Shifting to the left in Latin America
One in four Latin Americans live on less than $2 a day. That helps explain the new heft of the region’s political left - not just in Argentina, Chile or Brazil, where social democrats hold the presidency, but also in Peru, Mexico and Colombia, where the left lost presidential races but proved itself a formidable force.
Latin America has the world’s most unequal distribution of wealth outside of sub-Saharan Africa. Its richest 10 percent earns 48 percent of total income, while the poorest earns just 1.6 percent, according to the World Bank.
In the 1980s and 90s, most Latin American leaders heartily embraced a U.S.-advocated push for privatization of state industries and a lifting of trade barriers.
But per capita gross domestic product in Latin America and the Caribbean declined by 0.7 percent during the 1980s and grew by just 1.5 percent annually in the 1990s, the World Bank says. There was no significant decrease in poverty levels.
Now the legions of the poor have registered their displeasure, electing the likes of Chavez and Morales.
Peruvian economist Hernando de Soto calls the two “anti-market,”"anti-capitalist” charismatic leaders who are filling a power vacuum and benefiting from the huge unpopularity of President Bush’s administration with their anti-American rhetoric.
“The mistake, from my point of view, is trying to figure out Chavez. What you’ve got to figure out is why the market economic model has not worked to include the majority from Mexico down to Tierra del Fuego,” he said.
Nobel prize-winning economist Joseph Stiglitz praised Chavez and Morales for renegotiating oil and gas contracts with multinationals so the wealth could be more equitably shared, something Correa now promises to do in his oil-rich nation, where three in four people are poor.
“Whether they’re going to be able to get sustained growth can only be determined by the future,” Stiglitz said. “But the previous regimes were such failures that it’s hard for them to do much worse.”
The great challenge for any leader is spurring job growth. Venezuela’s official unemployment rate is nearly 9 percent - just two percentage points lower than in 1998, when Chavez was first elected, despite a booming economy.