The country that pays not to produce

Brazil does not have a capital scarcity problem. It has a destination problem: for every two reais put into building, one real remunerates those who do not produce.

Let me begin with the arithmetic almost nobody does out loud.

In 2025, Brazil as a whole — companies, families, and government combined — invested R$ 2.1 trillion in productive capacity. Factories, machines, construction, equipment, software, technology. Everything. It is what the IBGE calls gross fixed capital formation, and it corresponds to 16.8% of GDP.

In the same year, the public sector paid roughly R$ 1 trillion in interest on its own debt. It is the largest nominal figure ever recorded by the Central Bank, equivalent to 7.91% of GDP.

Read that again.

For every two reais this country put into building something, one real was transferred to remunerate those who already had money for doing nothing at all with it.

This is not an indignant newspaper-column metaphor. It is the arithmetic of the national accounts. It is published, audited, and available to anyone with patience and an internet connection.

Brazil does not have a problem of capital scarcity.

It has a problem of capital destination.

And before you hastily file me into some familiar political camp, let me take that possibility off the table: I will not ask for low interest rates by decree, I will not defend protectionism, I will not blame the financial market for existing, and I will not romanticize the Brazilian industrialist. I will do something more uncomfortable for every side.

I will look at the structure.

I. The diagnosis that is too easy

There is a ready-made, popular, and comforting explanation for Brazilian backwardness: the country became a service economy and therefore does not grow.

It is a bad explanation.

Rich countries are also service economies. Hospitals, engineering, logistics, software, research, insurance, consulting, education, design, maintenance. All of that is services. Many of these services raise industrial productivity, export knowledge, and sustain entire production chains. No mature economy escapes this destiny, and there is nothing degrading about it.

The Brazilian problem is of another nature, and it is harder to say.

We did not build a service economy.

We built, to a large extent, an economy of shelter.

We turned low-productivity services into the place where those expelled from production end up, and we turned the financial market into the preferred destination of the capital that should be financing production. They are two distinct movements with a common origin, and you must see both at once to understand anything.

The app driver is not to blame for this. He is working, taking risk, maintaining a car, paying for fuel, and supporting a family. He is, in almost every sense that matters, more of an entrepreneur than a good share of the people who call themselves entrepreneurs on event panels.

The problem begins when a country starts treating as modernization what is, very often, merely the last alternative available to a productive person.

Uber is not the cause.

It is the symptom.

And the symptom has a size. According to the PNAD Contínua survey, Brazil had about 1.7 million people working through digital platforms in the third quarter of 2024 — drivers, couriers, general service providers, and professionals. More than half were passenger transport drivers. But the absolute number matters less than the speed: in a study by the Central Bank itself, between 2015 and mid-2025 the country's employed population grew around 10%, while the contingent of app workers grew about 170%.

Keep those scissors in mind. They explain almost everything.

Because, at the same time, Brazil produced the best unemployment number of its recent history. Unemployment closed 2025 at 5.1%, the lowest in the IBGE series.

And productivity did not follow.

Surveys by FGV IBRE show that, in September 2025, the Brazilian worker produced only about 8% more than in 2012. Thirteen years. Eight percent. In the first quarter of 2026, productivity per hour worked fell again.

In other words: the country put more people to work without putting more capital behind each worker.

That has an ugly technical name and a simple consequence.

Employment rises. Income does not.

Unemployment can fall while the future disappears.

II. Size is not the problem. Composition is.

Let us go to the numbers, because numbers discipline the conversation.

In 2025, Brazilian GDP reached R$ 12.7 trillion, of which R$ 11.0 trillion correspond to value added at basic prices. Within that value added, services accounted for R$ 7.6 trillion, industry for R$ 2.6 trillion, and agriculture for R$ 775.3 billion. In proportion: roughly 69% services, 24% industry, 7% agriculture.

On manufacturing specifically, I need to issue a warning almost nobody issues — and which, to me, matters more than the number itself.

You will find it said that Brazilian manufacturing fell from 36% of GDP in 1985 to just over 10% today. That figure circulates in industry-association presentations, academic articles, and campaign speeches. It is, at best, exaggerated. The 1985 peak was calculated in the middle of hyperinflation, with the so-called financial dummy distorting the base of comparison; researchers at the very institutions that publish the figure have documented the overestimation. Other series, with different methodologies, put the peak somewhere between 21% and 27%.

And the current share varies between something close to 11% and something close to 14%, depending on whether you use current prices, constant prices, GDP, or value added.

I could have chosen the most dramatic number. It would have been more rhetorically efficient.

But whoever builds an argument on the most convenient statistic is building on sand, and sooner or later someone competent tears the whole thing down — including the true part.

And the true part survives any methodology: the productive base that should sustain this entire structure has become narrow, and keeps narrowing. In 2025, manufacturing value added shrank 0.2%. In the fourth quarter, the drop was 2.0% — the third consecutive negative result in that comparison.

The point, therefore, is not the size of services. It is their nature.

There is a categorical difference between a service that increases productivity and a service that merely disputes a slice of income that already exists.

An industrial software company can make a thousand factories more efficient. A trucking company can lower the cost of thousands of producers. A laboratory can create a molecule that did not exist. An insurer can allow a risky project to be executed — because insurance is not a cost; it is the technology that makes risk carryable.

These services do not compete with production.

They multiply production.

But an economy formed mainly of intermediation, consumption, informality, and low-productivity personal services depends on income that must have been created somewhere by someone.

Someone has to plant.

Someone has to build.

Someone has to manufacture.

Someone has to develop machines, molecules, materials, systems, and processes.

You cannot intermediate forever what has ceased to be produced.

III. The competitor nobody faces

Now we reach the point where I will lose some readers.

The Brazilian industrialist believes he competes against the competitor up the street, against the Chinese import, and against the tax burden.

He competes, above all, against the National Treasury.

Not as a declared enemy. As a rival buyer of the same money.

In July 2026, the Selic rate stands at 14.25% per year. Federal public debt reached R$ 9 trillion in May. Practically half of that stock is indexed to the Selic itself. And the holders are exactly who you imagine: financial institutions with about 31%, pension funds with about 23%, investment funds with about 21%.

Translating into a businessman's language: there exists in Brazil an asset with a sovereign guarantee, daily liquidity, known tax treatment, zero need for management, zero execution risk, zero labor litigation, zero inspections, zero delinquent clients — paying high double digits.

That asset is the floor of every allocation decision in this country.

It is what the textbooks call the risk-free rate.

Let me be blunt: there is no such thing as a risk-free rate at 14.25%. A rate of that magnitude is not the absence of risk. It is the presence of risk somewhere else — in the fiscal accounts, in the courts, in the currency, in the credibility of money, in the expectation of what comes next. The name "risk-free" is one of the most successful fictions in the financial vocabulary. It does not eliminate risk. It hides it and socializes it.

What it does, with brutal efficiency, is set the entry price of any productive project.

A factory does not merely need to be profitable. It needs to be profitable above a government bond that demands nothing from anyone. It must beat the financial cost, taxation, machine depreciation, regulatory insecurity, currency volatility, international competition — and still deliver a sufficient premium over an alternative that sleeps soundly.

In April 2026, the average rate on free-market credit to companies stood at 25.3% per year. The Cost of Credit Indicator, which measures the average cost of the entire national financial system's loan book, stood at 24.3%.

It is not enough to produce well.

One must produce miracles.

And here is the asymmetry that bothers me more than any other, because it is moral before it is economic:

The one who takes the risk is the businessman. The one who puts the family's assets into the operation is the businessman. The one who answers in court is the businessman. The one who loses sleep when the client pays late is the businessman.

And the one who is best remunerated, with the most predictability and the least exposure, is the one who took no risk at all.

A society can live with this inversion for a while. No society prospers with it permanently. When return systematically decouples from whoever carries the exposure, the system is not merely miscalibrated. It is training people to leave the game.

And they leave.

Not with a manifesto. With a spreadsheet.

IV. The industrial policy nobody called industrial policy

There is a sentence the Brazilian industrialist has repeated for thirty years, and it is wrong.

"Brazil has no industrial policy."

It does.

It is in the tax code, not in the inaugural speech. It was never voted under that name, never had a ministry, never appeared in a multi-year plan. And yet it directs more capital than any official development program this country has ever created.

It is called exemption.

Look at the list of instruments a Brazilian can buy today without paying income tax on the yield:

LCI. The Real Estate Credit Letter.

LCA. The Agribusiness Credit Letter.

CRI. The Real Estate Receivables Certificate.

CRA. The Agribusiness Receivables Certificate.

Incentivized debentures, under Law 12,431: infrastructure.

Real estate funds. Fiagro.

Now tell me where manufacturing is on that list.

It is not.

There is no industrial credit letter. There is no exemption for factory working capital. There is no tax-exempt paper for buying a machine tool, for an export line, for modernizing a plant, for applied research, for fine chemicals, for capital goods.

A Brazilian with R$ 500,000 can finance, without paying a cent of tax, a logistics warehouse, a soybean harvest, a shopping mall, a transmission line, and a residential development.

If he wants to finance a components factory, he pays tax.

And the size of this is not symbolic. At the end of 2025, according to B3, the stock of LCIs totaled R$ 508.8 billion, growing 29% in the year. LCAs totaled R$ 599.9 billion, up 16%. Those two instruments alone exceed R$ 1.1 trillion. Incentivized debentures issued in 2025 set a record: R$ 178 billion, an advance of more than 31% over the previous year.

Add it up. Compare it with the R$ 2.1 trillion the whole country invested in productive capacity that same year.

We are talking about more than half of the nation's annual investment parked — legally, rationally, with explicit state incentive — in instruments whose tax privilege points at three sectors.

And none of them is manufacturing.

I want to be fair here, because the lazy critique of this arrangement is as bad as its blind defense.

The exemption was not a conspiracy. It was a public policy decision with a defensible logic: real estate and agribusiness needed long-term funding, traditional bank credit did not deliver it, and the fiscal instrument created a market that today is deep, liquid, and reasonably efficient. To a large extent, it worked. Brazilian agribusiness is, by a wide margin, the most competitive sector of our economy, and it did not get there by accident.

The problem is not that the incentive existed.

The problem is that nobody ever asked what happens to those left out.

Because a tax exemption is not merely a benefit to the favored sector. It is a price signal to the entire country. When the State says, for twenty years, that the yield on a real estate paper is worth more after tax than the yield on an industrial paper of identical risk, it is not merely helping real estate. It is informing capital, every single day, in which direction to walk.

Capital listened. Capital always listens. It is the only thing it does well.

And there is a second, more perverse effect, which only now has begun to be said out loud. Representatives of the National Treasury itself have started attributing to the exempt papers part of the pressure on NTN-B rates — the inflation-linked government bonds. The logic is direct: if one instrument pays tax-free, all the others must pay more to compete with it. The exemption of the few makes money more expensive for all.

Join the two ends and you have the complete situation of the Brazilian industrialist.

He is outside the incentive.

And he pays, in his own funding cost, part of the bill for everyone else's incentive.

Twice.

In 2025, the government tried to fix this in the most direct and most clumsy way possible: Provisional Measure 1,303, which instituted a 5% tax on new issues of these papers. The measure lapsed in October without being converted into law. It will return to the agenda — everyone in the market knows it — but probably not before the elections, because the size of the stock is exactly what gives the resistance its political strength.

And here is the point that separates this letter from a complaint.

I am not asking for the removal of the agribusiness and real estate exemptions. Taking privilege away from those who hold it, in Brazil, is an exercise that consumes an entire legislature and usually ends in nothing.

I am pointing at something simpler and more embarrassing: for two decades, Brazil designed a sophisticated fiscal architecture to steer private savings toward chosen sectors, proved that the tool works, and never once pointed it at industry.

It was not for lack of instrument.

It was for lack of decision.

And, frankly, also for lack of organization by those who should have demanded it. Agribusiness organized and got its credit letter. Real estate organized and got its own. Infrastructure organized and got Law 12,431. Manufacturing spent the same period asking for payroll tax relief, favorable exchange rates, and tariff protection — that is, asking for relief on cost, not access to capital.

It asked for the wrong thing.

Cost relief extends a company's life by a few quarters.

Access to capital of compatible tenor builds a company for decades.

That is the whole difference between a sector that survives and a sector that expands — and it explains much of why Brazilian agribusiness competes in the world while our manufacturing shrinks at home.

V. Competing against another State

It is common to summarize the Brazilian disadvantage by saying the Chinese borrows at 3% while the Brazilian pays 20%.

The sentence works as provocation and fails as analysis.

Not every Chinese company gets cheap credit. Not every Brazilian industry pays the same rate. The real asymmetry is deeper and more interesting.

In June 2026, the OECD made public the MAGIC database, which tracks industrial subsidies received by 525 of the world's largest manufacturing groups, across 15 structural sectors, between 2005 and 2024. The numbers are consistent and unpleasant for those who like simplifications: Chinese companies received, on average, three to eight times more government support than those from OECD countries — in direct grants, tax breaks, and below-market loans. About 60% of Chinese companies' global market share gains in the period can be attributed to these subsidies, against a global average of 22%.

The Brazilian businessman believes he is competing against another company.

Frequently he is competing against another State.

Administrative efficiency does not solve a disadvantage of that magnitude. You can be twice as good as your competitor and still go broke before he does.

But — and this "but" is the reason I am writing this section instead of simply complaining about China — the same report carries a finding almost nobody cites, because it spoils the narrative on both sides.

The subsidies did not produce significant gains in productivity or profitability.

The OECD secretary-general used an image I wish I had used first: industrial subsidy works like doping in sport. It makes the less prepared athlete win the race. It does not make him a better athlete.

That completely changes the practical conclusion.

If subsidy created competence, the recipe would be obvious: subsidize more. Since subsidy buys market share without creating productivity, copying the Chinese model would give us exactly what it gives — large, dependent, mediocre companies, sustained by transfers that the Brazilian State, let it be said, cannot afford.

And there is an additional detail in the same report: the subsidies received by companies from economies like Brazil, India, and Indonesia are comparable, in relative terms, to those received by American companies.

We are not losing because we subsidize too little.

We are losing because we price our own capital as if the country were about to end.

That is a different disease, and the remedy is different.

VI. The venture capital mistake

Some conclude from all this that the solution would be to bring venture capital to industry.

In some cases, yes.

In most, no — and insisting on it has cost serious people a great deal of money and many years.

Venture capital is an instrument designed for a specific format of risk: fast-growth companies, high uncertainty, declining marginal cost, potentially extraordinary margins, and the possibility of multiplying capital in a few years. The model works because the portfolio accepts that most assets die, as long as one of them pays for all.

A food company neither dies nor multiplies by a hundred. A components factory neither dies nor multiplies by a hundred. A metalworks, a construction company, an equipment maker — none of them fits that distribution.

They have no tail. They have a cycle.

These companies do not need venture capital.

They need adequate capital.

They need long-term credit, intelligent receivables prepayment, machine financing with well-structured collateral, project finance, private credit funds, hybrid equity instruments, patient family capital, and structures compatible with the real economic cycle of each business.

A factory cannot be financed like an app.

A company that takes eight years to build productive capacity cannot depend on capital that demands an exit in four.

This sounds obvious written down. It is not what happens in practice, because in Brazil the instrument is rarely chosen by the nature of the asset. It is chosen by whatever happened to be on the table that month.

The Brazilian problem, therefore, is not just scarcity of money.

It is scarcity of architecture.

There is money looking for yield.

There are businessmen looking for capital.

There are machines that could be bought, companies that could grow, contracts that could be executed, technologies that could be developed.

And still the meeting between these parties does not happen.

The money prefers the collateral to the project.

It prefers the building to the entrepreneur.

It prefers the past recorded on the balance sheet to the future that still needs to be built.

That preference is rational for each institution in isolation. No credit officer is fired for declining a good deal; many are fired for approving a bad one. The asymmetry of incentives inside the institution reproduces the asymmetry of incentives outside it.

Rational at retail. Destructive at wholesale.

VII. The market that trades twice what it finances

Let me show this with the piece of data that, in my opinion, is the most revealing of all — and that went practically uncommented when it came out.

In 2025, the Brazilian capital market set a historic record: R$ 838.8 billion in offerings. Debentures alone totaled R$ 492.8 billion, the largest volume ever recorded. Commercial notes, receivables funds, securitization — everything grew. It was, by any conventional metric, an excellent year.

In the same year, the traded volume of debentures in the secondary market reached R$ 947.4 billion.

Almost double the primary.

In other words: the Brazilian market traded twice as much paper as it issued.

This is not a scandal. Liquidity is a virtue, and a deep secondary market is a condition for the primary to work. Whoever buys an eight-year paper needs to know he can sell it in three. I am not pointing at a crime.

I am pointing at a symptom, and it becomes sharper when you open up the destination of the money.

Of the funds raised via debentures in 2025, the largest slice went to infrastructure, and the second largest — 26.2% — went to debt repayment. In the first five months of 2026, the pattern repeats: infrastructure first, followed by ordinary management and debt repayment.

And the sectors? Electric power with R$ 119.8 billion, transport and logistics with R$ 88.3 billion, financial with R$ 79.5 billion, sanitation with R$ 44.5 billion.

Look closely at that list.

They are, almost all, sectors of regulated cash flow, long contracts, predictable revenue, and heavy fixed assets. They are exactly the assets a risk-averse market can price without needing to understand business.

What barely appears on that list is the mid-sized productive company — no concession, no rating, no thirty-year contract with a regulatory agency — which constitutes the backbone of any serious industrial economy.

Schumpeter wrote that the banker is the ephor of the capitalist economy: the magistrate who authorizes the entrepreneur to command resources that are not yet his, in the name of production that does not yet exist. It is the most creative function in the system. It is also the hardest, because it demands judgment about the future instead of accounting about the past.

A mature market is not the one that trades a lot.

It is the one that finances what does not yet exist.

VIII. A trade born beside the producer, not above him

It is worth remembering where all this comes from, because the etymology is more honest than most reports.

The word bank comes from the piece of furniture. From the wooden bench the Italian money-changer set up in the square, beside the merchant, the porter, the weaver, and the wool buyer. When the money-changer failed to honor his commitments, they broke his bench in front of everyone. Hence banca rotta. Bankruptcy.

Notice the moral architecture of that scene: the banker stood in the square. At the same ground level where the business happened. Exposed to the same crowd. Subject to the same shame.

The Medici did not grow rich managing abstractions. They grew rich building a network of branches in Florence, Rome, Venice, Bruges, and London to finance exactly what they knew how to evaluate: the wool and textile trade, with people they knew, along routes they understood. Their capital traveled glued to the merchandise. When it drifted from the merchandise and got too close to the papacy and the princes — that is, when it traded productive risk for sovereign risk — the Medici bank began to die.

The Fuggers, in Augsburg, financed silver and copper mines in Tyrol. They did not buy mining securities. They bought stakes in physical production, with technicians, engineers, extraction contracts, and operational knowledge. They too ruined themselves the day most of the balance sheet became credit to the Spanish Crown, which defaulted with the regularity of a clock.

The goldsmiths of London, in the seventeenth century, kept other people's gold and discovered they could lend part of it. There was born, in practice and not in theory, the mechanism that financed the Industrial Revolution: turning idle savings into productive capacity.

Walter Bagehot, editor of the Economist, described in the nineteenth century what made London different from every other financial center in the world. It was not the size of English savings. It was the speed with which those savings found the enterprise that needed them. The ordinary Englishman, without fortune and without name, could raise capital for an industrial idea that the French aristocrat, far richer, never could. That was the advantage. Not the stock. The routing.

None of this is nostalgia. It is a structural observation that crosses five centuries and admits no relevant exception:

The financial system produced wealth whenever it stood close to those who produce, and produced mere transfer whenever it drifted away.

And there is an even more uncomfortable pattern inside that pattern. In Florence, in Augsburg, in Amsterdam, in London — everywhere — the moment private capital migrates massively from financing production to financing the sovereign is the moment that financial center begins to lose importance in the world. Not because the sovereign does not pay. Frequently he pays very well. That is precisely the problem.

When the State becomes the financial system's best client, the financial system no longer needs to understand companies.

And when it no longer needs to understand companies, it unlearns.

That unlearning is slow, silent, and nearly irreversible, because knowledge about productive sectors is not in any manual. It is in people. In analysts who spent twenty years looking at metallurgy. In directors who have seen three full cycles of a sector. In relationships built on factory visits, not quarterly video calls.

When that generation retires without training a successor, the country loses something money cannot buy back.

It loses the capacity to judge.

IX. The financial market forgot its function

I need to be precise here, because this is the section where the careless will think I am preaching against banks, and the hasty will think I am defending banks.

I am doing neither.

The financial market was not created to enrich operators. That is a possible consequence of its activity, not its economic purpose.

Its function — the only one that justifies the legal, regulatory, and institutional privileges it receives everywhere in the world — is to collect society's dispersed savings, evaluate risks, and direct capital to projects capable of producing future wealth.

The bank should connect those who accumulated capital to those who know how to use it productively.

The investor should be paid for taking risk.

The analyst should separate good projects from expensive delusions.

Credit should anticipate a future production that cannot yet be financed with present cash.

When this mechanism works, the financial market is one of civilization's greatest inventions — comparable, in my reading, to bookkeeping and the enforceable contract, and probably more important than most technologies that win prizes.

When it stops working, it becomes a tollbooth.

The spread is not morally condemnable. Neither is bank profit. An institution that takes risk, maintains liquidity, fights fraud, meets regulation, provisions losses, and manages capital must be remunerated. Whoever thinks otherwise has never managed a loan book with double-digit delinquency.

The problem begins when the system becomes structurally better at extracting rent from the existing economy than at financing the economy that does not yet exist.

It is possible to make a great deal of money managing decadence.

For a while.

One can finance household consumption, roll over public debt, charge fees, structure collateral, trade assets, prepay receivables, and collect management fees on idle wealth. Fernand Braudel observed, studying four centuries of European capitalism, that the migration of capital from commerce and production into pure finance usually marks the autumn of a cycle, not its maturity. Genoa did it. Amsterdam did it. London did it. In every case, the financial years were the most profitable ones and the last ones.

Without growth in income, productivity, and production, the financial system's own base begins to rot.

Without healthy companies, there is no healthy corporate credit.

Without good wages, there is no sustainable mortgage lending.

Without production, there is no insurance, foreign exchange, investment, capital markets, or wealth management that stays prosperous for long.

The financial market does not live above the real economy.

It lives on top of it.

X. A country where few show up

Through July 9, 2026, the Federal Revenue Service had received 46.19 million individual income tax returns. Brazil's estimated population is approximately 213 million people.

That is, roughly, one return for every five Brazilians.

This figure is usually used the wrong way, and I will not use it that way.

It does not mean that only one in five people pays tax in Brazil. Brazilians of every income bracket pay taxes on consumption, energy, fuel, services, and goods — and, as a share of income, the poorest pay more. There are also dependents, children, retirees, and people legally exempt from filing. Whoever uses this number to say that "few sustain many" is doing demagoguery with statistics.

But the number reveals something else, harder to hide and harder to fix: the base of Brazilians with formal income and assets sufficient to appear fully in the State's records remains narrow.

There is an entire country that works, consumes, and pays taxes, and accumulates almost nothing.

People who cross life without building assets, without access to productive credit, without the capacity to invest in companies, and without any share in the capital of the country where they were born.

Add that to the rest of the picture and the portrait is complete.

Brazil invests 16.8% of GDP. China and India invest above 30%. Chile, Peru, and Mexico run between 20% and 24%. In 2020, about 87% of the world's countries had an investment rate higher than Brazil's.

In research and development, Brazil spends around 0.5% of GDP, against a global average of roughly 2.2%.

In 1980, the country accounted for about 2.8% of world GDP. Today it accounts for something close to 2.1%.

None of these numbers is a scandal in isolation. Together, they are a diagnosis.

A society like this does not indefinitely sustain a sophisticated financial market.

It can sustain an expensive credit system.

It can sustain an enormous public debt market.

It can sustain a few very well-decorated islands of prosperity.

But it does not sustain a prosperous civilization.

XI. The false solutions

Since this letter has already irritated reasonably everyone, let me use the momentum to close the easy exits.

It is not closing the border. Protectionism without a deadline, without targets, and without accountability merely converts private inefficiency into public cost — and transfers the bill to the consumer, who is always the poorest link in the chain. Temporary protection with verifiable counterparts is industrial policy. Permanent protection without counterparts is corporate retirement paid for by the people.

It is not handing subsidized credit to the government's friends. Cheap capital without criteria creates dependent businessmen, artificial projects, and socialized losses. We have done this. It is documented. It cost dearly and left no industry behind.

It is not lowering interest rates by decree. The cost of money reflects inflation, fiscal risk, legal insecurity, delinquency, banking competition, collateral quality, and trust in institutions. Pretending these causes do not exist does not eliminate the price — it merely transfers the problem to the currency, where it reappears larger and crueler, charged to those who cannot protect themselves.

And it will not be a new generation of apps that replaces the lost industrial depth. Software is fundamental infrastructure of the modern economy and I have no smokestack nostalgia. But even the digital economy depends on energy, data centers, cables, equipment, construction, mining, semiconductors, and logistics.

The cloud also rests on concrete.

The challenge is not choosing between industry and technology, between services and production, between market and State.

It is making each institution return to its function.

The State must offer stability, infrastructure, legal certainty, and horizontal policies capable of lowering the cost of producing — and must stop being the most attractive buyer of its own country's money.

The businessman must take risk, innovate, build teams, and construct efficient organizations — and stop asking for protection as if it were a vested right.

The financial market must find, evaluate, and finance the businessmen capable of turning capital into productive capacity — and stop confusing wealth management with capital allocation.

Each one must occupy its own place.

XII. The rebuilding begins with capital

Brazil does not suffer from a lack of courageous entrepreneurs.

There may be too much courage.

There are men and women mortgaging homes, maxing out personal credit lines, prepaying contracts, and risking the family's assets to keep companies alive in an environment that systematically punishes whoever invests long. Much of that courage is admirable. Part of it is not courage — it is lack of alternative disguised as strategy, and the market has the obligation to tell one from the other.

What is missing is not audacity. It is a structure capable of recognizing courage, separating competence from imprudence, and delivering the correct financial instrument to each company.

Not every businessman should receive money.

Not every factory deserves to survive.

Not every national idea is strategic.

Financing production does not mean abolishing judgment.

It means elevating it.

Capital must be directed to the businessmen who know their markets, preserve margin, honor contracts, train people, and manage to convert scarce resources into something society values enough to pay for spontaneously.

The role of those who work with money is not to flatter the businessman.

It is to judge him correctly.

To deny capital to the incompetent.

To structure capital for the competent.

And to stay close to what was financed, because whoever finances and walks away was not financing — he was betting.

This requires more than a spreadsheet. It requires sector knowledge, trust built over years, judgment of character, real understanding of collateral, the ability to structure a deal, and the willingness to remain beside a company through its true cycle, not through the cycle of somebody's term in office.

In other words: it requires bankers.

Not salesmen of banking products.

The distinction is old and has nearly been lost. The banker is the one who answers for the decision. The salesman is the one who answers for the quota. One signs at the bottom. The other signs in the space reserved for the client.

And since this letter is read by businessmen, not economists, let me come down from the level of the country to the level of your desk.

If you own a company and have capital to allocate, there are three questions worth more than any Selic projection for 2027.

The first: what is the real tenor of my asset? Not the tenor of the contract. The tenor of the asset. A warehouse lasts thirty years. A production line lasts ten. Inventory lasts ninety days. If the tenor of your liability is shorter than the tenor of your asset, you do not have a business — you have a treasury operation with industrial risk embedded, and it will break at some point for a reason that has nothing to do with the quality of what you produce. Most of the bankruptcies I have seen up close were not caused by a bad product. They were caused by mismatch.

The second: does the person across the table answer for the decision or for the quota? It is the most revealing question and the least asked. It is answered by watching what happens when the deal goes wrong: who disappears, who calls, who renegotiates, who invites you to talk before the installment falls due. Everyone is excellent at the signing. The proof is at the first stumble.

The third: what am I really buying when I accept a guaranteed 14%? You are not buying yield. You are buying the option not to decide. There are moments in the life of a company when that option is worth a great deal — after a sale, before a succession, during a crossing. And there are moments when it is merely fear dressed up as prudence. The difference between the two is the difference between wealth that crosses generations and wealth that merely ages well.

I cannot answer these questions for you. Nobody can, at a distance.

But I can state one thing with some confidence: whoever answers these three questions honestly makes better decisions than whoever spends the whole year trying to guess the next Copom meeting.

One of them you control.

The other you do not.

XIII. The duty of money

For decades, we treated production as a vulgar activity and money as a superior one.

The industrialist dirtied his hands.

The financier managed abstractions.

One faced suppliers, employees, broken machines, inspections, idle inventory, and delinquent clients.

The other was paid to calculate the price of risk.

There is nothing wrong with calculating the price of risk. It is a rare, difficult, socially valuable skill.

But there is something deeply wrong when the one who calculates the risk becomes systematically more valued than the one who takes it.

A society that honors only its intermediaries ends up with nothing left to intermediate.

Brazil does not need to declare war on the financial market. It needs to return it to its mission — and, for that, it needs to stop offering it an alternative so comfortable that any other choice looks irrational.

We do not need less capital.

We need capital put in the right place.

Capital for machines.

Capital for technology.

Capital for construction.

Capital for exports.

Capital for the businessman who does not yet have a perfect balance sheet but has already demonstrated competence, character, and the capacity to execute — which is, by the way, exactly the kind of information no rating system captures and that exists only for those who take the trouble to be close.

Money should not replace work.

It should allow work to reach a scale it would never reach alone.

That is the difference between finance and rentism.

One finances the future.

The other charges for the past.

If we keep rewarding capital for staying sheltered and punishing whoever puts it in motion, Brazil will not run out of money.

Money will run out of country.

No country becomes rich when the best business is not producing.

Leo Bentier