[Marxism] Capricious growth in Peru

Louis Proyect lnp3 at panix.com
Fri Apr 7 11:11:13 MDT 2006


NY Times, April 7, 2006
Growth's Caprice Angers Some Peruvians
By JUAN FORERO

ICA, Peru, April 1 — Business has been good for José Chlimper, owner of a 
vast farm carved into the desert here, where workers churn out 50 tons of 
asparagus a day for markets in the United States and Europe. Production is 
expected to double by 2009, and the seasonal work force tripled in just 
five years.

But even he understands why, with elections on Sunday, voters are in a 
punishing mood.

Successive governments, he said, have mismanaged services to the poor, 
leaving Peru with shoddy schools and poor health services. "Government has 
done a very poor job distributing wealth," he said, "therefore growth has 
not percolated in the way it should have."

Businesses like his are the motor of an economy that, on paper at least, is 
considered Latin America's most vibrant, growing by 6.7 percent last year. 
It is an expansion that should have made President Alejandro Toledo's 
government more popular and opened the door to another market-friendly 
administration.

Instead, polls show that more than half of Peruvians are ready to forget 
Mr. Toledo, the most unpopular leader in the region, and look past the 
pro-globalization candidate, Lourdes Flores.

Many have tired of the American-inspired free-market model and appear ready 
to bet on Ollanta Humala, a fierce nationalist who favors scrapping a new 
trade deal with the United States, or Alan García, a former president whose 
mismanagement of the economy in the 1980's devastated Peru.

With exports more than doubling in three years and poverty dipping, the 
question of why Peru seems set to join the tide of countries that have 
tilted toward populist leaders goes to the heart of the region's recent 
political transformation.

The new leaders are all quite different when it comes to policies; 
President Hugo Chávez of Venezuela, for instance, has opposed market-driven 
policies, while Brazil's president, Luiz Inácio Lula da Silva, has embraced 
them. But they have one thing in common: previously disenfranchised voters 
put them in power.

After a generation of erratic fiscal performance, with the economy spiking 
one year and nearly collapsing the next, Peru has averaged 5 percent growth 
rate the last four years. Foreign investment last year was twice as high as 
when Mr. Toledo took office.

But Peru is a young country, and while its growth has been impressive, Peru 
needs to register 7 percent growth a year consistently to make any real 
headway against poverty.

"You'd never think that a vote of protest would be justified right now," 
said Fritz Du Bois, director of the Peruvian Economic Institute, a 
free-market policy analysis group.

"But the big lesson of the appearance of this anti-system vote is that the 
Peruvian economy has to be much more ambitious. In a young population like 
we have here, if you grow 4 percent or so a year, you're just stagnant."

That fact is not lost on business owners like Mr. Chlimper, 50, the son of 
Eastern European immigrants. The country is clearly generating jobs, he 
said, including his business, called Agrokasa, and he believes that still 
more will come once free trade kicks in.

"But the job deficit is so big that we're not persevering," he said. "We 
had one year of 6.7 percent growth. But we need 20 years of persevering."

Many Peruvians simply cannot wait, and this is reflected in the backing 
given Mr. Humala, whose talk of increasing state control over the economy 
had helped give him a slight edge over Ms. Flores in a recent poll by Apoyo 
Opinión. Another poll, by CPI, shows Ms. Flores with a razor-thin lead.

Either way, Ms. Flores may still win the election in the second round, 
polls show, but Mr. Humala is hoping disillusioned voters put him over the 
top in the first.

"The poor have been forgotten, discriminated against, and what Humala 
offers is work and change," said Justo Paco, 55, a baker who lives in one 
of Peru's richest regions, Tacna, near the bustling border with Chile. "The 
economic model we have now is very bad."

In an interview, Prime Minister Pedro Pablo Kuczynski, the architect of the 
economy, acknowledged shortcomings. But he said Peru had built a good base 
for future growth by putting in place other, little-noticed measures, like 
collecting more taxes and lowering military spending. The taxes paid by 
companies have risen to $2.6 billion last year from $877 million in 2001.

He cautioned, however, that growth would be moderate and stable, far from 
fast-paced. "In order to run, you have to learn to walk," Mr. Kuczynski 
said, explaining that extricating Peru from poverty could take a generation.

With Peruvians clamoring for change, though, the candidates have offered 
quick fixes. Even Ms. Flores, who is known as a fiscally prudent manager, 
has promised growth of 7 percent a year and 650,000 new jobs annually, 
which economists say is unlikely to happen.

In this coastal region of southern Peru, normally covered by sand as far as 
the eye can see, asparagus sprouts along row after row of neatly tilled and 
irrigated plots. Under a broiling sun, workers carefully cut the asparagus.

Nine hundred employees, all wearing white lab coats, hairnets and plastic 
rubber boots, then clean the asparagus in special tanks, select the best 
stalks off a conveyer belt and pack them. The work is tough and repetitive.

But for Magdalena Oviedo, 40, who has been employed here five years, it has 
given her new opportunities. She recently bought a house, she said. Other 
workers talk of how the region, benefiting from new taxes, has built roads 
and improved infrastructure.

"People are pleased because there used to be no work," Ms. Oviedo said. 
"People now have a way of making a life."





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