By Whalen, Christopher
The International Economy , Vol. 20, No. 3
July's disputed presidential election in Mexico, where the conservative PAN party won a plurality of less than 40 percent of the vote, it would be a mistake to believe that the leftist political resurgence seen throughout the region during the tenure of President George W. Bush has crested. Since the approval of the NAFTA pact in 1994, the nations of Latin American have reacted to and in some cases against Washington's free trade agenda, helping propel political wins by the left in Brazil, Chile, Peru, and Venezuela.
Free trade, it seems, is great for the economists and politicians and business leaders who promote it, but bad for most other people, especially the majority of people in the nations of Latin America who are poor and who live on the margins. From auto workers in Michigan to campesinos in Costa Rica, waves of economic dislocation caused by competition with the low-wage nations of Asia are causing significant political shifts throughout the region--and the world.
Is it an accident that the rise of populism in Latin American comes at a time when global competition for jobs and investment is intensifying? The stresses of global free trade are hitting many nations of the region very hard, attacking the civic infrastructure of some of the most established Latin American societies and creating opportunities for populist leaders to seize power outside established democratic processes. The most often cited culprit, China, features wage levels one-tenth those of Mexico, a relatively high-wage market in the Central American chain.
You also could include Bolivia, Uruguay, and Argentina on the list of nations that have seen leftward shifts in their political economies, but we must distinguish among the different flavors of leftist or isquierdista. The Cuba-style socialist experiment of Hugo Chavez in Venezuela is very different from Michelle Bachelet's left in Chile, which has no agenda for fomenting regional revolution. Peru, Chile, and Colombia have free trade agreements with the United States and have apparently embraced free market economics, this in opposition to Venezuela, Bolivia, and Cuba, where the state is the center of all economic activity.
"Bottom line is we have no problem with responsible leftist governments that embrace democracy, free market policies, and want to provide a better life for their people," says one Bush Administration official with responsibility for regional policy. "It is the totalitarian states, where we see dictators use populism to get themselves voted into power, which are an increasingly dangerous crowd."
Overtly pro-U.S. leaders like outgoing Vicente Fox in Mexico (as this article went to press, the Mexican poll remained contested) and Oscar Arias of Costa Rica toe the free trade line set in Washington, but it is impossible to ignore the growing dislocation and poverty visible in both of these relatively stable, democratic societies--especially in once idyllic Costa Rica. Rising crime, illegal drug trafficking, and underground economic activity is undermining the rule of law in Costa Rica and in the nations throughout the Central American region. This slow wasting process, which at least partly has its roots in dislocation caused by the noxious combination of free trade and the mercantilist trade policies of China and the other Asian economies, is manifest by a steady northward migration of displaced humanity which begins deep in Latin America and streams up the Central American peninsula to the paradise known in Mexico as gringolandia.
"Besides having lost its reputation for honest government, Costa Rica is also losing its longstanding position as a land of social equality," writes Stephen Kinzer in the New York Review of Books. "Between 1988 and 2004, according to a new study, the income of the richest citizens doubled, while that of the poorest grew by just 7 percent. In a country once famous for its tranquility, barbed wire, barred windows, and private security guards now protect many homes and businesses. …