The generals have gone, the bosses are barely hanging on, the reds have been driven off. Can the free market now save Latin America from itself?
Libertarian-leaning journalist Vargas Llosa, son of famed novelist/politician Mario, suggests that a truly free market deserves a tryout, even if the loudest exponent of free trade, the US, keeps erecting barriers to protect its agriculture and industry from south-of-the-border competition. Against that ideal stands half a millennium of statist tradition, which Vargas Llosa memorably pegs as a long history of wealth transfer from the able working class to “the parasites upstairs.” Like fellow Peruvian Hernando de Soto, whose Mystery of Capital (2000) is by far the better book, Vargas Llosa enumerates several missteps on the part of Latin American societies: the failure to put private capital (including the savings of the poor, which dwarf foreign aid packages) to effective use; the restriction of property rights to the elite; the lack of a solid middle class; the tendency of rapacious states to nationalize successful enterprises; and so forth. In a nutshell, he writes, prosperity “still eludes Latin America because an economy in which most people do business illegally with a third of the productivity of those who belong to the formal club is condemned to low rates of real growth, a widening wealth divide, and social resentment.” This would seem inarguable. Vargas Llosa’s proposed remedies include standard libertarian nostrums for decreasing the presence of government in economic life, though he is more nuanced than many; he writes meaningfully, for instance, of the need to elaborate a society based on the rule of law. Still, some familiar Friedmanesque tropes turn up here: government has no business directly providing education or health care, taxes are a species of expropriation, and so on.
Of interest to those already committed to the unrestrained-market platform. But will the caudillos, comunistas, and capitalistas listen?