feitas, principalmente a tributária, e com os investimentos necessários, na infraestrutura e em tecnologia… Tenho fé no atual governo e espero que seja um governo de mudanças.

  21. Even India have better roads

  22. I'm Brazilian. 🇧🇷🇧🇷🇧🇷

    We don't suffer from it, we are one of the happiest countries in the world. We are "well".

    Sorry if something is wrong.

  23. What has a Big Mac got to do with intelligent living? How about the cost of vegetables, fruits, natural starches (corn, grain, beans, peas, lentils) and proteins (meats, dairy, fish, nuts, seeds)? Obviously local, cheap stuff, not silly imported stuff.

  24. How much more expensive are computers, tablets, phones? Basically stuff made in China. Can someone post here? This video just complains instead of looking at solutions.

  25. You are sarcastical at one point that "even India has better roads"you should visit and see the highways of India in fact India has so good highways that nowadays a lot of construction companies are building highways in countries like Iraq,Iran, Malaysia,Oman etc to name a few I think you are being stereotypical towards India

  26. Eu nunca ouvir falar q os brasileiors foram para Uruguai comprar nitendo kkkkk mais se ele diz kkkk 😂😂😂

  27. God forbid anyone buy a damn Pizza in Brazil.That shit costs more then an game,what the fuck?

  28. It needs Chinese ultra quickly development system if it is democratic or communist who cares as long as it works it is fine. Xi Jinping might help

  29. 10:19 this is totally false, who pays USD 5000 for a USD 1000 TV , this insterest rate is charged only in case of no or delayed payment. Terrible innacurate information!

  30. if brazilians stop voting on left and populist politicians this would be solved. but i dont think they are going to stop, so US please invade us and make this hellhole a colony

  31. Brasil's real problem is the huge amount of public employees, it makes everything expensive as it pushes the taxes in every product, every service or even in every company to hire an employee for itself. We pay taxes to pay salaries and retirement for people who only costs and barely does any good for the country. And by talking about retirement, the whole public retirement policies are born broken, as it was never meant to be sustainable, and we pay for long ago retired people, most of which never payed for it's own retirement.

  32. So Brazil has a bunch of problems, which could be solved easily, if they had a non corrupt moderate government for about ten years?

  33. Not only is Brazil poor, but people are stupid, there is no civilization in the country, everything is monotonous, monotonous and boring. There are no normal cafes, no beers, everyone on the street eats like animals and knows nothing, asking anything beyond the next corner is like seeing orogrammed robots, they only know what the orogrammer set them up on. international news, so they don't know much about the world (except Sao Paolo), but no big city like Lima or Buenos Aires or Bogota where there is a European civilized world with intelligent people! 😱

  34. This video is not that accurate. In the beginning you were generalizing the entire country using São Paulo which is the richest city in Latin America, and richest in Southern Hemisphere. It’s gdp per capita is significantly higher than that of the rest of Brazil so it’s only normal for it to be more expensive. The same applies for Rio de Janeiro. Nevertheless Brazil has a lot of problems regarding wealth inequality as for many of the reasons explained in this video which was pretty accurate. But note that the poor Brazilians aren’t going to go shopping where the wealthier Brazilians do.

  35. Today a lot has changed Brazil has. Almost all paved highways President Bolsonaro is increasingly investing in infrastructure and lowering taxes

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