Fri 10 Oct, 2008 04:33 pm
In Latin America, Pointing a Finger at the US
"Our financial system is not involved in the [U.S.] subprime" mortgage mess that sparked the catastrophe. "We did our homework and the U.S., who spent 30 years telling us what to do, did not."
Such is today's surreal situation that Washington is getting lectured on capitalism by Lula, the head of Brazil's leftist Workers' Party. All over a region once considered the poster child for economic dysfunction, the refrain is the same: Why can't the gringos run an economy as well as we do? Since the fall of the Berlin Wall, Latin America has been adopting the free-market economic reforms demanded by the U.S. The "Washington Consensus" " more open markets, draconian cuts in public spending, privatization of inefficient industries " has often been blamed for exacerbating the continent's epic inequality. But most Latin American countries now follow market policies. Some, especially Brazil, have used them not only to create prodigious wealth but also to redistribute it: 52% of Brazil's 190 million people now occupy the middle class, up from 42% when Lula was first elected in 2002.
Then came the mother of all Wall Street collapses, fueled by a toxic cocktail of avarice and incompetence once common to the Latin American establishment, and the continent's trust in Washington's free-market model is once again in tatters. The crisis is a shot in the arm for the socialist project of the new Latin left, led by Venezuelan President Hugo Chavez. "Countries like Mexico, Brazil and Chile have done everything expected of them macro-economically, but everyone underestimated the size of this crisis," says Peter Hakim, president of the Inter-American Dialogue in Washington, D.C. "Lula is very right to point the finger of blame at the U.S. If the Venezuelas of the region, which rejected market policies out of hand, come out better at the end of all this than the Brazils do, the credibility of the Washington Consensus will be sadly diminished."