Taking root: the practicalities of Latin American democracy.

• Author: Crandall, Russell

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.

Perhaps no country in Latin America is more closely associated with the alleged failures of the Washington Consensus than Bolivia. Indeed, Bolivia has become the poster child for everything wrong with "U.S.-backed" economic reforms. The international press zooms in on colorful anti-globalization protests and riots, ignoring the fact that before liberalization began Bolivia's average real GDP growth rate was negative. During the height of the reforms, the GDP growth rate was 4 percent, and hyperinflation was eliminated. In the past five years, Bolivia's growth has averaged about 2.5 percent--a growth rate certainly inadequate to meet the country's pressing socio-economic needs but nevertheless a vast improvement. Bolivia's "much improved, much improvement needed" situation echoes the regional reality, too.

Latin America's economic growth has not been nearly adequate to keep up with the region's pressing social agenda. Weak government institutions and weak rule of law hinder sustained economic development. Citizens often have little faith in their elected leaders. As a result, the region is stymied at times by a vicious cycle of voter apathy, poor public institutions, anemic economic activity and continued social unease.

But the most encouraging sign is that Latin Americans seem predisposed to solve social and economic problems via the ballot box. Popular dissatisfaction with the pace or outcome of reforms has not lead to revolutions or coups d'etat. Increasingly, democracy has become the only game in town in Latin America. Over the past several years, there have been several instances where threats to democratic rule have been resolved (some more effectively and permanently than others) through constitutional means. Guatemala in 1993, Paraguay in 1997, and, more recently, Bolivia and Ecuador (repeatedly) are but some examples.

One major step toward the maturation of democracy is the electoral success of the democratic Left. In the immediate aftermath of the democratic opening, conservatives won presidential elections in most countries. More recently, leaders such as Argentina's Nestor Kirchner, Uruguay's Tabare Vasquez, Chile's Ricardo Lagos and Brazil's Luis Inacio Lula da Silva (or Lula, as he is known) have come to power, ending the conservative monopoly.

Yet, while these leftist leaders hold unquestionably different ideological perspectives from their more conservative predecessors, their performance in office has usually been far from radical. Many observers expected them to govern in a radical manner, but these left-leaning governments of the region have, even with their social agendas, continued on the general path of economic reform set out during the 1990s. This is the "pothole" theory, whereby utopians or revolutionaries often become more pragmatic when faced with practical governing challenges. It's telling that...