BRAZIL IS NOT NEWS. As the country enters its sixth century since the arrival of Europeans in 1500, it makes few headlines and receives even less serious attention. Burning rain forests, homeless children, Stone Age Indians, rioting prisoners, erratic politicians, threatened species and even the annual death toll in Carnival have strangely lost their attraction for a world media industry that is allegedly voracious for content.This is odd because, although some of these aspects of Brazilian life have seen improvement in recent years, none has gone away. More predictable is the under-coverage of the good news from Brazil, even though this is substantial and, in some cases, truly spectacular.For the first time in its history, Brazil is a fully functioning democracy. Elections take place on schedule. All parties and ideologies are legal. The media are uninhibited by the law (or, in some cases, by the facts). The federation is a reality, not a facade for rule from the centre. Politicians point their fingers at other levels of government in a positively Canadian way. The courts and, even more, the public prosecutors have largely escaped the heavy hand of the executive: privatizations and elections take place amidst a brisk crossfire of writs. Formal democracy certainly has its imperfections. Bribery, intimidation, and fraud still occur, but they are increasingly marginal. No one doubts that President Fernando Henrique Cardoso is in Brasilia because a majority of the voters put him there -- not once, but twice.Democratic institutions have indeed existed before, notably during the Second Republic that began in 1945. But they were constrained by a restricted electorate and widespread manipulation of what was then a rural majority of voters. Most of all, the Second Republic lived under the perpetual threat of military intervention, which became a seemingly immovable reality in the so-called Revolution of 1964 that led to 21 years of military rule.Today, Brazil has the real thing. The military have not just returned to the barracks; their political views and intentions do not even attract speculation. Arguably there is one step still to take. State and municipal governments are already often on the left of the spectrum, but Brazil has yet to see the free election of a national government of the left. That, however, is true because its voters have three times failed to elect one. In a country where the few have always ruled, the democracy of 2000 is a most hopeful change.It is all the more encouraging because it is accompanied by a level of economic stability that only very elderly Brazilians can remember from a distant past. It is the combination of democracy and stability that is significant. For generations, it was widely believed that in Brazil democracy would lead straight to public profligacy and the economic abyss. The behaviour of many politicians lent substance to that view. Today, Brazil has enjoyed both democracy and a large measure of economic stability for more than six years. In particular, runaway inflation has been halted.It is difficult to exaggerate how great this last change is. There have been more violent inflations in other countries, but for sheer staying power and cumulative effect, the inflation in Brazil between 1946 and 1994 stands alone. By the end, the much-renamed currency unit retained less than one-quadrillionth of its 1946 value.For two generations of Brazilians, inflation was a way of life. Vast amounts of money, political capital, and tortured ingenuity were invested in controlling it, exploiting it, living with it, or discovering its hidden merits. Nothing seemed to stop the dragon - as Brazilians call it - for more than a few months. In 1994 Fernando Henrique(1) as minister of finance stopped it by a strategy combining high interest rates, a high and strongly defended exchange rate, and a well-managed transition period. He was helped by continuing economic liberalization - price rises would bring competition from imports - and by substantial progress in shrinking government and disciplining its finances. …