In this op-ed, Marifeli Perez-Stable of the Inter-American Dialogue links markets, democracies, and progress in a very simple equation – “Democracy+Market Economy=Progress.” Despite strong anti-market sentiments in countries like Bolivia and Venezuela, it seems that many other countries in the region are actually looking to things like free trade to propel them forward. Not being in attendance at the last Summit of the Americas, I was intrigued by the following statement:
Though the most unpopular U.S. president ever in the region, President Bush received warm applause when he was introduced at the summit while Chávez was greeted by silence. The Free Trade Area of the Americas may never materialize as first envisioned, yet 28 countries joined the United States in reaffirming their commitment to free trade. Only Venezuela — of the five that didn’t — has vowed to ”bury” the FTAA. The Mercosur countries — Argentina, Brazil, Paraguay and Uruguay — want concessions on U.S. agricultural subsidies before moving forward.
Further,
…Populism — which has deep roots in the region, mistrusts liberal democracy and exalts the state as an economic actor — offers but an illusion of an alternative. Where has a state-led economy matched the successes of today’s developed world — South Korea, Taiwan, Chile, Ireland, Finland or Central Europe? Nowhere. Didn’t populist policies in Latin America implode in hyperinflation, runaway debt and plummeting incomes in the 1980s? Most certainly. What, if not markets, could have brought the region back from such straits, which so decimated the poor? Surely, not more of the same.
Discontented though they may be, most Latin Americans do not defy common sense. Solid majorities believe that only democracy and a market economy can bring progress. Responsible elites in the public and private sectors must, therefore, make both work so that citizens gain better living standards and trust in institutions. When discontent turns into rage, populism flourishes.
Marifeli Perez-Stable’s point is well taken – rather than giving up on democracies and market reforms, countries should carry out what is known as “second-generation” reforms to improve the functioning of political and economic institutions. Democracies do work and markets do deliver!
Published Date: January 30, 2006