Latin America: a way out.

• Author: Pinera, Jose

The Latin American paradox has always astonished me. United by geography with two of the world's most successful nations, blessed with natural resources of every kind, lacking racial, religious, or language differences giving rise to serious violence, and with an extraordinary culture characterized by its diversity and by its continuity, Latin America could be a continent of peace, stability, and prosperity. But the region remains mired in underdevelopment and political instability.

The political and economic history of Latin America over the last two centuries is in direct contrast with that of the United States. The consequences speak for themselves, as the historian Claudio Veliz points out: "We are in a New World born at almost the same time to the North and to the South, settled by two great societies, springing from the two greatest empires of modern times. One group began poor, in the North, the other rich, in the South. In 500 years the positions have entirely reversed."

The United States generated a GDP of $12 billion in 1820, by 1900 this had risen to $313 billion, and to $10 trillion by 2000, all measured in current money terms. How was this explosion of wealth achieved? In large measure it is due to the institutions and political philosophy bequeathed to the United States by the Founding Fathers (Jefferson, Madison, Hamilton, Adams, Franklin, and Washington among others). The Declaration of Independence, the Constitution, the Bill of Rights, and the Federalist Papers are among the great works that gave such a firm and enduring philosophical, political, moral, and economic foundation to the newborn nation.

My hypothesis is that the tragedy of Latin America is the result of its having been an "orphan continent." The Liberators--Bolivar, San Martin, O'Higgins, and Sucre among others--fought heroically to free their countries from Spanish political control. But it is one thing to know how to fight and another to govern.

The Liberators (and their successors) did not anchor the young republics in the values of individual liberty, did not establish the rule of law, and did not limit the delegation of authority by the people to their democratic representatives. On the contrary, they maintained--and in some cases, further improved on--the Spanish centralizing tradition. Bolivar's hero, symptomatically, was the authoritarian Napoleon Bonaparte and not a constitutional president like George Washington.

So, Latin America had Founding Generals rather than Founding Fathers. The result is that the region lacks, even today, the institutions and principles of a true democracy in the service of freedom. That is why progress is so unsteady and so fragile. Like Sisyphus, we push the rock to the top of the mountain to see time and time again how it falls back down once more (although not always right back to where it started).

But the pessimism and fatalism of so much public discussion in Latin America is not justifiable. Many people content themselves with (or are resigned to) the mistaken belief that Latin America will never be able to find a road to prosperity. To rationalize that belief, they deploy arguments based on race, climate, terms of trade, Catholicism, and every type of explanation attributing the blame to someone or something external.

Freedom Works

Pessimism over the future, however, ignores three remarkable experiences of the last 30 years--eloquent signs that freedom does work in Latin America and that great steps forward can be made.

The first sign is the great success of the Chilean Revolution. During the 1970s, Chile managed to transform its most severe 20th-century crisis into an extraordinary opportunity to create a market-liberal order. Not only was that revolution the principal cause of the peaceful, gradual, and constitutional nature of Chile's return to democratic rule in 1990, it is also responsible for Chile's...