[Marxism] Latin America's Left Takes Pragmatic Tack (WSJ)
walterlx at earthlink.net
Wed Mar 2 04:03:16 MST 2005
(In public, at least, Washington and Wall Street are
rolling with the steady stream of left and progressive
election victories across the continent of Latin America.
They report, and appear to praise, what they refer to as
the pragamatic approach of these governments. Yet their
decision to demonstrate their independence of the US by
recognizing Cuba is highly significant. They want Cuba
included in the Latin American family while Washington
wants Cuba out.
(And furthermore, their expanding economic ties with
Cuba helps further maintain the island's ability to be
economically independent, and thus to limit, while not
breaking, the power of the US blockade. What remains to
be seen is how long so many US business people will let
the rightist Bush administration continue to deny them
an opportunity to engage in the simple business which
Cuba is fully open to practicing with them?)
March 2, 2005
AMERICAS BUSINESS NEWS
Latin America's Left
Takes Pragmatic Tack
To Reduce Poverty, New Leaders May Have
To Sell Economic Changes to a Skeptical Public
By DAVID LUHNOW
Staff Reporter of THE WALL STREET JOURNAL
March 2, 2005; Page A15
Uruguay became the latest Latin American nation to swear in
a socialist president yesterday, consolidating the left's
grip on power in the region but raising an important
question: Will it be any more successful in easing poverty
than the centrist parties it replaced?
Tabare Vazquez, a 65-year-old former physician, rode to
power in Uruguay promising to help the poor, a populist
platform that growing numbers of the region's politicians
are finding a useful springboard to power, thanks to
popular frustration at two decades of U.S.-inspired
free-market economic policies that have done little to ease
Mr. Vazquez represents a new breed of pragmatic leftists in
Latin America who hope to combine the left's traditional
warm-hearted social goals with a new-found appreciation for
cold economic calculus. In other words, Mr. Vazquez, a
former cancer specialist, wants to cure poverty, but he
knows he can't simply spend money to do it.
"You're seeing the same kind of transformation that a lot
of left-wing parties carried out in Europe, an evolution
into something that respects basic market principles," says
Mohamed El-Erian, who oversees $14 billion in
emerging-market bonds for Pacific Investment Management Co.
"I call it financially principled populism."
Many observers doubt the region's so-called New Left will
have much success reducing poverty if policy makers don't
go beyond simply learning not to overspend. Latin America
is fast falling behind Asia's dynamic economies in the
battle to attract investment. These observers fear the
region may not be able to get the jobs it needs to reduce
poverty if it doesn't carry out a host of changes to its
economies. That includes, among other things, improving the
quality of education, making rigid labor laws more
flexible, and improving government's ability to collect
taxes to spend on areas such as health care and highways.
"I'm not sure these guys are offering anything new," says
Riordan Roett, head of Western Hemisphere Studies at Johns
Hopkins University's Center for Strategic and International
Studies. "There are a whole host of microeconomic problems
that no one is resolving."
What is clear is that the region's populations are
desperate for change. In country after country, voters have
kicked out old-line conservative parties and given the
reins of power to untested leftist parties and outsider
political figures. Even on Washington's doorstep in Mexico,
a leftist from a party that has never governed nationally
leads the polls ahead of next year's presidential race.
With the exception of Venezuela's populist Hugo Chavez, who
has ramped up public spending on everything from highways
to utopian projects such as urban farming, the change in
Latin America's leftists is striking. Most bear little
resemblance to the region's left-wing parties of the past,
embodied by iconic figures such as Cuba's Fidel Castro and
Argentinian revolutionary Ernesto "Che" Guevara.
The new leftist generation is proving to be surprisingly
pragmatic on many macroeconomic issues. Bouts of past
hyperinflation have convinced most governments of the need
to control the public purse, and most now believe they need
to have an open economy in order to develop economically.
Brazil's president, Luiz Inacio Lula da Silva, embraces
free-market discipline with such fervor that some of his
supporters wonder if the conservative politicians that Mr.
da Silva beat for the presidency would have governed any
"It is an article of faith among the region's progressive
movements now that you can't reduce poverty simply by
spending," says Chile's education minister, Sergio Bitar, a
member of socialist President Ricardo Lagos's cabinet.
Given the broad consensus between the left and right on
economic principles, what may matter is the left's
political ability to pull off economic changes by selling
them more effectively to skeptical publics. They have made
some progress. In Brazil, Mr. da Silva managed to overhaul
the nation's pension system -- something that stymied his
predecessor, Henrique Cardoso. In Chile, Mr. Bitar is
spearheading a program to teach English at all public
schools in a bid to help Chilean workers become more
competitive in the global economy.
But the changes haven't gone far enough, according to
critics. Mr. da Silva's efforts to loosen Brazil's
labor-law restrictions, which are widely seen as reducing
employers' incentives to hire, have so far languished in
the country's parliament. Some economists wonder if the
burly former labor activist, the country's first
working-class leader, is pushing hard enough for a change
that could antagonize his labor base.
Some economists trying to find the right formula for growth
in the region are willing to give the leftists a chance to
tinker with free-market formulas, including giving the
state a more active role in managing the economy. The
Inter-American Development Bank, for instance, commissioned
a study by Harvard University economists for use by Mr.
Vazquez's government. The study, by economists Ricardo
Hausmann, Dani Rodrik and Andres Rodriguez-Clare, calls for
the government to boost its subsidies to create successful
businesses where Uruguay has a competitive advantage, such
as intensive rice farming.
The study also urges the new government to follow the
example of Chile in trying some unorthodox means to keep
its currency steady and relatively weak, in order to help
"The idea is to try to come up with some new ideas that can
be useful in the context of change in Uruguay," says
Eduardo Fernandez Arias, an economist at the IDB and a
So far, Washington has viewed the region's leftists, with
the exception of Mr. Chavez in Venezuela, as more or less
benign. Some believe the U.S. should engage the pragmatists
much more aggressively, helping them devise better ways to
reduce poverty and improve their economies'
"Washington should see this new breed of pragmatists as
part of the solution to the region, given that the formulas
advocated in the '90s haven't produced results," says
Michael Shifter, a policy analyst at the Inter-American
Dialogue think tank in Washington. He adds that building
closer relationships with pragmatists such as Brazil's Mr.
da Silva can help the U.S. find an interlocutor in dealing
with Mr. Chavez and others in the region who oppose U.S.
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