Political consequences of the economic crisis

The jokes are running rampant, like Hugo Chávez talking about "Comrade Bush" and his socialist policies. Clearly, Latin American leaders who have been labeled as adversaries by the United States are making much hay out of the crisis, which has involved truly massive state intervention by a government that proclaimed so loudly and confidently that massive state intervention was inherently evil. But what are the longer term political implications? Since we are in the midst of the crisis, it is still very early, but here are some thoughts.

First, the U.S. message about getting governments out of the economy will never be taken seriously again. This does not mean a rejection of capitalism per se, but for Latin America it means vindication of mixed economic models of its own choice.

Second, it gives a boost to more economic integration in Latin America. I am skeptical of the chances for integration because of historical antagonisms, rivalries, etc. but this crisis provides more support for those arguing that Latin America needs to come together. Let's see what happens in the summit later this year.

Third, it spurs further erosion of U.S. hegemony in the region. Bush administration policies had already contributed greatly, but Latin American governments feel more and more comfortable resisting U.S. pressure (of various sorts) and/or establishing relations with extra-hemispheric powers. Erosion is not the same as "disappearance" but things just ain't what they used to be.

The next question is whether the new administration will recognize the changes that have been taking place. There is a greater chance with Obama, but he or McCain will inherit so many problems that Latin America will barely register. But if U.S. policy (and rhetoric) is not altered to meet new realities, then the points outlined above will deepen to the detriment of the U.S.