Unfree Markets = Increased Latin American Prosperity

The normally half-way decent Economist magazine published a totally dishonest piece this week trying to spin a story about the growing middle class in Latin America TOTALLY to the right. While the UN (ECLAC) report the piece is supposedly based on it upbeat, it says nothing to support the thesis that moderate market friendly policies are finally paying dividends for the poor. They focus (conveniently) on Mexico and Brazil, though the data points toward Argentina leading Venezuela registering the most significant drops in poverty. Of course those 2 countries are doing exactly what the US and neo-liberal concensus deplore - increasing State control over natural resources and monetary policy.



I wrote about this particular media crime over at BloggingsbyBoz:

Yeah, the macro economic snad social situation is much improved today versus just 5-6 years ago. But the region is only finally getting to the point where they were in 1980. We all know what kind of reforms characterized the period of 1980-2002. We all know the trends since then...

Unconscionably, in a piece obsencibly about poverty reduction, not one mention is made of the place where rates have fallen the fastest, and most impressively = Venezuela. HH poverty rates have gone from 55% in 2003 to 30.1% in 2006 - a more dramatic decline than in even Argentina since their collapse.

Meanwhile, the stats regarding the "golden boys" of Mexico and Brazil had to be cherry picked from other sources to sound convincing. The reality is that Brazil has seen a miniscule decrease in poverty rates since '99 (1.5% points), and Mexico barely moved under Fox. Likewise "market friendly" Costa Rica, Panama and Peru recorded the largest poverty INcreases in that time frame. Conversely, the biggest employment boosts in the last 3 years came in Argentina, Uruguay, Panama and Venezuela. The report takes a special look at Argentina and concludes the ("peronist") economic growth of the last few years resulted in hugely better employment and wage results than during even similar growth periods during the "macroeconomic reforms" of decades previous (pg 120).

It is true that informal and temporary employment continues to rise at the expense of permanent private and State jobs. But this is nothing to applaud, as wages, labor rights, stability and social security all go out the window. The ability of States to fund retirees is becoming in serious doubt. In Brazil and Mexico, fewer workers have SS coverage than in 1990. In fact, in only four countries (Brazil, Costa Rica, Mexico and Peru) did the
purchasing power of wages actually fall during the period. In Mexico the real minimum wage also fell.

The simple fact is that Brazil and Mexico lag well behind the pack in nearly every measure, while Venezuela and Argentina strongly lead. To say, market reforms are "FINALLY bearing some fruit" is more than a little digingenous. Shameful.