THESE DAYS, news reports from Latin America suggest that citizens throughout the hemisphere are fuming with anti-capitalist and anti-American rage. The recent elections of leftist presidents in Chile, Brazil and Uruguay, as well as the fulminations of Venezuela's Hugo Chavez, are cited as evidence that the region has turned against Washington's "hegemony", including its despised and failed free market policies.
Are these impressions correct? Did the economic and political reforms undertaken during the 1990s impoverish Latin Americans, and is there a rising tide of anti-Americanism that jeopardizes the U.S. relationship with Latin America?
Assessing the Washington Consensus
WHILE THE term "Washington Consensus" has been misused and co-opted to the point of meaninglessness, it is important to recall that in its initial incarnation it represented the understanding that newly democratized governments needed to pursue economic reform to secure hard-won freedoms. In Latin America, this meant, in part, the privatization of state-owned enterprises, macroeconomic reform with an eye to controlling inflation, and trade and price liberalization.
We forget that by the end of the 1980s, Latin America was dangerously close to economic implosion from hyperinflation, negative growth, high unemployment and crushing foreign debt payments. In contrast, today's Latin America is much healthier without rampant inflation, uncontrolled fiscal profligacy and the other economic ailments that plagued the region during the "lost decade" of the 1980s.
No one should have expected the Washington Consensus would act as a magic pill that Latin America could swallow to alleviate centuries of economic instability; wrenching poverty and inequality still beset the region. But the frustrating persistence of poverty does not negate the success of these reforms.
