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Forgotten Continent

Page history last edited by Chris Yeh 13 years, 7 months ago

 The Forgotten Continent by Michael Reid

The Battle for Latin America's Soul


notes by Ben Casnocha


Chatper 1 - The Forgotten Continent


Latin America is often ignored as attention is showered on Africa, Middle East, China, etc. Neither poor enough to attract pity, nor dangerous enough to excite strategic calcuation, nor until recently has it grown fast enoguh economically to quicken boardroom pulsese. Only culturally has it been an influence. Music, dance, film, language (Spanish). Brazil is responsible for most of this attention -- "everyone loves Brazil" raved the cover of Newsweek. It's the environmental capital of the world: it has the most biodiversity and its river systems contain more fresh water than those of any other country.


In 2005/2006 there was new interest, mainly thanks to a flurry of regional elections. Story line was that Latin America was moving irrevocably to the left and out from under the thumb of the U.S. Hugo Chavez was a catalyst in this respect.


The region has become one of the world's most important testing laboratories for the viability of democratic capitalism as a global project. Only three relatively small countires -- Costa Rica, Uruguay, and Chile -- can claime to be "consolidated" democracies.


In late 90's there was much optimism about Latin America. This has since soured. The fruits of the Washington Consensus reforms were dissapointing. Financial crises in late 1990's.  The clearest indicator of region's relative failure is that Latin Americans are voting with their feet and immigrating north. Remittances have soared.


The main argument of this book is that for the first time in Latin America's history, genuine and durable mass democracies have emerged across much of the region. In both its breadth and depth, this process is new.


Chavez -- and his co-patriots in this thinking Correa in Ecuador, Evo Morales in Bolivia, Cuba, Nestor Kirchner in Argentier -- are trying to implement 21st century socialism. He's really a refurbished populist meaning  a brand a politics in which a strong charismatic leader purports to be a savior, blurring the distinction bewteen leader, government, party and state, and ignoring the need for the r estraint of executive power through checks and balances. Second, populism has often involved redistribution of income and/or wealth in an unsustainable fashion.


Brief overview of Latin America:

  • Brazil - a strong sense of separateness; its own language; lots of racial diversity; relatively stable democracy but sruggles with bloated state, violent crime and political corruption.
  • Mexico - region's other main giant. Proud of being an ancient society; "the Mexican builds a wall of indifference and remoteness between reality and himself"; Vicente Fox win in 2000 was first time power of govt transferred peacefully
  • Argentina - one of the most puzzling stories in economic history. 100 yrs ago had become a developed country and second largest in Americas after New York; development slipped from its grasp and it's been declining until it hit the nadir '01-'02; mass unemployment
  • Uruguay - small compact country of temperate climate. Switzerland of South America. Relatively stable.
  • Paraguay - small, the victim of countless dictatorships
  • Chile - Relative ethnic homogeneity and compact geography helped it to become a cohesive nation state before others. Trauma of Pinochet dictatorship has been overcome recently with economic reform and stable democratic processes.
  • Ecuador, Peru, Colombia, Venezuela - The Andean countries; suffer from geography
  • Peru - excessive concentration of economic and political power in Lima, resulting in regional rebellions.


Chapter 2: The Latin American Conundrum


Four main schools of thought around Latin America's development failure:


Dependency Theory

Composed mainly of left wingers, blames US intervention and Latin America's subordiate role in the world economy as an exporter of raw materials for both its failure to achieve development and its history of political authoritarianism. Foreign investment in Latin America as malign is widely propogated.


Cultural Explanations

Iberian mindset that reigned during Spanish colonialism still grips Latin America today. Culture which sees success not deriving from individual merit but from who you know. But culture hasn't stopped Spain itself, which has gone on to be a European success story. Cutlure is not the main obstacle to either democracy or development.



Policy Mistakes

Closed economy or too open economy -- experts argue LA has done too much of either. Poor macroeconomic policy choices. de Soto has argued that enforced property rights is key.


Institutional Weaknesses

History (the circumstances in which Latin America was colonized, became independent and related to the world economy) geography (climate, obstacles to trasnport, the presence of a large indigenous ppoulation), political institutions and policies have combined to mold the region's fate.

In Latin America, as in the US, land was abundant but labor scarce. This should have led to higher wages and labor-saving innovations to increase productivity. THis is what happened in farming in the US. In Latin America, on the whole it did not.


Chapter 3: The Seed of Democracy in the Land of the Caudillo


By comparison to the American Independence war in 1776, fight for independence in Spanish America was longer, bloodier, and more destructive. The war was triggered by Napolean's invasion of Iberia in 1807 and creating a power vacuum in heart of the empire. Colonial cultural styles created problems in the early years of independence. Also challenge of geography - Brazil, for example, is the size of the whole continental US!


In Latin America, the philosophy of positivism looms large. This is about an enlightened intellectual elite making decisions. Really enlightened despotism, or authoritariansim. This philosophy buttressed many dictatorships.


Chapter 4: Cold War and Revolution: The US and the Left Reject Democracy


More than anywhere else in the world, Guatemala is the victim of American intervention.


The Monroe Doctrine: American will deter / defend the Americas agaginst European intervention. This expanded in ways to justify American intervention in Latin America. Between 1898 and 1934 there were some 30 separate military interventions by the US in nine countries of the Americas -- all of them in the Caribbean Basin. Most of these exercises were self-serving, even if they were driven, too, by a high minded sense of the US's improving mission in the world -- a mixture of motives that is once again familiar today. On the other hand, interventionsim was restrained both by a desire to avoid foreign entanglements and by the moral rejection of imperialism on the part of a former colonial people. The result, in the balanced judgment of one historian, was a "kind of ambivalent impoerialism continually modifiefd by guilt, domestic politics, and the lack of a true colonial drive."


Chapter 6: The Rise and Fall of the Washington Consensus


Argentina's collaspse became the prime exhibit in the case against "neoliberalism."


The origins of the Washington Consensus lie in the debt crisis of 1982.


John Williamson, a British economist, coined the phrase. It was called "Washington" because he wanted to demonstrate to official Washington that Latin America had reformed itself. His formulation did not endorse neoliberalism. Just 10 points of basic economic management: achieve macroeconomic stability and taming inflation thru the control of fiscal deficits. Second was dismantling protectionism and opening up to foreign trade. Third aspect was reforming the role of state in economy and promoting the role of markets in allocating resources and generating wealth. Sensible list but forgot to mention importance of slashing poverty and inequality.


Income inequiality has been huge in LA for years.


Chapter 8: THe Reformist Reponse


Chile's reform depeened by democracy. Effective economic polices



In the past half century Latin America socieites have become overwhelmingly urban. Today more than 76% of Latin Americans live in cities. They are theaters of social progress and social inequality.



Evangelical protestism is winning converts and changing social attitudes among the region's poor.


Latin American rulerse have been divided between those who looked abraod in search of modernity and those who sought inspiration within, in the interior of their own countries and their traditions. A synthesis is surely within reach: the benefits of economic openness are clear, but the politicans must ensure that they reach the hinterland.

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