The Magazine

Latin Labors Lost

The dismal science south of the border.

Nov 18, 2002, Vol. 8, No. 10 • By DAVID FRUM
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Against the Dead Hand
The Uncertain Struggle for Global Capitalism
by Brink Lindsey
John Wiley & Sons, 368 pp., $29.95

John Maynard Keynes
Fighting For Freedom, 1937-1946
by Robert Skidelsky
Penguin USA, 608 pp., $20

THE LAMPS are going out all over Latin America. Two decades ago, there seemed hope at last that Latin America would emerge from its long, sad history of economic and political oppression. From Argentina to Mexico, the dictators and oligarchs fell in the 1980s and early 1990s --and so did the tariff barriers. Latin America was rejoining the world, or so Western investors were promised by the salesmen who peddled Latin American bonds.

But hopes that this time, no fooling, Latin America would at last achieve stability and freedom have once again been falsified. Since the economic crisis of 1998, the old ways have reasserted themselves, first in Venezuela (where the voters elected the onetime would-be dictator Hugo Chavez as president in 1998), then in Argentina (which defaulted on its debts and devalued its currency earlier this year), and now--most spectacularly--in Brazil. Last month, Luis Inacio Lula da Silva, known universally as "Lula," won the presidency of Brazil on his fourth try, with a platform that blended promises of radical economic redistribution, anti-Americanism, militarism, and a return to the protectionist policies of Brazil's past. In Latin America, the giddy, hopeful 1990s are now truly over. On the horizon are devaluation, inflation, and civil turmoil.

Studying Latin American history is like watching a handsome, talented friend throw his life away to some self-destructive addiction. Again and again he promises to reform; again and again he succumbs to the old affliction. In the 1870s, the 1920s, and the 1950s, Latin America seemed on the verge of success--and each time it faltered and failed.

This time, though, the failure (if it indeed occurs) will have more than local significance. The United States is now engaged in a world war against terrorism and Islamic extremism. In this war, America's ideals of democracy and freedom are powerful weapons. It won't help if America's nearest neighbors are rejecting those ideals at exactly the same time that the United States is attempting to propagate them in the Middle East.

For that reason, it is vitally important to understand what went wrong for many emerging markets in the 1990s. The critics and opponents of open markets have of course a ready answer: Globalization failed. Open trade, deregulation, and privatization, they say, further impoverished the already poor, who are now rising up against them in justified wrath. The former chief economist of the World Bank, Joseph Stiglitz, of all unlikely people, has become the leading exponent of this view. In a speech this summer, Stiglitz concluded that ''a reform strategy that promised to bring unprecedented prosperity has failed, in an almost unprecedented way."

But did the reforms of the 1990s fail? Is globalization finished? Is Lula the future? The best answers to all of these questions are found in two extraordinary books published this year: "Against the Dead Hand," by Brink Lindsey of the Cato Institute, and "Fighting for Freedom," the third volume of Robert Skidelsky's great biography of John Maynard Keynes.

"Against the Dead Hand" is the most important book yet published on the whole subject of globalization--brilliantly original, superbly well informed, and most important, unflinchingly honest. Honesty is a surprisingly rare virtue in writing about globalization. An unpleasant odor of hucksterism and salesmanship lingers upon too many of the words published in the 1990s about emerging markets and the global economy. Remember those television commercials showing little Paulita in Montevideo e-mailing chess problems to little Ming in Shanghai? The hucksters wanted to convince American investors that it was technology that was changing the world--and that there was still time to get in on the ground floor.

Brink Lindsey urges us to understand globalization in a radically new way: politically, not technologically. That understanding illuminates with clearer light the progress we have made toward a more open world--and the reaction against that progress in both rich and poor nations.