Brazil's Central Bank Staff Goes On Strike

A blog about business and economics.
Aug. 8 2012 5:46 PM

Brazil's Central Bank Staff Goes On Strike

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Brazilian students members of the Students National Union (UNE in Portuguese) demonstrate in front of the Central Bank building in Brasilia, on August 31, 2011.

Photo by PEDRO LADEIRA/AFP/Getty Images

The workers at Brazil's central bank are on strike today, demanding a 23 percent pay increase to compensate for inflation that's occurred since June 2008.

Irony aside, the broader issue here is that on the one hand the Brazilian government is trying to reduce the amount of inflation in the economy while on the other hand Brazilian public employee unions writ large are trying to get higher wages in order to stay ahead of inflation. If they get their raises, it'll be that much harder to contain economy-wide inflation. But if inflation isn't controlled, it'll be that much harder to contain militant labor action.

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These are the kind of problems that the U.S. government ran into in the late 70s (the famous PATCO strike involved exactly this kind of demand for a huge nominal wage increase in the face of high inflation) and that many right-of-center commentators still seem obsessed with today. Pay attention to Brazil and you'll see that these aren't fake problems, they're just the problems of a very different country from the one we live in today. A country with a lot more underlying inflation and a lot more union militancy than the US in 2012.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.