Monday, September 14, 2009
Friday, May 4, 2007
Tuesday, May 1, 2007
Balke' s Counterattack (on Latin America & Iraq)
Dear Mr. Raisbeck:
Thank you for yet another insightful commentary on, if less than rosy assessment of the current state of politics, economics, and political economy within the Latin American region. I appreciate the methodical way in which you addressed the points made in my previous post and will attempt to respond to yours in a similar manner.
The Value of Foreign Investment in Latin America
Here goes.In your first point, you argue that the current plight of the poor in Latin America (and no doubt in the developing world, more generally, I would imagine) is largely a product of an "unhealthy economy". While a sluggish, stagnant economy is certainly a nonstarter for broad-based development, I contend that a factor just as instrumental in Latin America's developmental shortcomings regards failing institutions, which time and again support a system in which an established, wealthy elite benefit disproportionately from macroeconomic advances. In this sense, things like impressive GDP growth rates, a tempered level of inflation, and burgeoning FDI, while important, do not represent a panacea for development. This brings me to my next retort, which regards your cute yet misguided, I think, crush on FDI. You argue that FDI is needed to push an economy forward. I agree. However, FDI's track record in Latin America, particularly during the 1990s when governments hell-bentedly opened themselves to MNCs in hopes of coming into accord with neoliberal and Washington Consensus prescriptions as a means of spurring broad-based, long-term economic growth evidences that fact that foreign corporations are all too often more interested in lining their own coffers than reinvesting into the domestic economy or working to improve human capital in the regions where they do business. Sure, domestic laborers are often trained to work for investors based in the developed world, and I would never deny that the income generated from this employment provides meaningful welfare improvement for families across the region.
However, when it came to developing the type of job know-how and sustainable employment structures truly capable of launching LA countries into an improved stage of development, MNCs proved lacking partners in the 90s, and my sneaking suspicion is that, without new pressure levied on them by aggressive political leaders, this trend will continue in future.
Corporate Tax and Foreign Investment
I appreciate very much your commments on corporate taxes and the importance of creating climates conducive to good business. You offered Ireland and Estonia as good examples of states in which government has played a constructive role in attracting business by way of altering the tax code. While my Irish heritage is constantly close to my heart, there is an example to support the importance of your claims that hits even closer to home for me. In my native and beloved state of New Mexico, the "Land of Enchantment", our Governor Bill Richardson has bent over backward to create a climate that will draw new, largely high-tech industries to his delightful, Southwestern locale. A key way in which he has succeeded in this pursuit is by pressuring state legislators (quite aggressively, I might add) to lower the state's corporate tax. Today, new businesses are popping up all over the state, including in southern, border areas near my native Las Cruces, but also in the state's northern reaches near Albuquerque and Santa Fe.
Pinochet's " Chicago Boys" vs. Chile' s Socialists
I think that corporations have an important responsibility to invest in the communities and polities in which they do business in a way that encourages improved human capital and sustainable growth in that area, however, implementing a tax that complicates their business activity to the extent that they do not even want to invest in the first place benefits no one.In your fourth point, you outline the success that Chile has had in terms of economic success and development and the fact that they are often referred to as the "Latin American miracle". You attribute a great of this success the reforms implemented under the repressive regime of General Augusto Pinochet and the infamous Chicago Boys, schooled under the late Milton Friedman. While there can be no doubt that Chile's economy did take off during the General's reign, unemployment and domestic poverty levels remained alarmingly high during at least the opening stages of his tenure (not too mention the plummeting of labor and basic human rights that he oversaw). Not only did Chile experience superior and more consistent growth under the socialist administrations that succeeded the general and continue to this day, but all-important development indicators including the right to unionize, retirement and health care guarantees, new, more robust educational opportunities (and, oh yeah, the right to not fear that you might be usurped off a city street at any moment and brought to a bloody death at the hands of government sympathizers for exhibiting the slightest indication that you do not adhere fully to its agenda) have been secured in modern times.
The Case of Uruguay
I would also point out that Uruguay, another country often praised for relatively superior development indicators and solid, steady economic growth, is notoriously known for its 'welfare state', which is undoubtedly maintained by a steady government hand in economic affairs. Indeed, while the administration of current President Tabare Vazquez under and similiarly moderate Finance Minister Daniel Astori have courted FDI at every turn, even indicating that, by 2010, the country hopes to have FDI account for 20% of GDP, it has worked equally hard to preserve the welfare state and stayed true to campaign pledges that it would not privatize important industries (not a single significant industry has been privatized since Vazquez took office). Is Vazquez handing out cash to the poor? No. Is he subsidizing groceries? No. But he is also not adhering to the strictly neoliberal doctrine proppagated by WC advocates, or even, I would contend, the relatively hands-off approach you seem to support, kind sir. Uruguay is a success story, and government intervention in the economy makes it more so.In terms of the importance of political leaders winning public support for their agendas, you seem to discount the importance. I concede that bad policy is bad policy whether it has the support of 1 or 1 million citizens. However, a good, progressive agenda will not achieve its full potential if there exists insufficient 'public buy-in'.
Human Development in Latin America
Indeed, in Chile, which, again, you cite as one of LA's success stories in a number of areas, has achieved so much in the way of development due in no small part to the ability of post-Pinochet administrations (post-Pinochet, I contend, because economic growth during his regime created little in the way of 'true' human development) to garner widespread public support for their policies. Chileans have rallied around the country's so-called 'Norway model' in which the country, by focusing on an inclusive approach to improve the conditions of all citizens in terms of income, health, education, labor conditions, and other factors, will move from a Latin American miracle to the truly coveted title of "world development power'. The road to this is long, however, and to reach its end, governments will need continued support from the public writ large.
Castro: Not Exactly a Failing Caudillo
You make a good point, sir, regarding populism's history of failure in LA. Romantic caudillos for years failed to instill the infrastructure of sustainable development while remaining in power via a paternalistic structure based on populist overtures to poor and disaffected communities. I will not dispute that this is not the way to go for future development in LA. However, when you point to Castro as representing the epitome of populism's failure, you forget to mention the substantial progress this country has made in important development areas, particularly with respect to education and health. Not only was Cuba one of the first states in the LAC region to achieve full literacy, but, today, virtually all citizens have access to free, high quality healthcare, and, as you know, the small island 90 miles to from Florida's southern coast boasts doctors and other medical practitioners that rival those in any developed country. I would also point out that the political leadership in Cuba, for all its faults, has offered a ready hand of assistance to countries in need of medical professionals, and serves as a needed destination for young students of medicine who cannot pursue opportunities within their home countries (I have seen this first-hand in Nicaragua, wherein the eldest son in the family with whom I stayed was studying in Havana on a full scholarship, but would have been out of school had he been forced to stay in Nicaragua) and cases no doubt exist elsewhere in the region. I also respect and largely agree with the lack of sustainability of the 'Chavista economic track'.
Chavez' Modus Operandi
The leftist posterboy's political dominance and support depends largely on public spending programs, the breadth and value of which significantly and directly correlate to oil export revenues. There are two things that interest me about this common charge, however. First, over the last year, oil prices have dropped meaningfully from the all-time highs they reached no more than two years ago, and while there exists a reasonable chance that they will remain where they are or fall a bit further, Chavez's power has in no way lessened during this period, and it seems to me that the drop in oil prices that would have to occur in order for him to experience a significant challenge to his power is not forthcoming. Secondly, Chavez has hedged his bets in terms of the parties to whom he exports. While you are good in pointing out that the U.S. constitutes, far and away, the largest buyer of Venezuelan crude, there are rumors that Chavez is investing in a canal in Nicaragua to facilitate increased exports to China, which would reduce his dependence on the U.S. I acknowledge, as well, that there exists doubt as to China's capacity to refine Venezuela's specific brand of 'heavy' crude, but if Chavez does succeed in significantly shifting exports away from the U.S., he stands to both increase his political power and forge a more sustainable flow of revenue. Both of these stand directly opposite Washington's interests in the region, especially given the U.S.'s lack of a consistent, well-reasoned diplomatic approach vis-a-vis Caracas- but this is another issue.
Dubai: No Model for Development
I cannot help but make brief mention of Dubai and the UAE. You argue that wise investment of petrodollar has allowed the UAE to create in Dubai a 'desert metropolis'. Fine. What you failed to mention is that this desert kingdom stands on the pillars of heartless abuse, with migrant workers from India and other South Asian locales working 17-hour days in horrific conditions only to have their paychecks arrive far overdue, if at all.
Raisbeck, this seems to hit at a central theme that seems to keeps our two approaches at perpetual loggerheads. You, on one hand, purport that progress requires sacrifice, often in the form of vast portions of a society being left behind while a country paves the way for an improve future. I purport, en otro mano, that countries can never make 'true' progress unless it accrues to ALL sectors. Anything less than this cannot be considered genuine development, under my mantra. Where I think we're headed, kind sir, is a meeting point, some happy medium wherein the bounds of reality that would possibly conflict the happy implementation of my agenda, and the requirements of equality and other human freedoms that leave your approach lacking in and of itself mesh and then fold. I look forward, through our future postings, to finding this medium and, perhaps, doing our part to change the course of history. I expect and demand big things from you, and I know you do of me, as well. Remember, someone once said that "a society not striving for equality is a society doomed to destruction". That someone is me, and I will hold by that statement til the end of my days.
With the warmest and most affectionate regards,--Balke
P.S. The candidate emerging from the impressive field of Democratic '08hopefuls will not be foolish enough to believe that our problems in Iraq will disappear upon Bush's departure. She or he will have a plan ready to go upon arrival in '09, and I AM confident that things can get better with or without our presence. Until next time.
April 28, 2007 2:03 PM
Thank you for yet another insightful commentary on, if less than rosy assessment of the current state of politics, economics, and political economy within the Latin American region. I appreciate the methodical way in which you addressed the points made in my previous post and will attempt to respond to yours in a similar manner.
The Value of Foreign Investment in Latin America
Here goes.In your first point, you argue that the current plight of the poor in Latin America (and no doubt in the developing world, more generally, I would imagine) is largely a product of an "unhealthy economy". While a sluggish, stagnant economy is certainly a nonstarter for broad-based development, I contend that a factor just as instrumental in Latin America's developmental shortcomings regards failing institutions, which time and again support a system in which an established, wealthy elite benefit disproportionately from macroeconomic advances. In this sense, things like impressive GDP growth rates, a tempered level of inflation, and burgeoning FDI, while important, do not represent a panacea for development. This brings me to my next retort, which regards your cute yet misguided, I think, crush on FDI. You argue that FDI is needed to push an economy forward. I agree. However, FDI's track record in Latin America, particularly during the 1990s when governments hell-bentedly opened themselves to MNCs in hopes of coming into accord with neoliberal and Washington Consensus prescriptions as a means of spurring broad-based, long-term economic growth evidences that fact that foreign corporations are all too often more interested in lining their own coffers than reinvesting into the domestic economy or working to improve human capital in the regions where they do business. Sure, domestic laborers are often trained to work for investors based in the developed world, and I would never deny that the income generated from this employment provides meaningful welfare improvement for families across the region.
However, when it came to developing the type of job know-how and sustainable employment structures truly capable of launching LA countries into an improved stage of development, MNCs proved lacking partners in the 90s, and my sneaking suspicion is that, without new pressure levied on them by aggressive political leaders, this trend will continue in future.
Corporate Tax and Foreign Investment
I appreciate very much your commments on corporate taxes and the importance of creating climates conducive to good business. You offered Ireland and Estonia as good examples of states in which government has played a constructive role in attracting business by way of altering the tax code. While my Irish heritage is constantly close to my heart, there is an example to support the importance of your claims that hits even closer to home for me. In my native and beloved state of New Mexico, the "Land of Enchantment", our Governor Bill Richardson has bent over backward to create a climate that will draw new, largely high-tech industries to his delightful, Southwestern locale. A key way in which he has succeeded in this pursuit is by pressuring state legislators (quite aggressively, I might add) to lower the state's corporate tax. Today, new businesses are popping up all over the state, including in southern, border areas near my native Las Cruces, but also in the state's northern reaches near Albuquerque and Santa Fe.
Pinochet's " Chicago Boys" vs. Chile' s Socialists
I think that corporations have an important responsibility to invest in the communities and polities in which they do business in a way that encourages improved human capital and sustainable growth in that area, however, implementing a tax that complicates their business activity to the extent that they do not even want to invest in the first place benefits no one.In your fourth point, you outline the success that Chile has had in terms of economic success and development and the fact that they are often referred to as the "Latin American miracle". You attribute a great of this success the reforms implemented under the repressive regime of General Augusto Pinochet and the infamous Chicago Boys, schooled under the late Milton Friedman. While there can be no doubt that Chile's economy did take off during the General's reign, unemployment and domestic poverty levels remained alarmingly high during at least the opening stages of his tenure (not too mention the plummeting of labor and basic human rights that he oversaw). Not only did Chile experience superior and more consistent growth under the socialist administrations that succeeded the general and continue to this day, but all-important development indicators including the right to unionize, retirement and health care guarantees, new, more robust educational opportunities (and, oh yeah, the right to not fear that you might be usurped off a city street at any moment and brought to a bloody death at the hands of government sympathizers for exhibiting the slightest indication that you do not adhere fully to its agenda) have been secured in modern times.
The Case of Uruguay
I would also point out that Uruguay, another country often praised for relatively superior development indicators and solid, steady economic growth, is notoriously known for its 'welfare state', which is undoubtedly maintained by a steady government hand in economic affairs. Indeed, while the administration of current President Tabare Vazquez under and similiarly moderate Finance Minister Daniel Astori have courted FDI at every turn, even indicating that, by 2010, the country hopes to have FDI account for 20% of GDP, it has worked equally hard to preserve the welfare state and stayed true to campaign pledges that it would not privatize important industries (not a single significant industry has been privatized since Vazquez took office). Is Vazquez handing out cash to the poor? No. Is he subsidizing groceries? No. But he is also not adhering to the strictly neoliberal doctrine proppagated by WC advocates, or even, I would contend, the relatively hands-off approach you seem to support, kind sir. Uruguay is a success story, and government intervention in the economy makes it more so.In terms of the importance of political leaders winning public support for their agendas, you seem to discount the importance. I concede that bad policy is bad policy whether it has the support of 1 or 1 million citizens. However, a good, progressive agenda will not achieve its full potential if there exists insufficient 'public buy-in'.
Human Development in Latin America
Indeed, in Chile, which, again, you cite as one of LA's success stories in a number of areas, has achieved so much in the way of development due in no small part to the ability of post-Pinochet administrations (post-Pinochet, I contend, because economic growth during his regime created little in the way of 'true' human development) to garner widespread public support for their policies. Chileans have rallied around the country's so-called 'Norway model' in which the country, by focusing on an inclusive approach to improve the conditions of all citizens in terms of income, health, education, labor conditions, and other factors, will move from a Latin American miracle to the truly coveted title of "world development power'. The road to this is long, however, and to reach its end, governments will need continued support from the public writ large.
Castro: Not Exactly a Failing Caudillo
You make a good point, sir, regarding populism's history of failure in LA. Romantic caudillos for years failed to instill the infrastructure of sustainable development while remaining in power via a paternalistic structure based on populist overtures to poor and disaffected communities. I will not dispute that this is not the way to go for future development in LA. However, when you point to Castro as representing the epitome of populism's failure, you forget to mention the substantial progress this country has made in important development areas, particularly with respect to education and health. Not only was Cuba one of the first states in the LAC region to achieve full literacy, but, today, virtually all citizens have access to free, high quality healthcare, and, as you know, the small island 90 miles to from Florida's southern coast boasts doctors and other medical practitioners that rival those in any developed country. I would also point out that the political leadership in Cuba, for all its faults, has offered a ready hand of assistance to countries in need of medical professionals, and serves as a needed destination for young students of medicine who cannot pursue opportunities within their home countries (I have seen this first-hand in Nicaragua, wherein the eldest son in the family with whom I stayed was studying in Havana on a full scholarship, but would have been out of school had he been forced to stay in Nicaragua) and cases no doubt exist elsewhere in the region. I also respect and largely agree with the lack of sustainability of the 'Chavista economic track'.
Chavez' Modus Operandi
The leftist posterboy's political dominance and support depends largely on public spending programs, the breadth and value of which significantly and directly correlate to oil export revenues. There are two things that interest me about this common charge, however. First, over the last year, oil prices have dropped meaningfully from the all-time highs they reached no more than two years ago, and while there exists a reasonable chance that they will remain where they are or fall a bit further, Chavez's power has in no way lessened during this period, and it seems to me that the drop in oil prices that would have to occur in order for him to experience a significant challenge to his power is not forthcoming. Secondly, Chavez has hedged his bets in terms of the parties to whom he exports. While you are good in pointing out that the U.S. constitutes, far and away, the largest buyer of Venezuelan crude, there are rumors that Chavez is investing in a canal in Nicaragua to facilitate increased exports to China, which would reduce his dependence on the U.S. I acknowledge, as well, that there exists doubt as to China's capacity to refine Venezuela's specific brand of 'heavy' crude, but if Chavez does succeed in significantly shifting exports away from the U.S., he stands to both increase his political power and forge a more sustainable flow of revenue. Both of these stand directly opposite Washington's interests in the region, especially given the U.S.'s lack of a consistent, well-reasoned diplomatic approach vis-a-vis Caracas- but this is another issue.
Dubai: No Model for Development
I cannot help but make brief mention of Dubai and the UAE. You argue that wise investment of petrodollar has allowed the UAE to create in Dubai a 'desert metropolis'. Fine. What you failed to mention is that this desert kingdom stands on the pillars of heartless abuse, with migrant workers from India and other South Asian locales working 17-hour days in horrific conditions only to have their paychecks arrive far overdue, if at all.
Raisbeck, this seems to hit at a central theme that seems to keeps our two approaches at perpetual loggerheads. You, on one hand, purport that progress requires sacrifice, often in the form of vast portions of a society being left behind while a country paves the way for an improve future. I purport, en otro mano, that countries can never make 'true' progress unless it accrues to ALL sectors. Anything less than this cannot be considered genuine development, under my mantra. Where I think we're headed, kind sir, is a meeting point, some happy medium wherein the bounds of reality that would possibly conflict the happy implementation of my agenda, and the requirements of equality and other human freedoms that leave your approach lacking in and of itself mesh and then fold. I look forward, through our future postings, to finding this medium and, perhaps, doing our part to change the course of history. I expect and demand big things from you, and I know you do of me, as well. Remember, someone once said that "a society not striving for equality is a society doomed to destruction". That someone is me, and I will hold by that statement til the end of my days.
With the warmest and most affectionate regards,--Balke
P.S. The candidate emerging from the impressive field of Democratic '08hopefuls will not be foolish enough to believe that our problems in Iraq will disappear upon Bush's departure. She or he will have a plan ready to go upon arrival in '09, and I AM confident that things can get better with or without our presence. Until next time.
April 28, 2007 2:03 PM
Friday, April 27, 2007
On Latin America and Iraq
Dear Mr. Raisbeck,
Thank you for your thoughtful and engaging message. Allow me to respond to your e-mail point by point.
The Need to Address the Plight of Latin America' s Poor
In terms of the far left's prescriptions for remedying Latin American poverty and inequality, I certainly agree that they are insufficient. My contention is solely that, in the past, moderate leaders have paid insufficient to the immediate needs of the poor and instead focused on what I consider overly-temperate approaches. What I do deem a positive about leaders such as Chavez, Morales, and Ortega is the fact that, though they may not be taking the best measures to ensure long-term growth, their rhetoric focuses on the plight of poor and disaffected citizens, whom, for far too long, have looked to the upper-echelons of political space as a place from which they were categorically excluded. At least now someone is talking about them because, in future, moderate leaders who do have the approaches that can create robust change will have to take their voices a bit more seriously.
What's Behind the Asian Model of Development?
Your comparison between Nicaragua and South Korea is intriguing. I've heard similar comparisons with respect to LA and East Asia's economic positions fifty or sixty years ago but never looked at the country-specific example you raised. All I would offer is that the common portrayal of the 'Asian Tigers' as having reached their current, impressive level of economic progress by employing a method of unadulterated capitalism is misguided. These countries worked in a careful fusion of free-market at protectionist policies to send export skyrocketing while at the same time ensuring that domestic industry got a boost. Whether similar conditions could emerge in LA is largely, I think, a political question. If a leader can sell her or his constituency on the idea of long-term progress, there may be a chance, but I think a lot of their success will hinder on how engaged they seem to be with the poor.
Iraq and the Bush Administration' s Incompetence
In terms of Iraq, you've clearly proved your point regarding the region's governability. However, there is a big difference between the ability of great leaders to set a place in order and the likelihood of this Bush Administration accomplishing a similar feat. I believe we have neither the competence nor long-term vision in the current White House to bring about a satisfactory solution in Iraq. Self-interest abounds and motives have been about the U.S. from the get-go. Obviously, any military adventure is designed to improve conditions within one's own state (otherwise, why risk the lives of your own soldiers?), whether that concerns security, economic interests, or otherwise, however, I believe the way in which we entered Iraq and continue to operate therein was misguided and overly-self-interested from the get go. We had little regard, it seems, for how the country could be brought back together after our thorough disassembly, and tens of thousands of Iraqis have paid the ultimate price because of it. The future will show if your interpretation that a solid democratic state can emerge in Iraq given its political history and ethnic division proves correct.
Thank you for your insightful and very well-articulated message, Daniel. I view you with the greatest of admiration.
Daniel Balke
Thank you for your thoughtful and engaging message. Allow me to respond to your e-mail point by point.
The Need to Address the Plight of Latin America' s Poor
In terms of the far left's prescriptions for remedying Latin American poverty and inequality, I certainly agree that they are insufficient. My contention is solely that, in the past, moderate leaders have paid insufficient to the immediate needs of the poor and instead focused on what I consider overly-temperate approaches. What I do deem a positive about leaders such as Chavez, Morales, and Ortega is the fact that, though they may not be taking the best measures to ensure long-term growth, their rhetoric focuses on the plight of poor and disaffected citizens, whom, for far too long, have looked to the upper-echelons of political space as a place from which they were categorically excluded. At least now someone is talking about them because, in future, moderate leaders who do have the approaches that can create robust change will have to take their voices a bit more seriously.
What's Behind the Asian Model of Development?
Your comparison between Nicaragua and South Korea is intriguing. I've heard similar comparisons with respect to LA and East Asia's economic positions fifty or sixty years ago but never looked at the country-specific example you raised. All I would offer is that the common portrayal of the 'Asian Tigers' as having reached their current, impressive level of economic progress by employing a method of unadulterated capitalism is misguided. These countries worked in a careful fusion of free-market at protectionist policies to send export skyrocketing while at the same time ensuring that domestic industry got a boost. Whether similar conditions could emerge in LA is largely, I think, a political question. If a leader can sell her or his constituency on the idea of long-term progress, there may be a chance, but I think a lot of their success will hinder on how engaged they seem to be with the poor.
Iraq and the Bush Administration' s Incompetence
In terms of Iraq, you've clearly proved your point regarding the region's governability. However, there is a big difference between the ability of great leaders to set a place in order and the likelihood of this Bush Administration accomplishing a similar feat. I believe we have neither the competence nor long-term vision in the current White House to bring about a satisfactory solution in Iraq. Self-interest abounds and motives have been about the U.S. from the get-go. Obviously, any military adventure is designed to improve conditions within one's own state (otherwise, why risk the lives of your own soldiers?), whether that concerns security, economic interests, or otherwise, however, I believe the way in which we entered Iraq and continue to operate therein was misguided and overly-self-interested from the get go. We had little regard, it seems, for how the country could be brought back together after our thorough disassembly, and tens of thousands of Iraqis have paid the ultimate price because of it. The future will show if your interpretation that a solid democratic state can emerge in Iraq given its political history and ethnic division proves correct.
Thank you for your insightful and very well-articulated message, Daniel. I view you with the greatest of admiration.
Daniel Balke
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