“A Natural Experiment”: William K. Black Compares the Latin American Left to the “Washington Consensus”
|Written by Dan Beeton|
|Monday, 07 January 2013 16:37|
William K. Black, former deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement and now Associate Professor of Economics and Law at the University of Missouri – Kansas City takes on Alvaro Vargas Llosa and other “neoliberal” pundits in a long post today at Huffington Post. Noting how Vargas Llosa, P.J. O’Rourke and others have condemned the left-leaning heads of Latin American states as “idiots” and “stupid,” Black examines the track record of the neoliberal economic model versus the alternatives being pursued by countries such as Ecuador:
We have run what economists refer to as a "natural experiment." At the same time that Latin Americans were overwhelmingly rejecting key neo-liberal aspects of the Washington Consensus the Eurozone and the United States moved rapidly in the opposite direction by adopting ever more extreme neo-liberal dogmas. These dogmas created what criminologists refer to as a criminogenic environment -- an environment where the incentives are so perverse that they can produce epidemics of "control fraud." These fraud epidemics directly drove the financial crises in the United States, the United Kingdom, Ireland, and Iceland and indirectly triggered crises by causing global systemic shocks. AVL does not wish to discuss the predation by the world's most elite bankers.
The loss of the young (through emigration), employment, output, income, and wealth and the growth of poverty and inequality that resulted from the most extreme neo-liberal policies are staggering. In the U.S., over 10 million Americans lost their jobs or could not obtain jobs that would have been produced by a healthy economy. Spanish unemployment is nearly 5 million. The crisis is so great that it is now common for Irish and Italian citizens to emigrate as soon as they earn their university degrees. The Financial Crisis Inquiry Commission reported that the loss of U.S. wealth in the household sector alone was estimated at over $12 trillion -- a trillion is a thousand billion.
[Alvaro Vargas Llosa] AVL and his father could have responded to Ecuador's gains in economics, political stability, and migration and the enormous support that polls find for Correa among Ecuadorians by praising Correa for his achievements in the factors that AVL said should be used to judge the success of Latin American leaders. Instead, they sought to do everything they could to defeat Correa. Failing that, they denounce Latin Americans as "idiots" because they support Correa's successful policies and reject the failed neo-liberal dogmas that blew up the global economy. It is unclear to me why Ecuadorians' support for successful policies and rejection of disastrous policies constitutes "idiocy" or "stupidity."
AVL's and his father's support for the predatory oligarchs of Latin America and their increasing willingness to ignore their murderous assaults on the people of Latin America during the dirty wars demonstrates that they have become what they denounce. They are the European intellectuals who now whitewash inconvenient facts about the oligarchs out of their polemics in order to blame the "idiocy" of the peoples of Latin America for all the ills of Latin America. Latin Americans, however, are demonstrating their wisdom by rejecting the failed dogmas of those who loathe them and their democratically elected leaders.