Ecuador’s economic performance challenges perceptions about ‘leftist’ Latin American governments

By William K. Black

Editor’s note: This is a response to an earlier Wall Street Journal article by By David Luhnow. That article (“A divided Latin America faces an uncertain future; Pacific rim countries grow while Atlantic coast countries struggle”) was posted in Cuenca High Life on Jan. 3.

The Wall Street Journal has written it’s latest “just so” article about how leftist Latin American leaders (Argentina, Brazil, and Venezuela) are bad and rightist Latin American leaders (Chile, Colombia, Mexico, and Peru) are wonderful. It quotes favorably this dismissal of progressive leaders.

“’We set out to create the Pacific Alliance because we wanted to set ourselves apart from the populists,’ said Pedro Pablo Kuczynski, a former Peruvian finance minister. ‘We wanted a thinking man’s axis.’”

No thinking women, allowed, of course. Dr. Michelle Bachelet just busted the “axis” by being re-elected President of Chile by a large margin. No one intelligent, of course, could be a progressive, at least that is what the right claims.

The supposed proof of this was that Morgan Stanley predicts that the four rightist nations (ignoring Bachelet’s electoral triumph which will probably put Chile in the leftist camp) will have higher GDP growth in 2014 than will the three leftist nations. I will set aside for purposes of this column the fact that Morgan Stanley despises the progressive Latin American leaders and panders to the oligarchs and the fact that Morgan Stanley forecasts of Latin American growth have greatly underestimated the growth of progressive nations.

Mexico is an odd champion of the right. It has recently had the worst GDP growth of any of the Latin American nations Morgan Stanley discussed.

As the author of the WSJ column wrote in a prior column about Carlos Slim, privatization in Mexico has been disastrous for Mexico’s democracy and economy because it has produced monopoly and massively increased inequality.

Mexico is now heading into an even more disastrous wave of privatization.

The WSJ column and the Morgan Stanley forecasts ignore Ecuador because it would have contradicted their claims. President Correa is an economist, and one whose predictions have proven far more accurate than the oligarchs’ economists. (Dr. Bachelet is a pediatrician.) The right cannot dismiss Correa or Bachelet’s intelligence without making their ideological biases embarrassingly apparent. Per capita GDP in Ecuador, measured on the conventional purchasing power parity (PPP) basis, was 58% of Mexico’s when Correa was elected in 2007. As of yearend 2012, the most recent date when comparative PPP data are available, that ratio has increased to 65%. Ecuador’s per capita GDP growth in 2013 has been much faster than Mexico’s so Ecuador continues to gain quickly on Mexico under Correa’s economic policies.

Under Correa, poverty has fallen sharply in Ecuador. The GDP growth is not simply going into the hands of a tiny group of oligarchs.

Inflation has not been a problem in Ecuador. Ecuador gets left out of the right wing narratives about Latin America because it falsifies the narrative and makes it clear that the Latin American nations that have elected progressive leaders are not some monolithic “axis,” but rather sovereign states that follow diverse policies reflecting the electorate’s views and the preferences of their democratically-elected leaders. Ecuador and Chile’s economies have proven so successful under progressive leadership that the oligarchs’ apologists find it is essential to edit them out of history.

Credit: New Economic Perspectives, http://www.economonitor.com/blo; Photo caption: Chile’s President-elect Michelle Bachelet