What Is Wrong with Latin America?


Ed O’Rourke

Distinguished Miami Herald reporter, Andres Oppenheimer, looks at the stagnant economic growth in Latin America and wonders why there is no growing prosperity.  In his travels, he has spoken to presidents of many countries and examined political, cultural and economic backgrounds of successful countries – China, Ireland, Poland, Greece, Portugal, Taiwan, Hong Kong, South Korea, and Singapore   .  He reminds me of Adam Smith’s Wealth of Nations in his examination of what conditions lead to wealth creation.  When I studied economic development in the late 1960s and early 1970s at the University of Texas at Austin, I found lots of theories.  Some economists looked at psychological and cultural impediments.  Mr. Oppenheimer and others debunk the dependency theory – which the wealthy nations conspire to keep the poor countries poor.

His book, Saving the Americas: The Dangerous Decline of Latin America and What the U.S. Must Do, is a collection of unvarnished criticism and solutions.  He gossips unfavorably traits about some Latin American presidents in a tabloid fashion that few do.  But the stories are not mere gossip.  They reflect serious underlying difficulties with  particular presidents and their current political frameworks.

My difficulties are with what Mr. Oppenheimer does not mention: global warming, the U.S. war on drugs, blatant political and military intervention in Latin American countries.

Mr. Oppenheimer presents his case that Latin America is stagnant, violent, and that under current patterns will become even more marginal in world affairs, that economic prosperity is achieved by investments in education and technology and participating in international trade agreements.

Futurology studies show Latin America as a marginal area on the world’s economic stage.  Latin America has 7.6% of the world’s gross product and 4.1% of its trade.   It has the highest homicide rate in the world with about two and a half million private security guards in the region.

While negotiating with the rich countries to lower agricultural subsidies to their farmers, Mr. Oppenheimer thinks it is more worthwhile to pursue production of high value added products and gives plenty of examples of that happening in poor countries.  The multinational Wipro Ltd. of India began its business selling cooking oil and became one of the world’s largest software companies.  For a $3 cup of coffee at Starbuck’s, the farmer gets 3%.  Some say it is 1%.    There is no future in growing coffee.

Latin America’s economy is heavily dependent of raw materials exports.  The prices of raw materials plummeted by 80% in the 20th century.  In 1960, raw materials made up 30% of the world’s gross product.  In 2007, they represented just 4%.

There are countries with relatively high standards of living that have few or virtually no natural resources – China (for a lot of the people), Ireland, Poland, the Czech Republic, Portugal, Greece, Liechtenstein, Singapore, Taiwan, Israel and Hong Kong.

After the Second World War, European countries were fearful of what would happen if they had to give up their colonies.  Newspapers were filled with predictions of a lower living standard.  There was a lot of restructuring but they managed to live in prosperity without those colonies.

What is happening now is a sloppy energy use.  The United States uses three times as much energy per item produced as the Japanese.  China uses nine times as much energy per unit as the Japanese.  Both American and the Chinese economies are unsustainable.

Latin America has mediocre universities.  London’s Times Higher Education Supplement ranked the world’s top 200 universities in 2004.  Only one Latin American university made the list, National Autonomous University of Mexico (UNAM), ranked 195th, nearly the bottom. Mr. Oppenheimer states that the UNAM of Mexico and the University of Buenos Aires “are both sacred cows in their countries that few dare to criticize, even though they are monuments to inefficiency and underdevelopment.”

Latin America as a region spends less money on education than most other places and what they spend, they spend badly.  The University of Buenos Aires, Mr. Oppenheimer’s alma mater, produces 2,400 lawyers and 1,300 psychologists each year, compared with only 240 engineers and 173 graduates with degrees in agriculture and livestock sciences.

The gossipy stories about some presidents are interesting reveal the limited vision in Argentine and Venezuelan political life.  Argentina’s president Nestor Kirchner likes to stand people up from long held appointments because he want s to show who is boss and that Argentina is a country to be reckoned with.  He stood up Russia’s President Putin in Prague and failed to show up at a major conference sponsored by the Miami Herald.  He was born, raised and later governor of Patagonia for 12 years.  He displays the localism coming from an isolated beautiful area oil-producing province of 200,000.  Before becoming president, he practically never travelled abroad.  He speaks no foreign language and shows little interest in the rest of the world.  In a move that the Clinton family would like to imitate, his wife is now the president

For Mr. Oppenheimer, there is plenty wrong with President Hugo Chavez. Mr. Chavez’s model is Simon Bolivar, the country’s liberator from the Spanish.  Venezuela is now the Bolivarian Republic of Venezuela.  Since Venezuela’s difficulties have nothing to do with foreign occupation, the president could choose symbolism of education and technology along with social justice.  For my part, the appeal to military models is troubling when the world needs peacemakers who can resolve disputes by diplomacy, commerce, technology, education and embrace social and environmental justice.  Most Americans, after five years of war, realize that aircraft carriers, fighter planes, tanks and rifles will not protect us from global warming or environmental degradation

The reader would not know from reading this book that the Intergovernmental Panel on Climate Change has called for an 80% decrease in carbon dioxide emissions.  If the rich countries continue their current path or if China and India pursue their plans to build coal fired power plants, the human race and the world’s living beings are doomed.  The world is going through its Sixth Great Extinction. The book criticizes the Bush administration for plenty but not for its environmental destruction.  Mr. Oppenheimer makes no reference to the destruction of the Amazon rainforest or multinational companies’ actions in their oil explorations pollution of surrounding areas.

Mr. Oppenheimer comes across as fostering free trade agreements without reservations in the same way that Thomas Friedman of the New York Times and free trade fundamentalists do.  The fact of the matter is that other people than left wing populist criticize unrestricted globalization as helping the rich and the multinational corporations.  One example is Nobel Prize winner and former chief economist and senior vice-president of the World Bank, Joseph Stiglitz. See his book, Making Globalization Work, for remedies that bring more social justice.  The successful countries that Mr. Oppenheimer praises all adopted globalization and trade agreements under their own terms, heavily regulating and monitoring events.

There is an approach to trade and capital market liberation known as the “Washington Consensus” forged among the International Monetary Fund (on 19th Street), the World Bank (on 18th Street) and The U.S. Treasury (on 15th Street).  This consensus emphasizes downscaling of government, deregulation, rapid liberalization and privatization.  When people like me want human rights, the environment, working conditions as part of the trade negotiations, we are considered protectionists.  Countries like Russia and Argentina who followed this path soon regretted their decisions.

Mr. Oppenheimer debunks the dependency theory.  Since the United States has actively participated in democratically elected governments’ overthrow such as in Guatemala, Iran, Chile and Nicaragua, I take the theory seriously.  I see our military interventions in the Dominican Republic, Panama and Grenada.   Since our Central Intelligence Agency actively worked to overthrow the Indonesian government in 1965, resulting in the massacre of 500,000 people, there is no allegation about our government that I would automatically reject.  John Perkins, author of bestseller Confessions of an Economic Hitman, is credible.  Mr. Perkins as a consultant for the World Bank deliberately inflated the returns of proposed projects in poor countries to get the countries into a state of debt peonage and compliance with the American foreign policy objectives.

Mr. Oppenheimer omits coverage of world-wide poverty reduction efforts.  When Gordon Brown was Exchequer of Great Britain, he advocated a second Marshall Plan for the world’s poor.  See the Global Marshall Plan web site (www.globalmarshallplan.org) for more.  Such poverty reduction would help deal with terrorism be reducing economic inequalities.  Those concerned about illegal immigrants crashing the gates of the United States and the European Union should support such a plan.  If people have decent jobs at home, few would bother with hardships and extortions involved in entering a country illegally.

Mr. Oppenheimer makes no reference to the American war on drugs.  Rich countries are make a lot of poor people even more miserable and some governments less able to control events in their own countries.  Since I can see no significant distinction between t Prohibition and today’s war on drugs, I see it as well past time we legalize drugs in some way.  For anyone who thinks that our current efforts are doing any good, I refer them to the Drug War Facts web site (www.drugwarfacts.org).  Organized crime will not go away but seek less lucrative activities.

Next to last, I hope in future editions that the publishers take time to prepare an index to make life easier for reviewers like me.

All in all, Saving the Americas is a fine book with some blind spots that can be addressed in future editions.  The criticisms that Mr. Oppenheimer makes take courage.  Many reporters and authors shy away from controversial commentary that could easily make future sources dry up.

Ed O’Rourke has a master’s degree in Latin American Studies from the University of Texas at Austin.

Main source:

First written in Spanish:

Andres Oppenheimer, Cuentos Chinos: El engano de Washington, la mentira populista, y la esperanza de America Latina (Tall Tales: Washington’s Deceit, the Populist Lie and Latin America’s Hope), Editorial Sudamericana, 350 pages.

Later translated into English:

Andres Oppenheimer, Saving The Americas: The Dangerous Decline of Latin America and What the U.S. Must Do, Random House Mandadori, 2007, 387 pages.