Saturday, January 10, 2015

Latin American Economic Reality

There are so many grandiose claims about Latin American political economy. They are often made in extraordinarily self-confident and even arrogant tones. And we're seeing them proven wrong, or at least grossly insufficient. For example:

--Latin American economies with open economies thrive more.
--Latin American economies that reject neoliberalism thrive more.
--Free trade is the answer.
--Free trade is a capitalist plot.
--Capitalism will set you free.
--Capitalism will enslave you.

Instead, we should focus on the fact that commodity-driven economies will rise and fall with prices, and if an economy relies heavily on oil then policy makers will be tempted to believe prices will remain high indefinitely. When things go sour, they will run in desperation to China for money and insist it's all about investment. The end.


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