Brad De Long wrote:
> >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...
>
> I wouldn't call Sebastian Edwards (or Rudiger Dornbusch, or Eliana Cardoso,
> or indeed Brazilian President Cardoso) "doctrinaire neo-liberals." I do
> think that they (and I) believe that neo-librealism is the best bet open to
> Latin American countries today.
O.K. Its just a label and really doesn't mean much. You probably know these people, I've just read their books. Intellectuals earn the label "doctrinaire" when they still hold theories that have been falsified.
>
>
> It would be much better if Latin American countries could pursue a
> social-democratic road to development: state-led support of rising
> industries a la East Asia, a heavy dose of government investment in
> infrastructure, a very strong government push for universal education, all
> supported by a strongly progressive income tax system that greatly shrank
> the extremes of inequality produced by the market's distribution of income.
>
> It would be better if Latin American countries could pursue a *successful*
> brand of populism--one that transferred wealth from creditors to debtors by
> a moderate rate of inflation, used capital controls to prevent the transfer
> of wealth from generating large-scale capital flight, but produced a
> high-pressure economy in which employment was high, growth rapid, and
> profits of manufacturers (who would reinvest them rather than transferring
> them abroad) high.
It would be better if the peasants and workers of Latin America organized themselves and overthrew the capitalist state and organized society themselves as they see fit. There are only hypothetical imperatives. If everyone were nicer to each other then we would have a better society.
>
>
> But the historical experience of Latin America since World War II appears
> to teach the lesson that the sociological and economic class bases of the
> Latin American state offer powerful impediments to either successful social
> democracy or successful populism
Yes, which is why these classes need to be overthrown. Its not just the dominant classes in Latin America but the dominant classes in the world that have acted as impediments to successful social democracy. Time and again, social democrats, socialists and communists in L.A. have been sabotaged, blackmailed and overthrown when attempting to build social democracy.The marines invaded the Dominican Republic in 1963 when a populist government was trying to set up a program similiar to the Alliance for Progress. It is not so much a question of reformers having the political will to build social democracy but whether U.S. imperialism lets them.
> --industrial policies do not accelerate but
> retard development, state-owned enterprises do not enable higher investment
> but become employment sinecures for the clients of the politically
> powerful, progressive income tax laws raise little revenue, and attempts at
> social insurance produce large budget deficits that end in hyperinflation.
>
> Hence neoliberalism, which is perhaps best seen as a counsel of despair, or
> of near-despair. If there is little that is worse than state-led
> development led by an anti-developmental state
Latin American economies were more successful under ISI than neo-liberalism. Edwards admits as much.
> , and if the sociological and
> political barriers to reform of the state are too high to be overcome by
> even committed reformers, then perhaps it is best to try to shrink the
> state--get rid of state-owned enterprises in the hope that private
> ownership will make them more efficient, get rid of social insurance
> programs that do little or nothing to reduce inequality (and that instead
> only transfer to clients of the powerful), get rid of restrictions on trade
> that enrich the already-powerful rather than nurturing new industries, hope
> that the program of reform attracts enough investment from abroad and
> transfer of technology to make it possible to assemble a political
> coalition to allow reform to continue.
This has been tried and has failed dramatically in all aspects except for the quelling of inflation. Put another way, halting inflation has come at the expense of the rest of the economy. It is the state of the class struggle that sets the barriers to what can and cannot be done. When the workers and peasants have strong class power the elites will cede to a position of social democracy. When the workers and peasants have state power we can build socialism. The masses will not come into the street and face down the machine guns for a higher education budget. Progressive measures have been implemented because they have been fought for and won through class struggle, not because the elites decided to be nice guys and throw a few crumbs off the table.
>
>
> And in addition hope that increased economic contact with the industrial
> core will generate an accompanying flow of cultural and social patterns as
> well--will strengthen demands for political democracy as well as for
> industrial-core values such as labor standards and pollution control.
>
> That, at least is the hope. And I do think that it is the best bet open to
> much of Latin America at this point. At least, I can see how the neoliberal
> program might succeed--and I can't see how social democracy or economic
> populism in Latin America today would generate a good outcome.
That was the hope. It has failed. Socialism or barbarism. There is no alternative.
>
>
>
> After all, if this year is as good a year for Mexican growth as the average
> year in the past decade, then this year Mexican measured real GDP will be
> more than 40% higher than it was a decade ago. Mexico's population growth
> rate is high enough that such an increase translates into less than half as
> large an increase in real GDP per capita
Poverty creates high population growth, capitalism creates poverty; capitalism creates high pop. growth rates. The logic is impeccable. From a standard undergrad text on economic development: " In short, expanded efforts to make jobs, education and health more broadly available to poverty groups in the third world countries will not only contribute to their economic and psychic well-being but can also contribute substantially to their motivation for smaller families which is vital to reducing high population growth rates." _Economic Development_ Michael Todaro, p201.
Sam Pawlett
> --but this is still progress of a
> sort (albeit of a sort that leaves measured real GDP per capita lower than
> in the late-1970s heyday of the oil boom).
>
> Brad DeLong