Meanwhile, elsewhere.

Written By: - Date published: 1:10 pm, October 29th, 2010 - 21 comments
Categories: capitalism, class war, Economy - Tags: , , ,

This post was initially going to concern itself with the recent  death of Nestor Kirchner. But then I decided that  rather than concentrating on the person, it would be better to concentrate on political contexts he helped develop and comment on those vibrant ongoing dynamics.

The economic indicators in the summary are from his time as President of Argentina by the way.

It’s fair to say that the political situation in Latin America is usually ignored by the Anglo-Saxon world, with what news reports we do get usually limited to overt or covert propaganda scare pieces on why we would never want to go down similar tracks to those of Latin America. We have all read the reports on Venezuela that demonise Chavez and ridicule the Bolivarian Revolution. And we have all read the news pertaining to coups in Honduras and attempted coups in Ecuador or the cursory removal of duly elected leaders in Haiti that seek to portray such events as almost natural and benign effects of progress and development. ( I’ve linked to atypical informative pieces)

The result is that slowly over time, the impression is built up that Latin America is a basket case of delusional or dangerous leaders and peoples who need to be saved from themselves.

The fact of the matter is that  leaders of Latin America and many of the prescriptions they follow accord with what many of the mainstream left  here advocate.  And the further fact is that those same leaders have no problem in forming genuine co-operative relationships with other leaders in the region who the mainstream left here would disparage and dismiss out of hand.

There appears to be a broad commonality of cause in Latin America and an acceptance that each country is located in a unique position in relation to that cause due only to different domestic situations, histories and experiences.  So whereas Venezuela may be able to push further on some fronts than others in the region in seeking the realisation of the Bolivarian Revolution, it is still disadvantaged in some respects when compared to Cuba or Bolivia. And both Cuba and Bolivia have various advantages and disadvantages in the current climate when compared with each other or to other countries of the region. The point is that there is a general thrust from countries as diverse as Argentina, Ecuador, Brazil and Venezuela that is moving everything in a common direction.

Nestor Kirchner was a contributor to that movement. And the success of his contribution to the advancement of Latin America can reasonably be summarised as resulting from his willingness to give the long finger to the ‘Washington Consensus’ as expressed through the major International Financial Institutions.

Here is an excellent piece from 2007 by Mark Weisbrot entitled How Argentina Jump Started It’s Economy after defaulting on $US 100 Billion of debt in 2001. The parallels with what New Zealand could be doing with regards exchange rate, growth and inflation and adherence to the doctrine of export driven growth ( not to mention standing up to foreign business interests) are obvious.

If the peoples and governments of Latin America can, then New Zealand governments and  peoples can. There are obstacles, of course. And unfortunately, one of them is the left in NZ. Or large swathes of it.  See, just as many on the left chastise people for buying into the Key/Labour Lite fiction, so those people themselves need perhaps, to sit down and examine their own fictions vis a vis Latin America and question who or what is informing them of events from those shores and why those parties always portray events in a certain, predictably negative light.

When people have an idea, a vision that can inform their hopes for the future, then people will protest and challenge forces that threaten that future. Maybe it is time for the populations (including the governments) of the Anglo-Saxon world, to call the bluff of the international community that forced us into this shotgun wedding with TINA ( the gun’s loaded with blanks) and just leave the building. Maybe it’s time to elope with  TARA and recognise that  TARA is maybe just a touch Latino in nature.

21 comments on “Meanwhile, elsewhere.”

  1. Zaphod Beeblebrox 1

    Argentina- another example of a country that was stuffed completely up by Neo-Liberalism. When do you think economists will work out that privitazation, reductions in government expenditure and tax reductions end up destroying everything they hold dear.

    • JonL 1.1

      Never.
      Economics, like so many other things, seems to have become a belief system, where reality is not allowed to intrude on peoples precious theories!

    • Hamish Gray 1.2

      I believe Argentina stuffed itself by its failed import-replacement policies that accelerated during the 1980s in a bout of economic nationalism (ie. let’s build our own trains, regardless of capability/cost), an idea that appears supported-without-question by several authors here.

      It’s not hard to rebound spectacularly when you’ve reached rock bottom, which Argentina had after its last economic meltdown in 2004 (I think it was then). Hardly a beacon of economic fortitude.

  2. Nick C 2

    Exactly what policies did they pursue which you would support being implimented here?

    [Nick C – lprent has put you in moderation until you substantiate or withdraw a comment here. — r0b]

  3. nadis 3

    Of course the three years since then haven’t been as rosy, (negative growth in 2009 like many others) but Argentina is an interesting case, and Kirchner did do very well. The lessons I see from Argentina are twofold, firstly that until Argentina, IMF proscriptions hadnt been rethunk since the 1970s Latin crisis (and the asian crisis etc). The best way for creditor nations to get their money back is to grow the debtor back to health, rather than flogging off the assets at knock down rates. I think that is now acknowledged by the IMF and their recent attitude to Africa and Eastern Europe where they are way more sympathetic and less doctrinaire to defaulting nations. The second lesson is that the primary policy followed by Argentina to get growing again isn’t that surprisiing – competitive devaluation – thats the first thing any government in charge of a stuttering economy looks to do. And while it had strong growth in 03,04,05,06,07,08 you should see what the contraction was like in 99-2002 (obviously under the previous regime). In usd dollar terms GDP contracted by 60%! In PPP terms it contracted by 25% so about 4 of the “high growth” years were required to get back to 1999 levels – ie from 1999 to 2006 the Argentine economy went nowhere.

    And I do recall a massive human cost in Argentina – not saying that was the Argentine govts fault, they had no easier choice – but the destruction in wealth and livelihioods initially by their devaluation and the contraction in government spending (which isn’t mentioned in the quoted article) was brutal. Official unemployment got up to 25%, unoffically it was twice that. You would have to wonder whether NZers would have the stomach for it – imagine the pain and cries if people couldn’t afford to buy cheap shit from warehouse or have their cheap overseas holidays. Or if government spending was slashed by 40% in real terms. Imports in Argentina fell by 50% after their devaluation.

    Argentina is also inherently a lot more productive than somewhere like NZ – government spend is around 26% of GDP versus our 43%. That is very big factor in their baseline better growth rate, and is true of most developing economies. This and the associated lower tax rate is a huge productivity head start. I heard bernard hickey on the radio saying that beneficiary/worker ratio in NZ is now at 1.7

    The problem in NZ is that we haven’t sat back and looked at monetary policy tools. We are unusual with just an inflation target – even the US has high employment, sustainable growth and low inflation as its three objectives.

    Since the RB Act was implemented every NZ govt (Labour or National) has not had the spine to readdress it – and every one of them should have. We can’t blame the Reserve Bank – they have been given one tool, so every problem looks the same. Personally I’d like to see some fiscal tools in the mix as well that the reserve bank could use. Rather than increase interest rates to battle the housing bubble why not allow them to implement a 5% stamp duty on second (or more) houses? Or increase/decrease GST? Or force LTV ratios on housing or investment property? Lots of targeted mechanisms they could use beyond the blunt tool of OCR.

  4. Nick C 4

    Also, you’re not seriously defending Chavez, are you? You may like the fact that hes the little guy who stands up to America, but beyond that he is a nut job and his policies have been nothing but destructive for the people of Venuzuela.

    • Colonial Viper 4.1

      Whom, according to Business Week give him a 48% approval rating (+/- 2.7%).

      Sounds like you should update your Bush era rhetoric.

      • Nick C 4.1.1

        Did you even read the article you just posted? Its very critical of Chavez, in particular of his economic policies. Take this quote for example:

        “Bank of America Corp. said today that Venezuela’s economy may contract 2.5 percent this year, revising an earlier forecast of 0.1 percent growth. Latin America as a whole will grow 4.8 percent this year, according to Bank of America.”

        I suspect his high approval rating (not that 48% is that high) is due to the fact that he shuts down all media who oppose him: http://articles.latimes.com/2009/jul/22/world/fg-venez-censor22

        But anyway since when have you considered a high approval rating a basis to label someone a good leader; it certainly hasnt stopped you attacking John Key.

        • Colonial Viper 4.1.1.1

          Actually if it wasn’t for Venezuela’s oil gushers they would be in even worse shape, economically.

          Nevertheless we are talking about a democratically elected leader with strong popular support.

          Re: John Key, I give him heaps but he deserves it IMO. $27 per capita tax break for Jackson and Warner Bros – no problems. $0.60 per capita expenditure to give the frail elderly home help: no chance.

          • Nick C 4.1.1.1.1

            I’d urge you to reconsider your opinion on Chavez (and socialism, but thats not going to happen). Hes crippled a country which should be one of the richest in South America with its oil wealth with his massivly inefficient central planning.

            http://www.businessweek.com/magazine/content/10_12/b4171046603604.htm
            http://www.washingtonpost.com/wp-dyn/content/article/2007/02/08/AR2007020801240.html

            This isnt ‘Bush era rhetoric’, its a simple reality: Chavez’s central planning policies have failed.

            • Colonial Viper 4.1.1.1.1.1

              I’d tend to argue that central planning policies can fail spectacularly. But they can also succeed pretty well. I guess one difference is the quality of leadership.

              As for socialism, thats an extraordinarily broad term.

              To me the economy is there to benefit both communities and society as a whole, not just selectively or in part. Therefore the economy is not the end goal, it is a sub-ordinate tool. And its use as a tool and how it is to wielded should be decided upon by a large number of people through participatory debate, and not just by a few at the top of the wealth pyramid.

            • KJT 4.1.1.1.1.2

              I suspect that if Chavez was really that bad he would not have been re-elected by the people in the best position to know.

              A country is not going to do to well when their largest neighbor keeps sponsoring a de-facto invasion from next door.

    • Vicky32 4.2

      Got any proof, Nick C? He’s a very popular “nut job” and despite the American lie that he’s a dictator, he has been freely elected… (I have discovered many ordinary Americans who’ve drunk the Bush-era KoolAid and believe Chavez to be a “nut job”. ) Mind you, if American kids don’t chips come from potatoes, how can one expect any better from the parents?
      Deb

      • Nick C 4.2.1

        See the links above

        • Vicky32 4.2.1.1

          The sources are tainted, sorry, do you have any *objective* links? The Washington Post is well known as a propaganda organ… (I am not going to say *what kind of organ, tee hee..)
          Deb

  5. Colonial Viper 5

    The problem in NZ is that we haven’t sat back and looked at monetary policy tools. We are unusual with just an inflation target – even the US has high employment, sustainable growth and low inflation as its three objectives.

    Yes this has proven to be a huge problem for the NZ economy. Labour has committed to fully rework the RBA and ensure that the Reserve Bank has a much broader range of socioeconomic targets. Including high employment.

    Currently the RB controls inflation by increasing unemployment, thereby reducing the spending power available in the economy. In other words inflation is controlled by increasing hardship to people so that the financiers can achieve their goals.

  6. nadis 6

    viper – is it it churlish for me to point out you have just had 9 years in charge of NZ when there was plenty of debate about changing the RB Act, and it was obvious that it was not working? Why did you not address it when you had the chance? Now seems a bit like empty rhetoric.

    And I would not agree with you that the “RB controls inflation by increasing unemployment.” That may happen at certain parts of the business cycle but it is an unintended consequence of a very blunt tool. I can assure you that everyone in the bank from Bollard down is very uncomfortable with high unemployment. But stupid politicians have given him shit tools. Blame the politicians on both sides of the house going back 20 years.

    And I am with Nick C on Venezuela. It should look like Norway but with lots of arable farmland, nice beaches and great mountains. Instead it looks like a less shabby version of Cuba with more modern cars. How can you be the worlds 9th largest oil exporter, be near both the worlds largest economy (USA is their biggest trade partner believe it or not) and in one of the fastest growth regions of the world and have 30% of your population living on $2 a day? Venezuela ranks as one of the most corrupt countries in the world – who benefits? I’m guessing your working class revolutionary hero, comrade Chavez.

    http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table

    That could explain his popularity – trickle down economics in its purest form – corruption and cronyism.

    • Colonial Viper 6.1

      viper – is it it churlish for me to point out you have just had 9 years in charge of NZ when there was plenty of debate about changing the RB Act, and it was obvious that it was not working? Why did you not address it when you had the chance? Now seems a bit like empty rhetoric.

      Labour has learnt the lessons of centrist-right wing history; Conference made that clear. The centre-right free market approach to the economy is a failure, particularly in respect of a free market in assets and in labour, and the RBA played its role in that. Now that Labour have finished looking backwards we’re carving a clear path ahead even as NAT supporters keep looking in the rear view mirror.

      I’m guessing your working class revolutionary hero, comrade Chavez.

      Ah the hackneyed communism narrative the Right love to hold on to. Keep it up if you can, however its pretty clear to me that the economy is here to serve the people and the objectives of common society, not the other way around.

  7. nadis 7

    Bill – you didn’t mention Chile in your “seeking the realisation of the Bolivarian Revolution”. Oversight? It does have a businessman billionaire as president so perhaps doesn’t fit the revolutionary struggle theme.

    Not sure you’ll ever see brazil, chile and argentina seeking common economic cause with venezuela. Do you have some rationale for the assertion you make? I can see brazil, chile and argentina all attemping to improve their economic performance in a technocratic and institutional manner, in the belief that a well managed economy is the best way to lift their people from poverty, and clearly those major nations all have way better leaders than they have had previously. Unfortunately Latin America has an embedded culture of corruption. To their credit the major economies Argentina, Brazil and Chile (and possibly others) are struggling away from that culture, but Venezuela ain’t at all.

    What is this “general thrust” in a “common direction” that you speak of?

  8. M 8

    Bill

    Outstanding post. South America is a very much overlooked area of the globe. I know that they have problems with graft but really it’s no worse than the white-collared criminals we have here, they just have better suits – funny how Key couldn’t give a straight answer to his Tranzrail dealings. Argentina shows what can be done when they carve their own path and don’t hold to old, failed models.

    Chavez is trying to form alliances in South America to keep US hegemony at bay but from what I’ve read but the US is trying to use Columbia by getting it to start a war with Venezuela so it can grab Venezuela’s sour crude. I’m sure if Bush had been able to manage it, this would have become another axis of evil to be quashed.

    Oil companies have gone into South America and have completely destroyed land and people’s lives in their thirst for oil and then have got the hell out of Dodge and suppressed reports of the environmental and human cost. Any time that Chavez gave Bush the finger during his presidency I cheered.

    Because of their more social-democratic societies I think people in SA may have a better time of squeezing through the bottleneck of peak oil and will be grateful of the wall along the border of the US to keep Americans ‘refugeeing’ south.

  9. Bill 9

    This comment has wound up being much longer than I intended. I hope it has addressed the salient points raised in previous writer’s comments.

    Can we be clear about some basic things? Any given country has a range of ideologies that are either in ascendency or decline; that are either oppressed or dominant at any given time. Leaders lend the weight of the state to dominant or ascending ideologies. This is as true in NZ or Venezuela as it is was in Pinochet’s Chile. The difference for us, ordinary citizens, is whether the power of the state is utilised to enhance possibilities as envisioned by us, or that might increase our welfare, or whether it is used to enhance possibilities inimical to our well being.

    In the case of Pinochet’s Chile, the power of the state was mobilised to thwart and destroy any and all opposition or potential for opposition, ie it was for the sake of defending and expanding a business agenda that was most decidedly not in the interests of ordinary people that thousands of people were ‘disappeared’, tortured and murdered in that country.

    Similarly, the defence of those same elite interests and the thwarting of any contending ideology led to the Argentinian state involving itself in the disappearance and murder of thousands of that country’s citizens.

    And so it was throughout Latin America… Guatamala, El Salvador, Haiti and on and on.

    Pinochet, in common with other figureheads of brutal dictatorships in the region, received support from Washington and Washington’s allies simply because they were willing to use state power to further an agenda that Washington and her allies wanted to see, not just brought to fruition, but to see persist.

    And in line with such designs, when control of the Nicaraguan state was lost in the late 70’s and the Sandinistas sought to utilise the state to satisfy non-business aspirations, Reagans support for the Contras eventually crushed that contrary agenda and simultaneously sent a strong message; an unmistakable threat, to any potential proponents of agendas that might be focussed on the welfare of the citizenry rather than the welfare of business.

    Today, Latin America is not so easily controlled from Washington and the old elites have been losing their strangle hold on state power in country after country.

    And unlike in the past (as might be argued vis a vis the Sandinistas), it is no longer the case that rival interests are necessarily merely vying for control of the state, but that the power of the state is, in some instances, being utilised to empower the citizenry in ways that ultimately diminish state power.

    This is more evident in Venezuela than in other countries and isn’t a simple linear process. There are set backs. And there is always the danger that the process halts and that at that point, an increased amount of power has become invested in the state and we get to witness yet again a situation similar to that which afflicted Russia and it’s satellite states for 70 years or so.

    At the moment, we are in a period where a number of Latin American states, and peoples within those state’s spheres of influence, are moving in directions contrary to that which Washington and it’s allies (domestic and foreign) would prefer. Washington and it’s allies have not been able to make their vision, as promoted and imposed through numerous proxy dictators of the region, persist. And while it is true that business elites and state bureaucrats often, and in many ways, seek to slow or even reverse the changes taking place across Latin America, the fact that ordinary citizens are becoming empowered and are increasingly able to articulate and even execute citizenry centred visions is nothing other than a good thing.

    Granted, some nations may go part way down the road of empowering their citizenry and then go no further. Some may successfully facilitate full emancipation of their peoples (21C Socialism). Or maybe everything will be reversed and old status quos reasserted.

    Maybe it is useful to bear in mind that all countries and state’s spheres of influence are comprised of multi-faceted and contending hopes and aspirations and that dominant ideologies merely limit or open up possibilities. The important point is the general political and economic direction being taken and the possibilities engendered and the new possibilities brought into sight by dint of the direction being taken.

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