Maybe a little 'capitalismo' is what Latin America really needs
We just had two important elections in Latin America.
In Venezuela, the center-right opposition took over the legislature. They plan to challenge, and perhaps reverse, President Nicolas Maduro's populism. To be fair, there was more to that election than ideology. In other words, corruption, crime, chaos, and simple bureaucratic arrogance were behind the anger in Venezuela.
In Argentina, newly elected President Mauricio Macri is committed to moving the country to the right and improving the damage that left-wing policies have done to Argentina.
Will the trend continue? Yes, and my guess is that "king of crony capitalism" Brazil is next! How can the eighth largest GPD in the world be so inefficient and corrupt? More and more Brazilians are asking that question!
I think that the Latin America middle class is finally figuring out that "populismo" is a scam and not a good economic development policy. It benefits three groups: big business, corrupt public-sector unions, and the politicians who carry their water!
Maybe the time has arrived to give "capitalismo" a chance, as James Pethokoukis reminds us:
Poor places are characterized by the absence of capitalist firms and by self-employment, employment: these are small peasants and farmers or owners of small shop. In these settings, there are no wages, there’s no employment relationship. There are no pensions. There is no unemployment insurance. The trappings of a capitalist labor market do not exist.
While Marx thought that capitalism, as a form of organizing production, would take over the world, poor countries and regions are characterized by the absence of capitalism, of capitalist forms of production.
The bad news is that there are entrenched interests from Mexico to Argentina to protect "crony capitalism." We saw the left's reaction in Mexico, when President Enrique Peña-Nieto tried to reform PEMEX and the teachers union. We saw in Mexico the same kind of childish demonstrations that Governor Scott Walker faced in Wisconsin.
The good news is that voters in Venezuela turned the ship of state. In Peru, President Ollanta Humala, a former leftist, is talking sense with economic reforms intended to invite more foreign investment.
We see small steps, but steps in the right direction.