Prince Admits the Pauper Exists!

[Sam Pawlett]

Thinking of Dornbusch, he co-wrote a book with Sebastian Edwards called
_Economic Populism in Latin America_. Edwards was a student of Harberger
and one of the most prominent Chilean Chicago-boys. He now works at UCLA
and the Bureau of Economic Research. He(Edwards) wrote an important
article in the April '97 issue of Foreign Affairs called "Latin
America's Underperformance" p93ff. Important because a doctrinaire
neo-liberal(and Pinocho supporter) finally admits that neo-liberal
capitalism has failed in Latin America. Edwards is worried that without
forthcoming substantial improvement in living conditions,  the LatAm
working class will no longer support the efforts at "reform". A few
snippets:
"After almost a decade of reform, the region has little to show in
improved economic performance and social conditions. Growth has been
modest at best. In many countries, wages have stagnated and job creation
has been sluggish...Rapid growth with rising real wages will require
both higher export growth and an increase in the value-added content of
the region's exports( i.e.a switch from primary commodity to
manafactured exports SP) ..It(growth, SP)  is much lower than the
regions historical average of 6% from 1965 to 1980...In most countries,
social conditions, particularly poverty, have not improved. Unemployment
has increased sharply, raising the question of whether these
market-oriented economies will create jobs fast enough to absorb a
growing labor supply...After a decade of the initiation of
market-oriented reforms, most Latin American countries continue to
export mostly resource based products with low value added...Poles of
prosperity and modernism and pockets of poverty and backwardness may
soon mark Latin America's economic landscape."
Hmmm, pockets of prosperity amidst plenty in Latin America. News to me!
Good observation Dr. Edwards! What phenomenological insight! You mean
you can actually see people scrounging in garbage cans through the
french blinds in your office? Got any econometric studies to confirm
this anecdotal evidence? Lower taxes, improve savings rates, open the
border to investment and presto! Right? Mr. Edwards solution is,you
guessed it, Sweden. Welcome to reality Professor Edwards!!

Sam Pawlett.