Trouble Down Below
What's wrong with Latin America.
May 19, 2008, Vol. 13, No. 34 • By MARK FALCOFF
What's new in Latin America? One way of finding out is to go to the website of the Spanish edition of the Miami Herald. Recently, for example, these were the lead stories: "Rosales [leader of the opposition in Venezuela] denounces kidnappings by the FARC [the Colombian guerrillas] in Venezuela"; "Retired military officer [in Argentina] caught with 1,100 kilos of cocaine"; "Six bodies bound in a shallow grave in Northern Mexico [apparently members of the Juárez narco-cartel]"; "Former vice-president denounces electoral fraud in Paraguay"; "Police lack clues in the case of the murder of a former Ecuadorian congressman"; "Huge arsenal discovered in a Honduran jail"; "Venezuela and Colombia on the verge of breaking diplomatic relations."
Is the Herald exaggerating or sensationalizing? Not at all. As someone who has been following the Latin American prints for more than four decades, I can attest that these stories represent a quite typical diet of the daily news reports coming out of the huge continent to our immediate south. Today is like yesterday; tomorrow will be pretty much like today.
In spite of this discouraging picture, some people seem to think that, with all our other problems, we should be spending far more time agonizing about the fate of these dysfunctional societies. One of them is Michael Reid, a British journalist married to a Peruvian who, for many years, has reported on the region for the Economist. To this end he has penned this book--a vast tour d'horizon chock-full of data, local color, observations, and economic -analysis. In fact, it reads like back issues of Reid's magazine, stitched together and perhaps expanded at greater length.
Not that this is all bad. Forgotten Continent is probably the best general book currently available on Latin America, and one not likely to be superseded for some time. It is knowledgeable, trenchant, and for the most part eminently fair and objective. Who will want to bother to plow through its 400 pages (some rather long on facts and figures) is hard to say; as publishers and agents have been telling me for years, books on Latin America appeal only to a left-wing market--and not a very large one at that.
To be sure, Reid's approach is not ideological; it is written in the Economist's house style: a conflation of condescension, hard economic data, and on-one-hand-but-on-the-other-hand pronouncements which seem always somehow to come down (just barely) on the side of optimism. Whether in the case of Latin America such optimism is justified is quite another matter.
The thesis of the book--it can be easily discerned from the subtitle--is that Latin America is at an institutional fork in the road. One path has been taken by the fragile but sometimes determined efforts at democracy by about a dozen countries, led by Chile, Colombia, Brazil, and Uruguay, followed at some distance by countries like Peru, most of Central America, and Paraguay. The other has been taken by republics that have succumbed to the populist temptation--led, of course, by Venezuela's clownish dictator-president Hugo Chávez, but followed closely by Bolivia's Evo Morales, Ecuador's Rafael Correa, Nicaragua's Daniel Ortega, and the on-again/off-again Kirchners in Argentina.
Reid is not optimistic about the possibilities of populism resolving the region's problems, even in countries like Venezuela that are currently awash in petrodollars. In that regard he is quite right, and he has plenty of facts and figures to back him up. But his metaphorical fork in the road is more imaginary than real. The fundamental problem is not the faux-révolutionisme of populist demagogues, who are bound to come to a bad end, but the highly unsatisfactory performance of the new democracies.
Reid says that the good news about the region is that the swing of the pendulum between weak civilian governments and incompetent (sometimes hideously repressive) military dictatorships has come to an end. So has hyperinflation. The bad news is that these societies--even ones ruled by more or less civilized rules of the electoral game--are still vastly underperforming compared with their (theoretical) potential.
Here and there he finds bright spots in all the crucial areas--economic policy, rule of law, governance, even education--and obviously some countries (notably Chile and, to some extent, Brazil) are doing much better than others. But a careful reading of Reid's survey, which admittedly covers a huge and complex area, nonetheless leads to one dismal conclusion. Even in the best of cases one is left with scattered archipelagos of progress in a huge sea of mediocrity and stagnation.
Not surprisingly, Latin America as a whole has lost significant geopolitical weight over the last four decades. A case in point: In 1966, Mexico was richer than Portugal and Brazil was more affluent than South Korea. But in 2002, the income per capita in both Portugal and South Korea was twice that of Mexico and Brazil. In 1950, the average income per head in Latin America was 25 percent of the United States (while in Asia it was 10 percent). But in 2000, Latin America had dropped to 20 percent of its northern neighbor while Asia had risen to a full 25 percent.
No wonder investors have misplaced the region's collective phone number. What's the problem? Many Latin American politicians and their epigones in the American academy blame everything on "neo-liberalism"--that is, the free market reforms enacted in the go-go 1990s. Reid carefully dispenses with this argument, even to the point of defending the much-maligned "Washington Consensus." But he discards cultural and historical explanations, even though he fails to come up with a satisfactory alternative.
The truth is that these are conquest societies, orphans of long-disappeared empires who lack any vision of a national project, or commitment to it (Brazil is a possible exception) or even, in many cases, any clear notion of national identity. Some, like Bolivia, are merely geographical expressions rather than real countries; almost all are afflicted by racial and social divisions and discrimination, exemplified by the fact that educational budgets--as, indeed, most government benefits, including social security and pensions--are tilted towards a small but still sizable "white" or "near-white" minority. Institutions are weak or nonexistent; too many crucial national issues are solved privately or en familia.
While there have been periodic attacks on vested privilege--in Mexico, Peru, Argentina, or Nicaragua, for example--rather than creating new and lasting opportunities for the landless or unemployed, they have usually ended up leaving the entire society poorer or, in the best of cases, simply creating a new class of well-connected generals and politicians who are entrepreneurs. (This is the fate that undoubtedly awaits Cuba once the Castro brothers have departed.)
It is refreshing, in a book of this sort, to see that the usual rosary of accusations against the United States is missing. Reid notes, for example, that intervention is only one side of American policy; the other is the search for peaceful cooperation. (Actually, he might have said, both at the same time.) But while on some historical issues he is right on the mark--he dismisses charges of U.S. responsibility for the coups in Chile and Brazil--on others he is quite wrong. The CIA did not blow up a Belgian ammunition ship in Havana harbor in 1960, nor was it responsible for the flight of Jean-Paul Aristide from Haiti.
He does, however, more broadly grasp the central paradox of inter-American relations; namely, the on-again off-again Latin complaints against Washington. Whatever is wrong with Latin America is the fault of the United States--either by intervening in matters that don't concern it, or by failing to embrace the region's problems as its own. ("I've got a problem; what are you going to do about it?") The Bush administration stands condemned for failing to give Latin America the priority it imagines it is due; the one that follows will no doubt be taken to task for excessive meddling and lack of "mutual respect." And back again.
In fact, as Reid notes, the only serious revolution of which Latin America seems capable is out-migration. Young people all over the continent dream of leaving, and many do. In 2005, an astounding 22 million Latin Americans worked in the developed world, having arrived there legally or illegally, followed by another 3-5 million who now work in more prosperous neighboring countries, such as Bolivians who emigrate to Chile or Paraguayans to Brazil. In the same year it was estimated that remittances to their home countries amounted to $54 billion, which is to say, more than all the foreign direct investment and foreign aid to the region combined.
The escape valve of emigration is important not merely for poor countries like Bolivia or Ecuador but even in relatively sophisticated societies like Mexico, Colombia, or Costa Rica. At this writing at least one out of every ten Argentines lives in Europe, Canada, or the United States. Not surprisingly, the debates on immigration policy underway in our own presidential campaign are followed with acute apprehension in nearly two dozen countries to the south.
As noted earlier, Reid is troubled by our current lack of interest in the region, and thinks that more attention and resources need to be devoted to it, not just by the United States but by the European Union as well. But as he points out, "It is neither poor enough to attract pity and aid, nor dangerous enough to excite strategic calculation, nor until recently has it grown enough economically to quicken board room pulses." This, together with its deteriorating infrastructure, declining physical security, and loss of global competitiveness condemns Latin America to permanent residence in the slummy suburbs of Western civilization--an admittedly unenviable position, but one apparently determined by its tragic history.
Why outsiders should try to solve the Latin American conundrum when so many Latins themselves have all but given up on it is a question that this otherwise comprehensive book fails to address.
Mark Falcoff, resident scholar emeritus at the American Enterprise Institute, is at work on a book about the Hispanosphere.