[freedomtowernight_edited.jpg] 26th Parallel: Costa Rica Gets It

Sunday, May 03, 2009

Costa Rica Gets It

(Sorry for the relatively light posting the past week. It's a crazy time of year for me at the old salt mine)

Andres Oppenheimer writes today about a response given by Costa Rican president Oscar Arias at the recent Summit of the Americas that didn't receive a lot of attention - compared to clowns like Daniel Ortega, Hugo Chavez and Rafael Correa.

Oscar Arias responded to Ecuadorian president Rafael Correa's "blame the USA" screed in a closed-door session. Here's some of what Arias said:

In his speech, whose written version is entitled ''We must have done something wrong,'' Arias started out saying, ``I have the impression that each time Caribbean and Latin American countries meet with the president of the United States, it's to . . . blame the United States for our past, present and future problems. I don't think this is entirely fair.''

He continued: ``We cannot forget that Latin America had universities before the United States created Harvard, and William & Mary, which were the first universities in that country. We cannot forget that in this hemisphere, like elsewhere in the world, until 1750, all of us in the Americas were more or less the same: We were all poor.

``When the Industrial Revolution started in Great Britain, other countries joined that train, including Germany, France, the United States, Canada, Australia and New Zealand. But the industrial revolution passed over Latin America like a comet, and we didn't even notice. We certainly lost an opportunity.

``Fifty years ago, Mexico was richer than Portugal. In 1950, a country like Brazil had a per capita income that was higher than that of South Korea. Sixty years ago, Honduras had a bigger per capita income than Singapore. . . . We in Latin America must have done something wrong .

''What did we do wrong?'' Arias asked. Among other things, he listed the fact that Latin America have an average schooling of only seven years, that the region has one of the world's lowest tax collection rates, and that it spends an absurd $50 billion a year on weapons and other military expenditures. ''That's nobody else's fault but our own,'' he said.

''So I ask myself: who is our enemy?'' Arias went on. ``Our enemy, President Correa, is that inequality that you rightly refer to. It's the lack of education. It's illiteracy. It's the fact that we don't spend on our people's health.''

This part, however, I'm not too crazy about:

Noting that the 21st century is likely to be the Asian -- rather than Latin American -- century, and that China has lifted 500 million people out of poverty since it opened its economy three decades ago, Arias concluded: ''While we continue debating about ideologies, and about which ``isms'' are the best, whether capitalism, socialism, communism, liberalism, neo-liberalism, etc., Asians have found an ''ism'' that is much more realistic for the XXI Century: pragmatism.''

I guess Arias was just trying to make a point on how other parts of the world have adapted faster and better than Latin America, but the only "ism" that's proven to work is capitalism, plain and simple. Let's see how far China's "pragamatism" takes them.

Anyway, I thought I'd point this article out because while I am very critical of many Latin American leaders for their lack of integrity, USA-bashing, castro-supporting and corruption, there are some that get it, and it's always good to point it out. Bravo, Mr. Arias. Perhaps that's why you usually don't hear much from/about Costa Rica. They keep their noses clean and don't cause any trouble. Good for them.


Blogger Andy said...

Arias' response is brilliant. I'm glad someone in the American media finally talked about it. You can read the whole thing here if you speak Spanish: http://www.nacion.com/ln_ee/2009/abril/26/opinion1944940.html

As to the "ism" comment, Arias' point is not which system is the best one. Though I think he would agree with you that capitalism takes it. The point is that Latin American leaders get mired in this debate for political gain, but don't seem to take any action to grow their countries' economies. That's why he used the example of Asian countries. Many of which, like China, have far less advanced political systems than Latin America, but are still capable to maintain solid economic growth.

1:24 PM, May 03, 2009  
Blogger Robert said...

Hi Andy,

I'll have to check out the Spanish article. Thanks for pointing it out.

I understood Arias' comment about the "isms", and stated the same general conclusion you did. I just think it would have been a slam dunk to reinforce democratic capitalism in his response. All in all, a small complaint.

2:54 PM, May 03, 2009  
Blogger Andy said...

Yeah, but then he'd be engaging in the same useless debate.

I think Arias understands that Latin America's biggest problem is economic and not political. (Noting that the one exception is Cuba, which is so outside of the norm.) Even countries like Bolivia and Venezuela, regardless of what their leaders say, run capitalist economies, and have, compared to China, some amount of democratic governance.

The problem for these countries is how do they grow their economies, within the capitalist scheme. I don't think it's a matter of more or less capitalism.

For example, they need to allow more foreign investment and free trade. That would fall under the more capitalism paradigm.

But they also need to fund education and infrastructure. And I think that's almost more important than opening up their markets because if you have free markets without an educated population you'll never attract advanced industry. Or rather, I should say, if they have free markets without funding infrastructure they'll never have real economic growth.

That is probably Latin America's biggest problem. They complain that the United States and Europe only open Coca Cola plants and maquiladoras down there. But, honestly, if they don't educate their population, they're never going to attract Microsoft.

Now, one could counter argue that Hugo Chavez has spent generously on social programs, and he has. But he has also scared off foreign investment by appropriating private property. Another problem is that Chavez's scheme for funding his social programs is ass backwards. Instead of encouraging foreign investment and using the tax revenue to fund social programs, he decided to take over PDVSA. Yeah, initially that brought in a lot of money for the government, but it has also meant that efficiency in oil production has decreased every year. And, the oil producing infrastructure is in a constant decline because too much money went to social programs and none to went back to PDVSA.

3:26 PM, May 03, 2009  
Blogger Robert said...

Perhaps Latin America's biggest problem is economic, but I don't take Chavez's anti-democratic actions lightly, and he seems have a fan club headed by the likes of Evo, Correa and Ortega. That's why a statement promoting democracy and capitalism, while being purely symbolic, would have resonated IMO.

You're absolutely correct in that Latin America has a huge education problem. Until then, they as a group won't be too productive there, or here for that matter.

3:35 PM, May 03, 2009  
Blogger Fantomas said...

Robert, Costa Rica a lo largo de su historia siempre se ha mantenido neutral en la mayoria de sus asuntos

3:39 PM, May 03, 2009  
Blogger Andy said...

Robert, I think it's important to recognize that democratic institutions do not grow in an independent universe. They're generally always the result of economic growth and an educated population, and not a propaganda campaign. I can't think of one poor country with strong democratic traditions. Fareed Zakaria has an excellent essay about this--The Rise of Illiberal Democracy.

Fantomas, me encanta tu nombre. Y tienes toda la razón. One of my favorite things about Costa Rica is that it abolished its standing army. It is a country concerned with economic growth, and not meddling.

3:51 PM, May 03, 2009  
Blogger Oasis of the Toucans said...

Arias is a good man.

5:58 PM, May 03, 2009  
Blogger Robert said...

Must be a boring night in the ol' banana jungle, eh Oasis?

9:01 PM, May 03, 2009  
Blogger Jonathan said...

It's cultural.

The most successful societies in history, Japan excepted, are cultural descendants of Britain. Limited representative govt, the rule of law, common-law legal systems, patents and other intellectual-property protections, the corporation as the central form of business organization, highly developed insurance and capital markets, Judeo-Christian work ethic, voluntary organizations, a common language, social tolerance. English civilization had all of these things; Spain and Portugal did not. The places colonized by Britain all did better in the long run than did everywhere else.

12:50 AM, May 04, 2009  
Blogger Andy said...

Well, not quite.

If you were completely right, then Brazil wouldn't have a higher GDP than India, and a much higher GDP per capita. Germany wouldn't be the largest economy in Europe, even though it was destroyed by war twice in the last century and half of it endured 40 years of Communism. Austria, Iceland, and the Netherlands would not have a higher GDP per capita than Australia. And, certainly, if you were right Luxembourg and Norway would not have considerably larger GDP per capita than the United States.

I don't know what a Judeo-Christian work ethic is, but take a lot at the economic growth in South Korea--there are no Judeo Christians there. Also, China is in line to become the world's largest economy without a significant Judeo-Christian population.

While I agree with you that there are certain traits common throughout the developed world--like advanced capital markets--I have to disagree with some of the ones you listed. Definitely common law legal systems or having been a former English colony have nothing to do with it, even though some qualities of modern capitalism are associated with the British Empire.

Some former British colonies have done very well for themselves, but so have many other countries who have nothing to do with the British Empire.

I really don't think it's a cultural issue.

1:41 AM, May 04, 2009  
Blogger La Ventanita said...

Andy, I think the Judeo-Christian work ethic refers to the work ethic that accompanied Luther's Protestant church. Among the many things he reformed out of then's Catholic church - yes he did more than those 95 questions - he instilled a work ethic into his new protestant church, which historical sociologists credit with the success the Anglos, the Saxons and the Anglo Saxons had.

6:56 PM, May 04, 2009  
Blogger Andy said...

Well, that's a protestant work ethic then, not a Judeo-Christian work ethic. Jews and Catholics don't follow Martin Luther or Calvin--who's probably more responsible for what we've come to know as a "protestant work ethic". For example, Luther didn't believe commerce was the kind of work that should be encouraged.

And while I agree that there is some relationship between early capitalism and Calvinism--Calvin preaches continuing reinvestment of one's wealth--I don't think we can say that development is cultural anymore.

And, honestly, I think it diminishes a real belief in the universal goodness of capitalism and open markets to say that it is.

7:17 PM, May 04, 2009  
Blogger Robert said...

Judeo-Christian values and their positive influence on many aspects of society is a large part of what defines American culture, and a huge reason for its success. Culture is one of the few things that bind us, that connect us to both our past and present. Our culture, passed down by generations, doesn't diminish the inherent goodness of capitalism, open markets and self-worth. It reinforces it.

No, a culture doesn't have to be Judeo-Christian in make-up to be successful, but I would argue that those cultures (Japan especially) have learned and borrowed a lot from Western and especially British civilization.

9:39 PM, May 04, 2009  
Blogger Steve said...

There is another "ism" that was left out of this discussion...and that is cronyism which stifles capitalism and innovation in Latin America.

I find it almost laughable that Arias is hung up on the industrial revolution without even mentioning the more recent comets of computer technology and the Internet. It never fails to amaze me in my travels to Latin America in that there is so little innovation and scalable entrepreneurship there. I was just saying to a friend how a propos (have I spelled that wrong?) of the iPhone application software explosion that once again there is total fascination with the device in Latin America (everyone has to have one) but near ZERO application software developed there for it.

8:05 AM, May 06, 2009  

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