Latin American intellectuals and the economy

...There is a quandary in Latin America, shared by all: given the limp response to economic liberalization, what now...

...too much was promised, and too quickly...

...The behavior of newly elected presidents in Latin America is shaped by three factors: (1) the perceived "bequest" they have received— their sense as to whether or not the economy has been well managed by their predecessors...

...The intellectual puzzle in Latin America is why the countries of the region are not growing...

...He explained: "Political parties and political leaders have invested enormous political resources in the implementation of this model, and it just has not delivered the expected results, leading the public to conclude that politicians are incompetent—and even deceptive—and that democracy as a form of government is flawed...

...Hugo Chavez, clad in his Brioni suits, is revealing when he says that although he dislikes the United States, there is something admirable from the United States: "The Simpsons...

...Latin America's present abPOLITICS ABROAD sence of intellectual debate, with identifiable differences of opinion about economic development among political actors, has surely retarded the renovation of the region's political parties, facilitating their dominance by individuals who long ago should have left the political stage...

...Latin Americans are not sure what comes next or just what they should do to propel their economies forward...

...His colleague da Silva is more thoughtful and more measured in his words, but he, too, is bereft of specific proposals...

...One major risk comes from charismatic charlatans offering simple solutions—or easily targeted scapegoats...

...But this description is misleading...

...Almost everywhere, exports have increased but not kept up with the surge in imports...

...More common in Latin America is the perception that economic liberalism has been tried and that the results have been meager...

...Not knowing what to make of economic liberalism's less than robust performance is politically debilitating...

...During the 1980s, the figure rose to 41 percent, though the triumph of political and economic liberalism brought a small decline in poverty in the 1990s—to the still unacceptable figure of 38 percent...

...Which sectors of the economy have fared well and which sectors have stumbled...

...What to do now...

...For reasons that remain elusive, the economy of the region does appear to be more cyclical than the economies of, for example, the United States and the European Union...

...What concerns Latin Americans, though, is the net effect of this economic activity on employment and income...

...What social groups have prospered and what groups have suffered...

...Why is there no "take-off...

...Isn't at least a measure of ideological contestation necessary to shape— and stimulate—public policy...

...Most emblematic are two presidential candidates in neighboring El Salvador and Guatemala: seventy-three-year-old Shafik Handal, an orthodox communist, excomandante of the Farabundo Marti National Liberation Front in El Salvador, and seventysevenyear-old Efrain Rios Montt, who as a general, came to the presidency of Guatemala on the heels of a military coup in 1982...

...For him, as for President Fox, opposition to these reforms represents nothing more than "a brake on change...

...There are considerable political risks in this intellectual vacuum...

...But 2000 was the end of growth...

...Throughout Latin America it appears that believers in liberalism have lost their fervor, their drive...

...But who can be sure...

...This rout is not an alternative to liberalism...

...Depending on the country, foreign investment (as, until recently, in Argentina) or remittances (as in El Salvador) have closed the balance of payments gap...

...And, although there are critics of liberalism, no one right now has an alternative— resulting in a tired intellectual moment in the history of the region...

...The private sector of the countries of Latin America, from mammoth Brazil to the island state of the Dominican Republic, is organized by type of economic activity, in what are called "chambers" (ccimaras...

...In Mexico, for example, more than two million Mexicans enter the labor force every year...

...A good starting place for new thinking about Latin America's economic development is a thorough review of the experience of economic liberalism...

...Unless or until a new economic paradigm emerges, it is urgent to perfect what is at hand, with thoughtfulness and creativity...

...What's the plan...

...Chavez is the Bart Simpson of Venezuela, taunting and provoking the upper class...

...Other economic reforms are criticized simply because they have not produced the promised results...

...In fact, these presidents have no readily identifiable program that distinguishes them...

...2) the discipline of the financial markets...

...In many countries, too, the labor force is growing rapidly...

...When it comes to management of the economy, they simply don't know what to do...

...Poor economic performance also has political consequences...

...Dismal macro-economic statistics mask individual hardship...

...But nothing in Latin America (or anywhere else) is so easy...

...Alternative public policies, including strategies for promoting economic development, have not emerged from the streets of La Paz, Quito, Lima, Buenos Aires, or elsewhere...

...Elsewhere, charismatic politicians have been elected who are disdainful of the status quo and who project an image of caring about the frustrations and needs of POLITICS ABROAD the poor majority, including Alejandro Toledo in Peru, Lucio Gutierrez in Ecuador, and Nestor Kirchner in Argentina...

...Liberal reforms have lost their momentum as much from the loss of a "push" as from opposition...

...Just as useful are analyses of "winners" and "losers" within individual countries...

...Many influential Latin Americans share his assessment...

...Who is competitive in the ferocious world economy and who is not...

...There is unease throughout the region about how obsessed the colossus to the north is with Central Asia, the Middle East, and issues of "security...

...Latin American presidents who are commonly referred to as right-of-center, such as Vicente Fox in Mexico, Francisco Flores in El Salvador, and Alvaro Uribe in Colombia, also have no substantial ideas about how to stimulate economic growth in either their individual countries or in Latin America at large...

...The country's private sector is collapsing...

...What kinds of partnership between the state and the private sector are most fruitful...

...Luis Miguel Pando, the director of Mexico's private sector advisory board (CCE), for example, asserts that economic reforms are urgently needed in four areas: fiscal (government revenue and spending), energy (still largely dominated by the state), labor, and the structure and performance of the Mexican state (elephantine and sluggish...

...Since 2000, angry mobs have forced out of office three other Latin American presidents: Jamil Mahuad of Ecuador, Alberto Fujimori of Peru, and Fernando de la Rim of Argentina...

...And even the middle class in Latin America is threatened by wobbly economic performance...

...In all of these cases it was only clear to whom the mobs were directing their ire—el senor presidente...

...Indeed, according to the United Nations Economic Commission for Latin America and the Caribbean (CEPAL) in 2001 and 2002 the economy of the region contracted...

...Chavez rants against the "private sector" and praises the country's "liberator" from colonialism, Simon Bolivar (long dead...

...In Caracas at the end of 2000, 11,539 businesses filed tax returns...

...it suggests more than a symbolic identification with the poor...

...A comprehensive survey of attitudes on government and politics in seventeen Latin American countries by BarOmetro Latinoamericano, a private polling organization based in Chile, revealed that in 2002 only a third of Latin Americans expressed satisfaction with their country's democracy...

...Criticism is heaped upon those in political office—and on the reigning economic model...

...And, anyway, who has the patience...

...In the ensuing decade—the 1990s—economic growth resumed...

...The Venezuelan economist Ricardo Hausmann, now teaching at the Kennedy School of Government at Harvard University, shrugs his shoulders: "Economists have discredited many potential hypotheses . . . the 24 n DISSENT / Winter 2004 truth is we still don't know what leads to economic growth...

...A rebound in the economy of the United States wouldn't hurt, either...

...But can political parties exist without ideology, without even ideas...

...Social unrest forced Bolivia's president, Gonzalo Sanchez de Lozada, to resign on October 17, 2003...

...But to what end...

...Correspondingly, the number of unemployed in the country has tripled in the last few years...

...But he has no idea how to stimulate economic growth...

...Moreover, the vision of how economic liberalism works—the infamous "invisible hand"—was conveniently simplified, leaving governors with the facile conclusion that they only had to offer their citizens a sound currency and—poof!—individual self-interest and initiative would lead to prosperity...

...If political parties are not tied to ideas, to visions of state and society, it becomes all the easier for political parties to be dominated by individuals or small groups, hungry for the perks of power...

...Where in Latin America are the new leaders, with fresh but sober ideas, to propel the region forward...

...CEPAL has a gloomy indicator: percentage of households mired in poverty...

...this is, after all, a region where it is quipped that if you crash your car, you exit the middle class...

...Natural resources abound...

...It is often remarked that there is no democracy without political parties...

...Although both Chavez and da Silva are considered critics of liberalism—of free markets— neither of them, in fact, has an alternative...

...Perhaps there is nothing to be done about the slow economic performance of Latin America except to wait DISSENT / Winter 2004 • 25 POLITICS ABROAD for better times abroad...

...DISSENT / Winter 2004 n 27...

...In contrast, Brazil's president, Luiz Inacio "Lula" da Silva, concluded that his predecessor, Fernando Henrique Cardoso, did a reasonable job, and that he is dependent on the goodwill of the international financial community...

...In 2002, 5,200 tax returns were filed...

...If growth does not resume in Mexico, he says, the country's presidential elections in 2006 could result in a "Lula-type" victor...

...pUBLIC DISAPPOINTMENT with Latin America's democracies has many roots, including the perception of widespread and egregious corruption and the lackluster performance of many state bureaucracies...

...However, it is widely acknowledged, including by political leaders, that poor economic performance is crucial in generating disappointment with governments, and even with democracy itself...

...Another thousand firms are estimated to have disappeared in the first half of 2003...

...Venezuela's president, Hugo Chavez, concluded that he had inherited a pitiful country, and he has run roughshod over it, all the more so because oil revenues free him from dependence on international bankers...

...These leaders are all sometimes called "left-leaning...

...But where are the arguments...

...Empirical research can be tedious, but economic paradigms not grounded in local realities are dangerous...

...In 2002, CEPAL claims, 49 percent of households were caught in poverty...

...and (3) reigning ideas about how to stimulate growth—or promote more equitable growth...

...And 2003 was another tough year...

...A former member of Costa Rica's Congress, who has also served as a cabinet minister, told me in the privacy of his home 26 n DISSENT / Winter 2004 that the central political problem of the region's democracies is the economic model of liberalism...

...Growth is needed to generate employment, stimulate wage increases, and produce the resources needed to combat poverty and inequality...

...The survey also revealed a low level of confidence in the all-important institutions of democracy: political parties, congress, judiciary, and the government/ president...

...No one even bothers asking these men what their ideas are about how to stimulate economic activity...

...The organization estimates that from 1945-1980, some 35 percent of Latin American households were poor...

...Wages are low because of weak—or insufficient— demand for labor...

...Indeed, individual business leaders are silent when asked, "If you were given $50 million, where would you invest it...

...The benefits of economic liberalism were surely "oversold" politically...

...Some believe markets—and market forces—have yet to be given a chance, that there are, in fact, still substantial barriers hindering the creativity of entrepreneurs and firms...

...The figures are only estimates, but they give a credible sense of trends...

...the labor force is young and energetic...

...And for the last few years the results have been anemic...

...After being pummeled by recession and the burden of foreign debt in the 1980s, all Latin American countries (even, in its own peculiar way, Cuba) opened their economies to the play of market forces...

...The harshest criticism is directed toward privatization schemes, which frequently have been tarnished by corruption, including the diversion of funds earned from the sale of state assets to party election campaigns...

...Consumers have been happy to buy the torrent of imported goods that have accompanied the lowering of tariffs...

...FORREST D. COEBURN'S most recent book is Latin America at the End of Politics...

...The region's universities are quiet, too...

...There ought to be a wide range of arguments about how to interpret, implement, and criticize economic liberalism, and about how to ameliorate poverty and inequality—sufficient to fuel a healthy intellectual debate...

...But these organizations are also not producing new ideas about economic stimulation...

...Pando dismisses criticism of economic liberalism, arguing that, if asked, 99 percent of Mexicans could not even define it...

...All, or almost all, the reputed barriers to economic growth—from state enterprises to subsidies to ruinous tariffs—have been removed...

...economies are linked to the world economy...

...Many in Latin America share the sentiment...

...A higher figure, 56 percent of those surveyed, agreed with the assertion that democracy is preferable to any other form of government, leaving doubts about the other half of the population that seemingly would not object to an authoritarian form of government...

...What next...

...It is important to understand why certain countries—such as Chile—have fared better than other countries—including, prominently, Argentina—and why other countries— such as Ecuador—never really got a chance to put the doctrine into practice...

...Latin America may, in fact, have the most suitable economic model, but be whipsawed by the slowdown in the United States, Europe, and Japan...

...There is even, perhaps, a longing for the country of old described by President Calvin Coolidge: "The business of America is business...

...ATHIRD, ESPECIALLY depressing interpretation is that it is the health of the world economy, in particular, commodity prices and capital flows from rich countries, that overwhelmingly determine economic growth in Latin America...

...Still, as he acknowledges, economic growth is all-important for the region...