[Mark Weisbrot, co-director of the Center for Economic and Policy Research (CEPR) in Washington, D.C. takes a critical look at a recent piece by the Latin America editor of The Economist, Michael Reid, which paints a dismal picture of Venezuela and argues that the British left should support economic policies in Latin America which Reid argues are "building on the economic reforms misleadingly known as the Washington Consensus". For Weisbrot it is a tribute to the sophistication of the British left that they can see through the one-sided media coverage of Venezuela and Latin America.]
The cold war rages on
It is a tribute to the sophistication of the British left that they can see through the one-sided media coverage of Venezuela and Latin America
By Mark Weisbrot - Comment Is Free
December 20, 2007
Michael Reid paints a dismal picture of Venezuela and argues that the British left should support economic policies in Latin America that are "building on the economic reforms misleadingly known as the Washington Consensus". He has a weak argument on both counts.
Taking the "Washington Consensus" first - or neoliberalism as it is commonly called in Latin America - it is hard to imagine what would constitute economic failure if the neoliberal era in Latin America does not qualify. From 1980-2006, per capita income (or GDP) in the region has grown by about 14%. In just 20 years from 1960-1980, prior to the implementation of neoliberal reforms in most of the region, it grew by 82%.
Reid cites Brazil, Mexico, and Chile as neoliberal success stories. But Chile is the only country in the hemisphere that has grown faster since 1980 than before. Brazil has averaged about 0.5% annual growth in per capita GDP over the last 26 years, as compared to the 123% cumulative growth from 1960-1980, before neoliberal policies were adopted. Mexico has also had very slow growth (about 17% per capita GDP growth from 1980-2006) compared to 99% from 1960-1980. It has also had sluggish growth since Nafta was implemented in 1993.
It is difficult to overstate the importance of this unprecedented economic growth failure. Brazil and Mexico would have European living standards today if they had continued to grow at pre-1980 rates. This is what happened to non-neoliberal South Korea and Taiwan.
Reid also tries to argue that the Venezuelan economy and the poor have done badly under Chávez. It is important to look not only at the whole nearly nine years of the Chávez administration, but also the four and half years since the government got control of the country's most vital industry: oil. Venezuela fares better than the rest of the region by either measure, but it has done remarkably well since the government got control over the oil industry in the first quarter of 2003. The economy (real GDP) has grown by 87%, creating about 1.8m jobs (nearly three times the rate of annual job creation during the current US expansion).
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