A Quiet Revolution

Latin America, it is safe to say, gets no respect in Washington. Mention the region at a meeting of foreign policy cognoscenti who are not Latin America specialists, and eyes immediately glaze over. There may be a quick discussion of Venezuela's Hugo Chávez, but attention will swiftly return to the Middle East, Russia, or China. Back in 1971, Richard Nixon advised the young Donald Rumsfeld, "Latin America doesn't matter. . . . People don't give one damn about Latin America now." Rumsfeld took Nixon's advice on where to focus his career, and the rest is history.

Coverage of Latin America in the mainstream media is little better. It merits attention primarily when it causes trouble for the United States. Thus more ink has been spilled on Chávez over the past few years than on the entire rest of the region combined. The only associations that many in the United States have with Latin America are problems such as drugs, gangs, and illegal immigration.

But Latin America should matter to Americans, and not simply because Latinos have passed African Americans as the United States' largest ethnic minority (15 percent versus 13 percent). The region is home to the world's largest collection of democracies, but it is also a place of huge social inequalities and ugly dictatorships. Consequently, it has been a key battleground of ideas, where competing models of development -- communist, socialist, free-market, mercantilist -- have clashed. The Cold War was fought out in Latin America, from the coup against Guatemala's Jacobo Arbenz in 1954, through the Cuban Revolution and the military dictatorships that arose in reaction to it, to the civil wars in Central America in the 1980s.

The penultimate act of this morality play came in the 1990s, when the region had returned to democracy and weathered the debt crisis of the 1980s. The end of the Cold War seemed to signal an opportunity for a new start. Washington and international financial institutions such as the International Monetary Fund and the World Bank pushed Latin American governments to open their economies to global trade and reduce the role of the state in economic management -- the so-called Washington consensus. This shift toward ideas and policies favored by the United States produced not the kind of explosive economic growth experienced in East Asia but rather a minicrisis of stagnation in the late 1990s and, in the case of Argentina in 2001, full-blown economic meltdown. This stagnation paved the way for the election of left-of-center leaders in Argentina, Bolivia, Brazil, Ecuador, Nicaragua, Uruguay, and Venezuela, some of whom have denounced "neoliberalism" and U.S. policies as the source of their countries' troubles.

Development models matter. If the United States cannot help steer countries in its own neighborhood toward liberal democracy and market-based economic growth, it is hard to see what business it has trying to transform the politics of countries halfway around the world that are culturally much more foreign. At the moment, the dominant discourse in the Western Hemisphere holds that U.S. ideas about development have failed.

The real story, however, is more complex: despite Chávez's antics, most Latin American countries have been successfully deepening their democratic institutions, integrating into the global economy, and beginning to address endemic social inequalities in ways that bode well for the future. This story of slow but steady progress by reformist, rather than revolutionary, governments across Latin America will never make headlines, but it is the topic of an excellent new book by Michael Reid, a longtime Latin America correspondent for The Economist. "Most Latin American countries were better placed in 2007 than they had been at any time in the previous quarter of a century," Reid writes. "Incomplete though they were, and despite some costly mistakes of implementation, the economic reforms have provided the region with a platform from which to seek its fortune in the world."

Reid points out that an accident of history -- the spike in oil prices since 2001 -- has given spurious plausibility to the alternative represented by Chávez's "Bolivarian Revolution" in Venezuela. That model is populist in the classic sense: it satisfies short-term popular demands for social spending but in ways that are completely unsustainable in the long run, and not just for countries without Venezuela's energy resources but also for Venezuela itself. The real action lies instead with countries such as Brazil and Mexico, whose reforms are likely to be much more enduring. As Reid notes, "Radical social movements of sometimes questionable representativeness might grab the headlines with street demonstrations, but the power of public opinion, expressed through the media, through local government or in civic groups, is often more significant in quietly achieving change."

VIVA LA EVOLUCIÓN!

There is evidence of progress on the part of reformist democratic leaders across Latin America in a number of domains -- most notably the high quality of macroeconomic policy management in virtually all of the region's countries. The debt crisis of the early 1980s was brought about by the failure of political leaders to rein in spending in the wake of the oil shocks of the 1970s. Central banks monetized fiscal deficits, bringing on a cycle of inflation, currency crises, capital flight, and economic contraction. Today, countries in the hemisphere without energy resources face rising import bills once again. But despite the anti-Washington consensus rhetoric, most countries have continued to follow relatively orthodox economic policies and have been rewarded by growth with low inflation. Many resource-exporting countries (Venezuela excepted) have created stabilization funds to squirrel away revenues for a rainy day -- the opposite of their behavior in earlier decades.