Thursday, November 12, 2009

The American Betrayal of the World's Rural Poor

Since the late 1980's, there are any number of examples one could choose to symbolize the dramatic failure of the U.S. and its allies to deliver on their utopian promises for market-driven higher living standards in the developing world. Among them are the worse crisis since the Great Depression, increasing economic inequality, destruction of the environment, and rapid declines in several key measures of welfare. However, the stunning lack of progress made in the lives of the rural poor should go down in history as one of the great betrayals of the neoliberal era.

For decades international financial institutions, aid organizations and the United Nations advocated an aid based approach to fighting world hunger. The way to respond, the hungry were told to believe, was through a series of technological 'green revolutions', increased market access and external support. At the same time international financial institutions were shoving their ideology of deregulation and liberalization down the throats of national governments. The result? The number of hungry people has topped one billion for the first time since records were established in 1970. Instead of placing blame on a failed strategy, the aid community is blaming the global recession and food crisis for their inability to eradicate hunger.

In the run-up to the 2009 UN Food Summit, the international aid community announced the boldest betrayal of hundreds of millions of starving people around the world. The UN Food Summit also backed away from any recommitment to halve world hunger by 2015---a key component of the UN Millenium Development Goals. Now the experts are claiming that even that goal may be impossible to reach until mid-2040. Humanitarian groups have rightly protested that the Rome summit was a failure, and that the three-day event was damaged by the absence of many of the world's leaders. The only silver-lining of the summit is perhaps the long overdue rejection of neoliberal paradigms in the final agreement. National responsibility for food security is one of the core principles in the summit declaration, which demands that plans for food security must be “nationally articulated, designed, owned and led.”

"The responsibility for ensuring food security, agricultural and rural development is the responsibility of each government and its people...It’s not the responsibility of the FAO and certainly not the responsibility of a summit. A summit does not have land. A summit does not have farmers. A summit does not have a budget to invest. A summit is a framework for discussion and debate to arrive at consensus solutions in the face of common challenges at the global level.”

In the aftermath of the fall of the Berlin Wall, American leaders boasted that the global integration of investment, trade, and communication would lead to a diffusion of economic prosperity and human development around the world. In 2009, with all of the enormous global prosperity, free trade, and cutting-edge technology the fact that there are more hungry people now than a decade ago, should make us re-think our basic laissez-faire assumptions about economic development. The prominent libertarian economist Friedrich von Hayek once warned that the social democratic welfare state of the post 1930's New Deal era would lead down the 'Road to Serfdom'. But in fact it is Hayek and the development policy-makers who shared his ideas who have condemned the rural poor to virtual slavery.

Saturday, November 7, 2009

Bolivia's Bold Experiment

Today, Bolivia is a powerful alternative example for other underdeveloped countries facing mass illiteracy, poverty and inequality in the way that revolutionary Cuba once was during the Cold War. But before Bolivia becomes the Cuba of the 21st century it will have to survive a series of so far unyielding challenges.

Evo Morales' emancipatory project for the poor and marginalized groups of Bolivia represents an independent model of economic development in a region traditionally dominated by U.S. economic interests. Since his election in 2005, Morales' brand of revolutionary social democracy and anti-capitalism has vexed American and European economic experts who favor neoliberal approaches to development---a model they have from time to time been prepared to defend through the barrel of a gun.

President Morales expelled the International Monetary Fund and nationalized significant industries upon his election in the face of Western opposition. But despite their fears, Morales and his party Movement Toward Socialism (MAS) have led Bolivia to what is expected to be the fastest economic growth rate in the Latin American region this year.

At home Evo Morales is the front-runner in a December election that will widely be a referendum on the economic policies of his first term. So far, public opinion polls indicate that Evo is regarded favorably in Bolivia, especially compared to this right-wing opponents. Even in Santa Cruz and Tarija, districts where the opposition is most vocal, President Morales gained about 57 and 56 percent respectively. If elected, Morales has promised to continue historic social spending on health care, housing, and education.

The first indigenous President of the America's has also promised to increase even more the role of the state in the Bolivian economy---a key source of antagonism among conservatives. The end result has been overwhelmingly positive. The billions of dollars in additional revenue from the now publicly-owned industries have allowed the government greater resources to spend on badly needed social programs. Public investment increased from 6.3 percent of GDP in 2005 to 10.5 percent for 2009. Higher earnings for exports and a fairer government imposed tax rate also created a budget surplus after years of large deficits.

Government revenues can only be expected to increase as President Morales invests in new lithium production facilities. Bolivia has 50 to 70 percent of the world's lithium reserves and foreign corporations are poised to rake in lucrative profits. But Morales is instead looking toward endogenous control of the reserves. Some are calling Bolivia, "the Saudi Arabia of Lithium" and the mineral resource if managed well could make South America's poorest country a global player in the technology industry.

The economic rebellion in Bolivia is a victory for yet another Latin American leader who launched an ambitious experiment in statist political economy 50 years ago. Cuba's former president, Fidel Castro is without question a primary source of inspiration for MAS' left-wing nationalism and he frequently celebrates President Morales in his widely read Reflections. Today, Bolivia is a powerful alternative example for other underdeveloped countries facing mass illiteracy, poverty and inequality in the way that revolutionary Cuba once was. But before Bolivia becomes the Cuba of the 21st century it will have to survive a series of so far unyielding challenges.

Bolivia still faces relative dependency on energy reserves for export, widespread corruption in regional government and entrenched political instability. In the 1990's privatization and austerity measures promoted by the IMF in Bolivia led to increased unemployment and break downs in social services. State capacity for industry regulation and service delivery have been historically weak and despite obvious improvements, the government still faces difficulties in reaching the most remote pockets of the country with their programs.

Unlike Cuba's one-party system, MAS is seeking radical transformation through the channels of liberal democracy. In this way political economic reforms have to be won by consensus with interest groups that are existentially opposed to the Morales' agenda. The European-descended elite of Bolivia who make up the opposition to Morales, historically controlled the government and remain the primary beneficiaries of the countries mineral wealth. The efforts by the President to redistribute political and economic power among indigenous groups have been met with vehement resistance.

The opposition-led senate for instance has opposed most of MAS' proposals to overcome internal obstacles to development including corruption. In 2008, opposition leaders led violent protestors in attacking MAS supporters resulting in public condemnation from outside Bolivia among Latin American allies. President Evo Morales' ambitious agenda for reform is more broadly complicated by the calculus of electoral politics inside Bolivia. MAS its self is essentially an alliance of social movements bound together less by political ideology than their support for Evo Morales. Even if Morales wins re-election in December, long-term objectives could be easily reversed if interests within MAS splinter in the years ahead.

Though a tiny country in South America, Bolivia's political economy of development hold significant implications for other democratic developing countries around the world. Unlike their Asian counter-parts who have pursued authoritarian state-directed efforts to attract foreign direct investment for economic growth, Bolivia is attempting to grow endogenously and democratically launching a dynamic social and economic empowerment strategy for the poor.

The road ahead for President Evo Morales and his supporters is sure to be paved with even greater difficulties than in previous years. If they can win, Evo Morales will have achieved a progressive vision of state-directed development that other underdeveloped countries have so far been unable to sustain in recent years. The implications of a successful experiment will ultimately reach well beyond their immediate borders and have a significant impact on global debates in other continents.