Latin American Success

President Obama travels to Brazil for the start of his first trip to Latin America, and in so doing he is going to a country that has achieved amazing success in 15 short years.   26 years ago the military gave up its control of Brazil’s politics, and in 1988 a new constitution was put in place.  The new Republic — Brazil’s third — had a slow start.  A massive maldistribution of wealth (a remnant from colonial times and slavery), hyper partisan competition, corruption, and severe inflation made Brazil a country that seemed unable to benefit from its vast resources and land.

Back in the sixties social scientists Henrique Fernando Cardoso (of Brazil) and Enzo Faletto (of Chile) published a book called Dependency and Development in Latin America where they posited an historical-structural approach to explaining why Brazil, despite being blessed with resources and early independence, took a very different path than the United States.  They showed how early advantages allowed American businesses to get a head start.  Using that position of greater relative power and wealth they were able to manipulate Brazil’s economic and even political systems their benefit.   The structure of the relationship between the US (and US corporations) and Latin American states fostered and maintained a dependent relationship.

Brazil’s military government — at the time focused on trying to bring in western investment and not caring much about Brazil’s poor — saw the book as dangerous and Cardoso was sent to exile.  Yet over time the book became a standard (I still have my copy from grad school), explaining how social relations and even national development is shaped by historical and social structures in a manner that isn’t easy to alter.

In 1995 Brazil began down a path that would ultimately alter those relationships.   They elected a center right “neo-liberal” government that determined that Brazil needed to open up its markets and use globalization in its favor.  The government, headed by President Henrique Fernando Cardoso, started a process whereby inflation was tamed (something the Brazilians took awhile to get used to), the economy started to grow, and political stability was achieved.  Cardoso was a darling of the IMF, World Bank and western “neo-liberal” elites, rejecting import substitution policies and “socialist” paths towards development in favor of openness to the markets.     The turn around in the late 90s was dramatic, and Cardoso easily won a second term.

Yes, President Cardoso was the same academic that once criticized the way the international economic system created dependent relations for Latin American countries.   To many his embrace of neo-liberal economic policies smacked of a betrayal of his more radical past thinking.  But Cardoso would have none of it.   He argued that he was doing precisely what was necessary to break out of those dependent relations.  Corporations were no longer “American” any more, but global, and Brazil could use its resources and policies to transform its position in the system.    Globalization has its problems, but it could also be used to help Brazil turn around its fortunes.

Cardoso brought political stability to Brazil, and his pragmatic style of governance avoided the extreme partisanship of the past.  Rather than demonizing the left and waging war on social programs and fights for equality, he embraced the need to alter the unfair distribution of wealth, recognizing that Brazil could never become a normal country unless it cleaned up that residue of its colonial past.   He also brought the issue of race out in the open.   Brazil’s black population is second only to Nigeria’s, yet due to the past practice of slavery — eliminated only in 1889 — inequities and poverty amongst blacks is a huge problem.

Alas, Cardoso’s government, while stabilizing both the economy and the political system, did not do enough to try to fix the socio-economic problems and systemic poverty in much of the country.   So Brazilians in 2003 brought Lula da Silva to power as President.   Known as a radical and a leftist, many feared da Silva would rule Brazil like Hugo Chavez did Venezuela, and wondered if he would undo the accomplishments of Cardoso.

But just as Cardoso was pragmatic on the center-right, da Silva turned out to be a pragmatist on the center left.  His programs to fight poverty and redistribute some of Brazil’s wealth were successful and popular, and did not harm Brazil’s economic development.    In fact, da Silva over time became just as popular among the international business community as Cardoso had been, recognizing the need to mix friendliness to investment and global trade with a strong social conscience at home.

Brazilian Presidents serve up to two terms.   On January 1, 2011 Dilma Rousseff, of da Silva’s Workers Party won the Presidency.   As gravy to the already impressive successes of the past fifteen years, new off shore oil discoveries assure the Brazil’s natural resources will continue to benefit the country.   Already energy independent, thanks to an extensive ethanol program which fuels over half of Brazil’s cars with sugar-cane based ethanol, this suggests that Brazil’s future looks very bright, especially if both left and right can stay pragmatic and assure the bitter and violent partisanship of the past is brushed aside.

President Obama is especially popular in Brazil, in part because Brazil’s black population see in him a potential for themselves — America is modeling how tolerance and opportunity can transform a society.   Not that long ago it would have been unthinkable for the US to have a black President.

Besides Brazil, President Obama will visit Chile.  Enzo Faletto stayed in academia in Chile and died in 2003, but Chile has also seen a revitalization of its economy in recent years (and signed a free trade agreement with the US in 2004).   Unlike Brazil the leftist government came first, undertaking serious reforms to help reduce Chilean poverty.   The center right government of  Sebastian Piñera has been pragmatic, being open to business while not dismantling the social programs that had proven so effective.   El Salvador, the third state in the President’s trip, is also a success.

President Obama’s trip to Latin America underscores the importance of this Latin American awakening, slowly spreading across the continent.  True, anti-Americanism remains strong (though somewhat muted now that Obama is President), and the US no longer can call the shots like it could a few decades ago.  But that’s good.  It’s showing that the dependent relationship is turning into an interdependent one, and that is more healthy in the long run.

Finally, Republicans critical of Obama traveling while crises linger in Japan and Libya are way off base.   There is nothing the President can do for Japan from Washington that he can’t do from Brasilia.   As for Libya, this helps underscore that the Libyan intervention is a UN affair, not an American led war.  That is important, and helps minimize the chance of an anti-American backlash in the Arab world.  Moreover, with the US overstretched in two other wars, President Obama wants the Europeans to take the lead on this, and that’s a good thing.

Most important, though, is the fact that the President can’t be afraid to act in the interest of the United States just because other difficult situations exist.   And improving and solidifying relations with countries like Brazil and Chile is very much in our national interest!

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  1. #1 by brucetheeconomist on March 20, 2011 - 06:03

    Encouraging story on Brazil. What is the status of Argentina now? It’s always seemed like a country that has great potential, but hasn’t lived up to it.

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