Latin American Chimeras
A key reason why Latin American countries have not been able to attain economic development is that their political leaders, supported by their constituencies, have not been persistent in maintaining their economic decisions. In other words, as authors such as Álvaro Vargas Llosa have shown, in Latin America every ten years or less, economic models (and constitutions) are changed, at least superficially. Most of the time those decisions are not the correct changes anyway, and they demonstrate the underlying assumption that the state is the owner, creator, distributor, and perpetrator of wealth in every model implemented.
In the events of this week, one can find an example of both pitfalls: instability and incorrect assumptions. In Venezuela, for two days, there was the first ministerial meeting of the Community of Latin American and Caribbean States (CELAC) regarding eradication of hunger and poverty in the region. For two days, social development ministers of thirty-three countries joined together in order to discuss strategies.
Why does this event show the lack of persistence in Latin American countries? There are two ways to see it. First, CELAC is the most recent attempt to establish integration among Latin American states, but there have been plenty of others. Since the 1960s, one can count at least fifteen different integration efforts. All of them exist still. However, since they have not worked in the past, Latin American leaders create new ones from time to time. Consider that in 2008, the Union of South American Nations (UNASUR) was created. Then, two years later, due to different reasons, CELAC was created.
This could mean that Latin American leaders think that the reason why their integration does not work is because of the names they have given to their past endeavors or because of the number of members.
Second, international summits aimed at eradicating hunger or poverty in the region have been the norm. Latin American leaders have not just been very active in, for example, the discussions that led to the Millennium Development Goals, they have also pressed for these topics in contexts such as the Summits of the Americas. The fact is that since they find it necessary to hold new meetings with the same objectives, nothing has worked in the past.
This leads us to the second reason of underdevelopment of Latin American countries: the wrong ideas. Perhaps the integration as well as the eradication of hunger and poverty have not been successful on account of the number of meetings. They have failed because the previous ones have implemented strategies that are not only inefficient but against the supposed aims. Towards these public aims, Latin American leaders discuss every topic imaginable, except free trade, foreign investment, or economic freedom. How can poverty be eradicated without these strategies? What is the objective of integration among countries if not freeing trade or fostering investment?
The same was the case with these leaders, gathered this time in Venezuela. As before, the strategies they have decided on are just more statism, in a new scenario, and the same wrong policies. They decided on an action plan in which the states have the main role in solving the problems of education, health, hunger, and poverty in the region. Among the specific strategies they included are public purchases of food; distribution of food to different social groups; creation of information systems (!); and alphabetization. Also, they announced the creation of one essential tool for development promotion: a musical center.
These strategies will fail in the future as they have in the past for the following reasons, among others. The CELAC states do not have the financial resources needed to guarantee the public provision of education and health care or to distribute the amount of food needed to feed everyone. Even if they did have the resources, they could not guarantee the quality of those goods and services. Finally, even if the supply and quality could be attained, the perverse incentives, for cronyism and a poverty cycle, would make any such program unsustainable (akin to the almost 50 million people on food stamps in the United States.)
Although these facts are evident for those who want to see them, Latin American leaders – and many in the civil society – prefer the rhetoric of the speeches in which “integration” processes such as CELAC are focused on the poor ones and are based on tolerance and inclusion. As the past has shown, even though this could sound good, it does not stop being another chimera — another one that sets Latin America apart from the creation of wealth and of free societies.