Sunday, May 07, 2006

Latin America

One of the many problems with reactions like the Guardian's to the news that Bolivia is going to join the Latin-populist-screwAmerica crowd is that it sees the continent's left wing drift as something new. It isn't. Latin America has always been something of a sucker for the latest left wing thinking on how everyone else is responsible for its woes.

Being on the Gold Standard was a good idea before the First World War when it acted as a commitment mechanism demonstrating and encouraging budgetary restraint. This kept interest rates down and allowed the growing Latin American economies to borrow from the developed world and particularly Britain. Unfortunately, it was never possible for South America to reap the full benefits as the commitment was constantly under threat from political pressure from farmers. Such protest was common in the States as well but never caused such intractable problems to a much more stable polity.

Still, in the 19th century it was widely expected that Argentina, with its vast wealth of resources and before oil had become crucial, would become one of the richest states in the world. Indeed, by the start of the First World War its per capita income was similar to that in Germany or France. Things went wrong with the collapse of the world economy during and after the war but this was true elsewhere, certainly in Germany. The new scheme for becoming an industrial giant (because industry creates power, not because it necessarily creates wealth) was to place tariffs on your infant industries. Unfortunately, the lack of competition that tariffs created meant that the new industries remained costly and ineffective. Latin America steadily fell further and further behind European progress as it burdened the rest of its economy with tariff protection for the industries it was trying to develop.

With each generation the region appears to find new justifications and strategies for failing to implement the policies which are creating such success where they are deployed in the rest of the world. Usually the trigger for a renewed experiment with socialism is some kind of macroeconomic crisis. After the Asian financial crisis it was widely accepted that old methods of doing business (relation-based transactions) were making modernisation a source of instability and a process of quiet reform was begun. The response to crises in Latin America, such as the Argentinian collapse, is almost inevitably to give up on the whole project and hope that government can save the day.

South America has many of the advantages in resources that North America has. It also started off wealthier; North America was third prize in the Imperialist landgrab after the Caribbean and the South. The contrasting fortunes of the two regions, the fact that one now has the wealth and power to be the new "imperialist" in the Left's story of victimhood, suggests that the US instinct to trust the individual and enterprise is far more conducive to national success.

4 comments:

El Dave. said...

Matt,

With regard to the colonialism of the North vs the South, I fear you're mistaken.

1. Forms of colonisation
People in the north of America went lock, stock and barrel, family, community, the works, with the intention of staying, and so developing an autoctonous economy. People who went to the south went to extract natural resources, make themselves rich, and go back to Iberia. No attempt was made for a long period of time to develop an economy.

2. The North inherited the political culture of Britain of the Glorious Revolution. For all its faults, it was rather better than the equivalent in the South - the 15th and 16th century Spanish court.

3. The United States developed, particularly postbellum, as a coherent entity with good communications, sufficient central government and so on. The South never unified, and there was no means of the central government and other states containing the nuttier ideas of some leaders.

4. The US intervenes in South America, historically, when it's in the US interest. Nothing about liberal principals, no comments about today's regime, but how was Latin America meant to develop when the following is a partial list of US military involvement in South and Central America from 1880.

Mexico 1846 – war based on Manifest Destiny
Nicaragua – interventions in 1850, 1853, 1854 and 1857
Panama 1856
1898 – War against Spain – US take Cuba, Puerto Rico, Guam and Phillipines
1903 – Ten warships go to modern Panama to take land for the canal
1905 – US help the dictator of Mexico, Diaz, to crush a strike
1905 – Honduras
1908 – Panama (again)
1909 – Nicaraguan president Zelaya suggested that US mining and banana interests should be taxed. Not expropriated, not nationalized, taxed, where previously they hadn’t been. Legalises divorce. US put Diaz (no relation) in place
1910 – US occupation of Nicaragua to support Diaz
1912 - Nicaragua again – US troops support Diz regime
1914 – occupation of Vera Cruz, Mexico
1915 – occupation of Haiti. Lasts till 1934
1916 – occupation of Dominican Rep., lasts till 1924
1918 – Occupation of part of Panama
1912 – Coolidge wants the removal of Herrera of Guatemala in the interests of United Fruit. He goes.
1925 – occupation of Panama City
1929 – Forerunner of School of the Americas established in Nicaragua
1930 – Trujillo emerges from US-trained National Guard to become dictator of the Dom. Rep.
Bit of a break hear; the US relinquished its right to unilateral military intervention in Cuba and Panama
1943 – US shuts down Honduran newspaper El Cronista because criticism of the Honduran dictator is bad for the war effort
1946 – School of the Americas opens. Go on, justify that.
1954 – Arbenz of Guatemala takes some land from United Fruit and offers to pay the value of the land. CIA topple him. Castillo Armas becomes dictator for thirty years. Political parties outlawed, franchise reduced. Death penalty for strikers.
1960 – Leftist grouping offering free elections in power. Right wing junta takes over with US consent.
1961 – Bay of Pigs. Had to mention it.
1961 – Velasco Ibarra of Ecuador removed in CIA-backed coup
1963 – US supported coup in Guatemala
1966 – state dept report on Guatemala. ‘To eliminate a few hundred guerillas, the government killed perhaps 10,000 Guatemalans.
1968 – General Alberto Medrano, paid for by the CIA, organizes the forerunner to the Salvardorean death squads
1972 – Centrist predicted to win in El Salvador. US does nothing about coup. Coup successful
1973 – US supported coup kills Allende and installs Pinochet
1973 – Military takeover of Uruguay, supported by US
1980 – Military junta takes control of El Sal. US pours money into El Sal.

Matthew Sinclair said...

1. Indeed. That is a plausible explanation of why it plays host to so many unstable polities. It doesn't hurt my general case that domestic politics are the reason for its present economic weakness rather than external actors.

2. Ditto.

3. Ditto.

4. This is the actual disagreement. A great many of the interventions listed are pre-1945 which means that many of the occupations were either limited affairs or to do with the smaller Latin American states.

Many of the post-1945 interventions are only associations rather than being directly the result of US action.

Finally, don't a lot of them look like the consequences of Latin American instability (encouraging and making possible US involvement) rather than its cause?

El Dave. said...

Trying to export the system that operates in 'the West' hasn't work, doesn't work and isn't going to work.

With regard to point 4, it doesn't matter when they take place. Democracies in South America are never given the opportunity to do things on their own because the US has a tendency to step in.

xD.

Matthew Sinclair said...

Latin America is as descended from the West as the US is but I'm not trying to export anything beyond stable government which respects property rights. That kind of thing has exported to most of Asia just fine.

The examples you have given are almost always a chronic mess before the US steps in. US involvement is a symptom not a cause.