Archive for the 'LatinAmerica' Category

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Quote Of The Day

“In fact, for the malcontents of Hollywood, academia, and the catwalks, Chávez is an ideal ally. Just as the sympathetic foreigners whom Lenin called “useful idiots” once supported Russia abroad, their modern equivalents provide the Venezuelan president with legitimacy, attention, and good photographs. He, in turn, helps them overcome the frustration John Reed once felt—the frustration of living in an annoyingly unrevolutionary country where people have to change things by law. For all his brilliance, Reed could not bring socialism to America. For all his wealth, fame, media access, and Hollywood power, Sean Penn cannot oust George W. Bush. But by showing up in the company of Chávez, he can at least get a lot more attention for his opinions.  As for Venezuelan politics, or the Venezuelan people, they don’t matter at all. The country is simply playing a role filled in the past by Russia, Cuba, and Nicaragua—a role to which it is, at the moment, uniquely suited”. —

Immigrants Attraction To The United States

Historian Victor Davis Hanson makes an interesting comment:

One final thought here. Why would deported illegal alien and activist Elvira Arellano, who according to the LA Times, “symbolized inhumane treatment of migrants to some,” wish to return to the US?

News reports suggested she does in petitioning the Mexican government for a diplomatic visa. Surely she might prefer either to bring her children to Mexico, or file citizenship papers to become an American. My sense is that she desperately wants to stay in the US and not Mexico and the reasons are more than just economics.

In my own observations, why do Mexicans come to El Norte? Not as said just for the money. Much of it is dignity. Despite the slurs, the US, especially its popular culture, treats aliens far better than does the Mexican government its own.

How? At our own government offices, clerks are respectful regardless of status. The average American doesn’t much care about class or diction. There is a meritocracy here absent in Mexico. But most importantly things work. In Mexico, the conditions of daily power, water, sewer, etc make life hard, and the future bleak. Police here often can’t ask the immigration status of those detained, in Mexico the arrested must pay bribes or face worse. So there is a sort of Orwellian doublespeak here, reminiscent of the Middle East: a desire to be a part of America, and when that proves impossible or difficult, then abstract furor or tantrums at the idea and policy of the United States—suggesting the root cause is desire for an alien culture, heightened by feelings of want, envy, jealousy, rejections, and feelings of inadequacy, all masked by chauvinism and ethnic triumphalism.

The full post can be found here.

The To Be Venezuelan Dictator?

The BBC reports:

Chavez seeks end to term limits

Venezuelan President Hugo Chavez has confirmed that he will try to change the law to allow him to remain in power indefinitely.

Under the current constitution, Mr Chavez will have to leave office at the end of his term in 2012.

But he says he wants to remain in power for as long as Venezuelans continue to support him.

The constitution is under review and Mr Chavez is expected to make changes to cement in law his socialist revolution.

‘People decide’

The details have so far been kept under wraps, but Mr Chavez has confirmed what many people expected – that he will be seeking to remain in power continuously.

“It will be the people who make the final decision about how long I stay,” he said on his weekly TV show Hello President.

He said this is something that happens in many European and Asian countries and that it should not be seen as a threat.

But opponents disagree. They are concerned that this could lead to abuse of power.

The new constitution will be put before parliament within the next 10 days.

Later this year, there will be a referendum allowing Venezuelans to decide whether to accept the changes.

Quote Of The Day

“Since the collapse of the Soviet empire, many defenders of socialism have argued that dictators, including Mao, Stalin, and Pol Pot, were aberrations; they took Marx’s ideas in the wrong direction. They claim that nationalization of the means of production (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 50 years later, Hayek’s argument holds. Every socialist regime tends toward authoritarianism of some sort. Chavez reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the Left who supported him. Unfortunately, what the proponents of socialism again and again fail to realize is that it is the message, not the messenger, that is embarrassing”. —Cato @ Liberty

Time To Pray For The Citizens Of Venezuela

I don’t pray very often but there are times when events are so catastrophic, so desparate, and so predictable that prayer is in order and Venezuela has reached that point. While Hugo Chavez is big on socialist rhetoric, he has always been very short on actual implementation.

James Surowiecki, the financial columnist for the New Yorker, explained it this way:

To people on both the left and the right, Hugo Chávez is a kind of modern-day Castro, a virulently anti-American leader who has positioned himself as the spearhead of Latin America’s “Bolivarian revolution.” He calls for a “socialism of the twenty-first century,” and regularly floats radical economic ideas; during his recent campaign for reëlection, he suggested he might move Venezuela to a barter system. When he spoke in front of the United Nations General Assembly in September, a day after President Bush, he said, “The devil came here yesterday.” And, just last month, after he was overwhelmingly reëlected to the Presidency, he dedicated the victory to Castro and proclaimed it “another defeat for the devil who tries to dominate the world.”

Chávez’s rhetoric might not be out of place in “The Little Red Book,” yet everyday life for many Venezuelans today looks more like the Neiman-Marcus catalogue. Thanks to the boom in the price of oil, many Venezuelans have been indulging in rampant consumerism that might give even an American pause. In the past year, auto sales have doubled, property prices have soared (mortgage loans are up three hundred per cent), and, thanks to this buying frenzy, credit-card loans have nearly doubled. And while Chávez has done a good job of redistributing oil revenue to the Venezuelan poor, via so-called misiones, designed to improve education, health care, and housing, and has forced oil companies to renegotiate contracts, there has been no nationalization of industry, relatively little interference with markets, and only small gestures toward land reform. If this is socialism, it’s the most business-friendly socialism ever devised.

In other words, most people thought Hugo Chavez was all bark and no bite when it came to actually implementing socialism. Then Chavez had this to say:

As Venezuela embarked on another six years under Hugo Chavez, the president announced plans to nationalize power and telecommunications companies and make other bold changes to increase state control as he promised a more radical push toward socialism.

Chavez, who will be sworn in Wednesday to a third term that runs until 2013, also said he wanted a constitutional amendment to strip the Central Bank of its autonomy and would soon ask the National Assembly, solidly controlled by his allies, to approve ”a set of revolutionary laws” by presidential decree.

”We’re moving toward a socialist republic of Venezuela, and that requires a deep reform of our national constitution,” Chavez said in a televised address after swearing in his new Cabinet on Monday. ”We’re heading toward socialism, and nothing and no one can prevent it.’

In other words, Chavez is serious and is now planning on doing the real work that socialism requires, that of heavy nationalizing of industry, changing constitutions, and possibly (sic) reducing property rights. History has repeatedly, universally, and clearly shown what results those policies lead to – political censorship (already begun, see here), large poverty, and finally the mass killing of innocent people, espeically farmers, and the poor.

The economist writes:

This is terrible news for Venezuela, which has already disastrously underinvested in its main source of revenue; if oil prices keep tumbling, Mr Chavez and his constituents will both be in serious trouble. It is one thing to demand better terms on favourable oil leases, and another thing to nationalise wide swathes of your economy; I find it hard to imagine that this won’t chase out much of the foreign investment that Venezuela will desperately need. The bishops of Caracas should be praying hard that oil prices stay high.

P.J. O’Rourke has a term for stories that are invalidated by later developments: OTBE, or OverTaken By Events. For journalists, this is annoying, but since universal, not too much so. But when events in the oil market finally overtake Venezuelans, it may be disastrous.

It is time to start praying for the citizens of Venezuela.

Capitalism In Latin America

Gary Becker, Nobel Laurette in economics and professor of economics at the University Of Chicago, writes on capitalism in Latin America:

One legitimate reason for the opposition to capitalism in Latin America is that it frequently has been “crony capitalism” as opposed to the competitive capitalism that produces desirable social outcomes. Crony capitalism is a system where companies with close connections to the government gain economic power not by competing better, but by using the government to get favored and protected positions. These favors include monopolies over telecommunications, exclusive licenses to import different goods, and other sizeable economic advantages. Some cronyism is found in all countries, but Mexico and other Latin countries have often taken the influence of political connections to extremes.

In essence, crony capitalism often creates private monopolies that hurt consumers compared to their welfare under competition. The excesses of cronyism have provided ammunition to parties of the left that are openly hostile to capitalism and neo-liberal policies. Yet when these parties come to power they usually do not reduce the importance of political influence but shift power to groups that support them. A distinguishing characteristic of Chile since the reforms of the early 1980’s is the growth in competitive capitalism at the expense of crony capitalism. This shift more than anything else explains the economic rise of Chile during the past 25 years that has made Chile the most economically successful of all Latin American nations.

The full post can be found here. His response to comments can be found here.

In Praise Of Guatemalan Manuel Ayau

The Washington Times writes about this remarkable man:

More than a half-century ago, after returning from the U.S. with his engineering degree in hand, a young Guatemalan named Manuel Ayau wondered why there was little demand for his engineering services in his home country. Rather than just fret about the sorry Guatemalan economy, he decided to try to understand the root cause of the problem, which led him to read widely and learn economics. The great Austrian economists, Ludwig von Mises and Hayek, provided the explanations and the remedies Mr. Ayau sought.

Manuel Ayau then formed in 1958 the first economic think tank in Guatemala. He and his colleagues soon realized their little think tank was unlikely to raise the level of economic and civil society literacy to bring the necessary change to Guatemala. The universities, which were run by the state, had been taken over by the communists or socialists and thus were a major part of the problem rather than the solution.

Thomas Jefferson correctly observed that democracies were unlikely to succeed without an educated electorate. Guatemala had a history of political turmoil and a poor educational system. Mr. Ayau and his colleagues realized without a high-quality university that taught real economics (rather than leftist ideology) and the legal and political classics, Guatemala would never have the trained cadre to run a successful democracy and civil society.

Thus in 1971, Mr. Ayau created a private, nonsectarian university with the mission “to teach and disseminate the ethical, legal, and economic principles of a society of free and responsible persons.” His creation, Universidad Francisco Marroqu?n (UFM) — named after 16th-century Guatemalan humanitarian and intellectual — is now widely viewed as the best university in Guatemala. The school has a beautifully designed and landscaped campus — without graffiti or litter — in Guatemala City. Leading economic and other scholars from around the globe have lectured and or/taught at UFM. It attracts the best students, and all must be proficient in the English language.

In addition to starting a think tank and university (where he served as the first rector and professor of economics), Manuel Ayau became a highly successfulentrepreneur. He also found time to serve in the Guatemala House of Representatives and as a president of the Mont Pelerin Society.

As would be expected, creating a private university whose students are taught the virtues of the rule of law, civil society and free markets did not sit well with many in the Guatemalan statist elite. Less expected was a 2001 attack on Mr. Ayau and the university by an arrogant and economically ignorant ambassador from the United States, trying to foist the State Department’s failed development policies on Guatemala. Mr. Ayau characteristically stood his ground, as he had with the domestic forces of tyranny.

Manuel Ayau knows why Guatemala is poor. But he, unlike the big government domestic and foreign bureaucrats who criticize his policies, has actually done much of the difficult work to establish the necessary base for a free and prosperous society.

The scholars at UFM understand it takes many years to create the critical mass for liberty. But now, the Guatemalan economy is doing better and a stable democracy seems to be taking hold. As the lives of future generations of Guatemalans improve, it will be, in part, because they stand on the shoulders of the remarkable — engineer, economist, philosopher, entrepreneur, statesman, and teacher — Manuel Ayau.

The full article can be found here.

The Difference A Dictator Makes

With the recent death of Pinochet, Chile’s former dictator, it is a good time to stop and compare two ideologically opposed dictators – Chile’s Pinochet vs Cuba’s Castro/Che.

The Washington Post writes:

A Dictator’s Double Standard

Augusto Pinochet tortured and murdered. His legacy is Latin America’s most successful country.

Tuesday, December 12, 2006; Page A26

AUGUSTO PINOCHET, who died Sunday at the age of 91, has been vilified for three decades in and outside of Chile, the South American country he ruled for 17 years. For some he was the epitome of an evil dictator. That was partly because he helped to overthrow, with U.S. support, an elected president considered saintly by the international left: socialist Salvador Allende, whose responsibility for creating the conditions for the 1973 coup is usually overlooked. Mr. Pinochet was brutal: More than 3,000 people were killed by his government and tens of thousands tortured, mostly in his first three years. Thousands of others spent years in exile.

One prominent opponent, Orlando Letelier, was assassinated by a car bomb on Washington’s Sheridan Circle in 1976 — one of the most notable acts of terrorism in this city’s history. Mr. Pinochet, meanwhile, enriched himself, stashing millions in foreign bank accounts — including Riggs Bank, a Washington institution that was brought down, in part, by the revelation of that business. His death forestalled a belated but richly deserved trial in Chile.

It’s hard not to notice, however, that the evil dictator leaves behind the most successful country in Latin America. In the past 15 years, Chile’s economy has grown at twice the regional average, and its poverty rate has been halved. It’s leaving behind the developing world, where all of its neighbors remain mired. It also has a vibrant democracy. Earlier this year it elected another socialist president, Michelle Bachelet, who suffered persecution during the Pinochet years.

Like it or not, Mr. Pinochet had something to do with this success. To the dismay of every economic minister in Latin America, he introduced the free-market policies that produced the Chilean economic miracle — and that not even Allende’s socialist successors have dared reverse. He also accepted a transition to democracy, stepping down peacefully in 1990 after losing a referendum.

By way of contrast, Fidel Castro — Mr. Pinochet’s nemesis and a hero to many in Latin America and beyond — will leave behind an economically ruined and freedomless country with his approaching death. Mr. Castro also killed and exiled thousands. But even when it became obvious that his communist economic system had impoverished his country, he refused to abandon that system: He spent the last years of his rule reversing a partial liberalization. To the end he also imprisoned or persecuted anyone who suggested Cubans could benefit from freedom of speech or the right to vote.

The contrast between Cuba and Chile more than 30 years after Mr. Pinochet’s coup is a reminder of a famous essay written by Jeane J. Kirkpatrick, the provocative and energetic scholar and U.S. ambassador to the United Nations who died Thursday. In “Dictatorships and Double Standards,” a work that caught the eye of President Ronald Reagan, Ms. Kirkpatrick argued that right-wing dictators such as Mr. Pinochet were ultimately less malign than communist rulers, in part because their regimes were more likely to pave the way for liberal democracies. She, too, was vilified by the left. Yet by now it should be obvious: She was right.

I have no problem with those who remain consistent and despise all dictators regardless of political leanings, but I find it hard to stomach those who praise Che on the one hand and condemn Pinochet on the other. Yeah, they were both evil scandalous killing machines and will both probably end up in hell, but if you’re going to value one aside from his evil killings, then Pinochet should definitely be your pick.

Update: John O Sullivan, writing in the Chicago Sun-Times, gives the context behind Pinochets dictatorship in Chile.

Right Vs Left View Of The World

Michelle Dion, writing in her blog, details the troubling circumstances Mexico is in:

As the time nears for the swearing in of Mexico’s new President, the PAN’s Felipe Calderon, the situation is not looking good. Earlier this month, the PRD’s Lopez Obrador had himself sworn in as President in an unofficial ceremony. Yesterday, a small fight broke out in the Congress (for the leftist version of events) when members of the PRD tried to take control of the dais and the PAN stepped in to stop them.

Felipe Calderon, member of the right-leaning PAN party, won Mexico’s presidential election on July 2, 2006 by a narrow majority, so narrow that a recount was conducted. López Obrador, member of the left-leaning PRD party, immediately started with accusations of irregularities in polling stations and demanded a national recount. Back and forth went the accusations until finally, after a targeted recount still showed Calderon the winner, on September 5, 2006 Calderón was unanimously declared President-elect by the Tribunal. The citizens of Mexico trust the Tribunal. They trust the Federal Electoral Institute.

So what does Obrador do? He certainly doesn’t admit defeat like a person with class would do, on the contrary, all of these rulings against him make his resolve stronger. He stages protests, he disrupts speeches, he tries to do everything he can to disrupt the transition of power. Lastly, and this is the one that might bring the most long term harm to Mexico’s Democracy, he has now staged a parallel government that will try to implement its own policies in defiance of Mexico’s long established government – all of this despite the fact that the majority of Mexican citizens have turned against him.

Why is it that lefties around the world, whether with Al Gore in 2000, Democrats in 2002 and 2004, or Obrador in Mexico – have a hard time accepting defeat? Contrast this to Republicans, who in the recent election lost both houses of congress in very close races. In fact, George Allen, the Republican Senator who lost in Virginia, was entitled to a recount under Virginia law but declined to do so, knowing that the recount would last until December, leaving the leadership of the senate in question. In fact, the only lasting contested race is one where a democrat contested her loss to a republican, again, following in the tradition of democrats before her.

So why this significant difference? Steven Den Beste, writing in the Chicago Boyz Blog, gives the best answer yet:

2000, Democrats: “We wuz robbed!”
2002, Democrats: “We wuz robbed again!”
2004, Democrats: “We wuz robbed yet again!”
2006, Republicans: “Bummer. Oh, well, we’ll do better next time.”

Note that right-wing pundits and bloggers don’t seem to be fixating on voter fraud, despite documented evidence that the Democrats have been doing that kind of thing? Note that Republican candidates who lost very narrowly gave in gracefully, without demanding recounts or resorting to the courts? Why the difference?

I think it’s the basic Democrat culture of entitlement showing through. Democrats were angry in 2000, 2002, and 2004 because they felt that they deserved to win. Republicans don’t feel that anyone deserves anything. They believe that all rewards have to be earned.

There’s another way of looking at this. In 2000, 2002, and 2004, Democrats explained their defeat by looking to see what the Republicans had done to inflict defeat on the Democrats. In 2006, the Republicans seem to be explaining their defeat by looking for all the ways they themselves loused up. The Democrats are showing their investment in the cult of the victim. They didn’t lose because of any fault or failure of their own; they lost because of the nefarious acts of villainous Republicans.

It’s another manifestation of their epistemological breakdown regarding the principle of cause-and-effect. The Democrats do not fundamentally believe that they are in control of their own fate — or ours. They were victims in 2000, 2002, and 2004. The only reason they weren’t victims in 2006 was that the nefarious Republicans didn’t successfully pull off their nefarious plots and plans this time. And in general Democrats demonstrate a broad belief that there’s no relationship between acts and results, cause and effect. What matters is motive, not behavior. If you do something with good intentions, the result will be good.

And never mind what road is paved with good intentions. They don’t believe in Hell, either.

The full post, with much more not quoted above, can be found here.

Update: France seems to exhibit the same phenomena, see here.

Update: Contrast President Bush vs President Clinton leaving office here.

Quote Of The Day

“His potential to cause trouble was on display last Friday, as members of his Revolutionary Democratic Party blocked Mexican President Vicente Fox from delivering his final state of the union address before the national congress. They mobbed the speaker’s platform and refused to move. Rather than engage in a shoving match, or worse, Mr. Fox maintained his dignity and walked away. It’s as if Tom DeLay had refused to let Bill Clinton deliver his annual address on Capitol Hill. Tellingly, Mr. López Obrador is validating the warnings about his authoritarian tendencies made by the Calderón camp. Mr. Calderón was down in the polls until his supporters suggested that Mr. López Obrador was a dangerous leader in the mold of Venezuelan strongman Hugo Chávez. And last week the leftist leader, sounding very much like Mr. Chávez, said his opponents “can go to hell with their institutions.” By that he apparently means Mexico’s democratic institutions”. —Wall Street Journal editorial pages

Quote Of The Day

“Two other observations struck me during my visit to Cuba: 1. I don’t think I met anybody who truly believed in communism. I met with high officials at ministries and top people at the University of Havana and official think tanks, some of whom were very intelligent and quite sophisticated, and all of whom left me with an impression that cynicism about the revolution was widespread. 2. Discontent with the status quo among the general population was also widespread. To this day, the economy has probably not yet bounced back to the income or consumption levels that existed in 1989 or 1990. Food rations are skimpy and clinics cannot afford to provide basic medicines or supplies (patients must finance those goods themselves). Why put up with the lack of freedom if the revolution can’t even guarantee basic necessities?”–Ian Vasquez, blogging at the Cato blog over, Transition in Cuba: How Would Raúl Rule?

Fastest Growing States Vote Conservative – Around The World

During the last two presidential elections I reported how pro-growth areas, both demographic and economic, tend to vote Republican and anti-growth areas tend to vote Democrat, for example, the European magazine The Economist shortly after the 2004 election reported:

Mr Bush’s optimistic message gave him a commanding advantage in pro-growth America….Most of Mr Kerry’s base was in stagnant America. Democratic strongholds such as Chicago, Cleveland, San Francisco and Mr Kerry’s Boston have been losing people and jobs.

Mr Bush’s America, for the most part, is booming. This is not just because the red states that voted for Mr Bush are growing faster than the blue states that voted for Mr Kerry. It is also because Mr Bush did well in the fast-growing suburbs and “exurbs” in both red and blue states. Mr Bush’s triumph in greater Phoenix, greater Houston and greater Atlanta was perhaps predictable. But Mr Kotkin points out that he also triumphed in what he calls the “third California”: the vast inland region that is producing the bulk of the state’s growth at the moment.

Well it seems this is a global trend:

Symmetrical politics. There is also a fascinating symmetry in the recent election results in the three NAFTA nations: Mexico, Canada, and the United States. All chose center-right governments by narrow margins, installed by minorities of the voters. Calderon’s 35.9 percent of the vote in a three-party system is eerily similar to the 36.3 percent won by Stephen Harper’s Conservative Party in Canada’s four-party system. We all know about Bush’s two elections. All three leaders have been opposed vociferously, indeed often considered illegitimate, by the metropolitan elites of New York, Toronto, and Mexico City. All three beat parties that claimed only they had national reach–the Democrats here, the Liberals in Canada, and PRI in Mexico–but that were tarred with scandal when they were voted out of office.

All three won thanks to huge margins in economically vibrant hinterlands–George W. Bush’s Texas, Stephen Harper’s Alberta, Vicente Fox’s Guanajuato. Calderon carried the Mexican states north of metro Mexico City by 47 to 22 percent over Lopez Obrador. These are the states where you find giant new factories, glistening shopping malls, rising office buildings, new middle-class subdivisions, Wal-Marts, freshly paved highways. This is the Mexico that NAFTA has brought into being. Just as Bush carried most of our fastest-growing states and Harper’s Conservatives carried Canada’s fastest-growing province, so Mexico’s northern states, which produced more than half the nation’s population growth from 2000 to 2005, voted PAN.

These center-right parties all stand for change–change in the sense of allowing a vibrant private sector to grow and alter our ways of living and making a living. Their opponents tend to stand against change, for the vested interests of public-sector unions, for (in Canada and Mexico) the subsidy of anti-American metropolitan elites. Some years ago, I predicted that NAFTA would produce a Texafication of North America. NAFTA was in large part a Texas project, pushed forward by President George H. W. Bush and shepherded to ratification here by Treasury Secretary Lloyd Bentsen, who grew up in the Lower Rio Grande Valley, and in Mexico by President Carlos Salinas, who grew up in nearby Monterrey. Since 1993, the United States, Canada, and Mexico have all become more like Texas, as people move away from high-tax and slow-growth places. Bush in 2000 and Harper and Calderon in 2006 would not have won on the demographics of the 1980s. But they won on the demographics of today–though, let’s remember, by narrow margins.

Bolivia, Before And Now

James Surowiecki, writing in the Financial Page of the New Yorker writes:

Twenty years ago, a radical economic experiment began in Latin America. With economies beleaguered by foreign debt and runaway inflation, many of the region’s politicians decided that salvation lay in a program of market-friendly reforms that became known as the Washington Consensus—privatization of state-owned businesses, balanced budgets (usually achieved by cutting social spending), free trade, and openness to foreign investment. Reform, the promise went, would lead to prosperity.

The reforms happened. The prosperity didn’t. And so, in Latin America, it’s a time of backlash. In recent years, voters in Brazil, Uruguay, and Venezuela have elected leaders with avowedly leftist politics and a vehement rhetorical opposition to Washington Consensus economics (also known as neoliberalism). The latest evidence of this shift came several weeks ago, when Bolivia elected Evo Morales, a forty-six-year-old Aymara Indian, as President. In almost every way, Morales represents a clean break with the past: he’s the first indigenous President of Bolivia; he’s a former leader of the country’s cocaleros, or coca-leaf growers, and has promised to decriminalize coca growing; his party is called the Movement Toward Socialism; and he has called for the re-nationalization of the country’s lucrative natural-gas resources. Like Hugo Chávez, the President of Venezuela, Morales is openly hostile to the United States, speaking freely of the need to resist “U.S. imperialism.” Not surprisingly, the Bush Administration has tried to dismiss Morales as a kind of unholy combination of Pablo Escobar and Fidel Castro. But his ability to win a solid majority in a country where politics has traditionally been dominated by a small, ethnically homogeneous élite shows just how badly neoliberalism has failed in the region.

Neoliberalism actually enjoyed a strong start in Bolivia. In 1985, when inflation was running at twenty-five thousand per cent, the country instituted a campaign of “shock therapy,” eliminating price controls, slashing government spending, and removing barriers to trade. The changes stopped the hyperinflation almost overnight, and got the economy growing again. In the years that followed, Bolivia deregulated its banks, reformed its tax system, privatized its five biggest state-owned companies, and tried to attract more foreign investment. But during the past fifteen years the country’s per-capita economic growth has been just 0.5 per cent a year, and today half of all Bolivians live on less than two dollars a day. Bolivia has always been a very poor country with a few very rich people, but inequality has worsened, with the élite skimming off most of the little wealth that has been created. The immense gap between what neoliberal reforms promised and what they delivered has inevitably left people feeling cheated and angry.

Neoliberalism failed in Bolivia because a macroeconomic checklist is not enough to make an economy work. Incorporating a new business in Bolivia, for instance, takes fifty-nine days, entails fifteen separate procedures, and costs twice as much as the average person earns in a year. So, according to a recent World Bank study, most of Bolivia’s businesses remain “informal,” which means that they have no legal protection, and limited access to credit markets. Corruption is rampant—a survey in 2000 found that it was a greater problem in Bolivia than in about ninety-five per cent of other countries surveyed. And the state bureaucracy has been more interested in patronage and clientelism than in good policy. The government’s campaign against coca farming, for instance, left the cocaleros without economic alternatives, since the infrastructure necessary to get food crops to market in a timely fashion didn’t exist. Privatization, however, turned into a handout to the wealthy.

Even if Bolivia got the big picture right, it got the details all wrong. And it’s increasingly clear that when it comes to development God really is in the details. A country’s history, institutions, and power structures have a profound impact on whether reform can work. Neoliberalism, at least in its purest form, suggested that good policies alone were what mattered. But, as a just-released study of development in Latin America by the Inter-American Development Bank puts it, “Policies and institutions are inseparable.” Reforms that can’t be implemented properly are sometimes worse than no reforms at all.

Unfortunately for Bolivia, though, Morales is just as utopian as the neoliberals were. His economic vision looks like the Washington Consensus turned on its head: instead of privatizing industries, you nationalize them; instead of liberalizing trade, you control it; instead of deregulating industries and prices, you subsidize and supervise them. And Morales’s promise is similar to the one Bolivians heard two decades ago: my program will lift us out of poverty.

It may be foolish to expect caution from a populist like Morales; radicalism is the basis of his appeal. Ultimately, however, utopian rhetoric and utopian strategies are the last thing a country like Bolivia needs, because they foster the illusion that prosperity is easy to achieve. Morales has some potentially useful ideas, most notably land reform, which was instrumental in the development of Japan, South Korea, and Taiwan—countries where tenant farms owned by absentee landlords were gradually replaced by independent farms. But his hyperbolic rhetoric and his lack of attention to the concrete realities of reform will make it harder for even his sensible ideas to work. Bolivians have been promised too many big victories. What they need now are some small ones.

The article can be found here.

The Sad State Of Latin America

Juan Forero writes in the International Herald Tribune:

Morales gave the kind of leftist speech that increasingly strikes a chord with Latin America’s disenchanted voters, railing against privatization, liberalized trade and other economic prescriptions backed by the United States….

Morales, 46, a former llama herder and coca farmer leader who has a slight lead in the polls for Bolivia’s election on Dec. 18, offers what may be the most radical vision in Latin America, much to the dismay of the Bush administration. But the sentiment extends beyond Bolivia. Starting on Dec. 11 in Chile, voters in 11 countries will participate in a series of presidential elections over the next year that could take Latin America further to the left than it already is.

Since an army colonel, Hugo Chávez, won office in Venezuela in 1998, three quarters of South America has shifted to the left, though most countries are led by pragmatic presidents like Luiz Inácio Lula da Silva in Brazil and Néstor Kirchner in Argentina.

That decisive shift has a good chance of spreading to Bolivia, Ecuador and, for the first time in recent years, north of the Panama Canal.

In Central America, the Sandinistas, led by Daniel Ortega, are positioning themselves to win back the presidency they lost in 1990. Farther north in Mexico, polls show that Andrés Manuel López Obrador, a hard-charging leftist populist, may replace the business-friendly president, Vicente Fox, who is barred from another term.

Traditional, market-friendly politicians can still win in all of these countries. But at the moment, polls show a general leftward drift that could result in policies sharply deviating from longstanding American economic remedies like unfettered trade and privatization, better known as the Washington Consensus.

“The left is contesting in a very practical way for political power,” said Jim Shultz, executive director of Democracy Center, a policy analysis group in Bolivia. “There’s a common thread that runs through Lula and Kirchner and Chávez and Evo and the left in Chile to a certain degree and that thread is a popular challenge to the market fundamentalism of the Washington Consensus.”

The left, continuing to do what it is most famous for, destroying countries economies one by one.

Quote Of The Day

“Regarding U.S. policies towards Latin America, there is a double standard everywhere you look. It is crystal clear where Lula, Chávez, Kirchner, Vásquez, etc. want to go. Many ideas and policies of Marx, Lenin, Stalin, Mao, Castro, and Che Guevara are being rediscovered and openly applied by them, while U.S. foreign economic policy continues to sail down a third way between capitalism and socialism. No wonder such little respect is shown towards Washington. Free trade, yes, but not regarding sugar or shrimp or steel or lumber or whatever deep pocket lobbyists want to keep out today. Private enterprise and the right to work, sure, as long as the interests of American unions are safeguarded by “fair trade”, which includes a “level playing field” (unaffordable wages and working conditions) and “no child labor”, even if the real alternative for many of those youngsters is begging or prostitution, rather than going to school.

A hundred years ago, 50% of Americans worked in agriculture and no one in Washington dared to tell farmers that their children could not help in the field or that going to class was more important than food on the table. Most Latin Americans still work in agriculture. Thinking how your great-grandparents would have reacted if Washington tried to apply to them its current foreign economic policies will help understand how Latin Americans see those deceitful policies, displayed as “fair trade””. —Carlos A. Ball, editor of AIPE, a Spanish-language news organization based in Florida, and adjunct scholar with the Cato Institute

Quote Of The Day

“The fact is, U.S.-Latin American relations are at one of their lowest historical points. The majority of Latin intellectuals traditionally have felt a deep and secret inferiority complex toward the U.S., blaming it for everything bad that takes place in the hemisphere. They have taught in both public and private schools and universities for three generations, and finally have seen their favorite students reach the top political positions not only in Venezuela, Argentina, Brazil, Uruguay, Ecuador, Paraguay, and Bolivia, but also again in Chile, where the highly successful accomplishments and the good name of the “Chicago boys” are being meticulously trashed by official lies and horrendous judicial decisions, while Allende’s followers are treated as victims and “compensated” from the state coffers”. —Carlos A. Ball, editor of AIPE, a Spanish-language news organization based in Florida, and adjunct scholar with the Cato Institute.