trends is not only good for investing it is good for improving life
style. So I paid attention when a reader recently sent me this
I wouldn't respond
pass judgment on the geopolitical rumblings in Latin America. It
would be helpful however for someone with your purview to give some
background on the backlash throughout Latin America against the largely
failing economic policies supported and some say trumped up by the U.S.,
World Bank and the IMF.
"At the same
time, I am aware of the great risk you run of offending
some of your more conservative readers. I can hear them now condemning
those of us who might even see some rationale behind the leftward shift in
many LA governments. What heresy to think that Chavez might actually
be doing some good for the millions of poor: arguably the first Latin government
to begin to make headway after so many years of flawed neo-liberal economic
"I'm not sure
my miscellaneous ramblings are making much sense. I
just would like to hear some frank dialogue about what’s really happening
on the ground in South America. I for one think some good things may
come from less versus more U.S. cooperation. And, I think this is also
an indication of reduced influence of the U.S. throughout the world. By
the way, I recommend you get a copy of Eduardo Galeano's Open Veins
of Latin America."
This is a difficult
question that the reader posed…and
has been argued so much, but it’s worth answering because Latin
America offers enormous opportunity, if we can feel political stability.
of course is the obvious disparities between the rich and poor. This problem
is exacerbated by modern communications. The most watched
TV program in the world is Bay Watch. No wonder humble people everywhere
are envious of U.S. life. They have no way of knowing that is not
really how people in wealthy countries live.
Nor can we
fit square pegs in round holes. Different
different attitudes, work ethics and ideals that do not always mesh
smoothly from country to country. Perhaps this is what war has always been
Yet there is
a flaw in the left leaning thinking as well. Capitalists
are always trying to sell their goods. People in poor countries are
too willing to buy…even when they cannot pay. They borrow. Debt mounts
until the payments become a burden.
This is true in the industrial world as well as emerging nations.
I agree that
the IMF plan cannot work in democracies everywhere. Voters in some poor
countries (such as Venezuela)
just will not accept a leader who sticks to some of the rigid IMF plan. On
the other hand the establishment is trying to hold together capitalism
in the global community together. This system has its voters and places
demands on its politicians as well. If poor countries refuse to repay
for products and services they buy or debt they owe, then the Western
system fails. This won’t help the poor either. Who will then
buy Venezuela’s gas? Where will the poor be then?
in communism have shown that this system does not work as well as capitalism. Communism
requires central planning which, human nature being what it is, is a flawed
Most people just do not put their interests ahead of the others. This
fact of life screws up the beauty of the communistic ideal. George Orwell
explained all this in Animal Farm.
as I see it, is that the poor do not want to pay, yet want the Western
TVs, movies, cars, computers,
cell phones, refrigerators and other capital and consumer goods. So
who does pay? How do we resolve this tension between the haves and have
a bit of this and a bit of that is what the world needs. There does appear
to be a middle ground that does work, especially in small
countries. This is the Scandinavian model where democracy, high tax
and socialism are mixed with freedom and capitalism.
moved ahead of the US in productivity despite having one of the highest
tax rates in the world. Denmark,
Sweden, Norway and Finland have very high tax rates but one of the highest
standards of living in the world.
Get economic statistics at http://www.stat.fi/index_en.html
seems to require a great deal of time to evolve though. Democracy began
in Scandinavia over 1,000 years ago. Education is vital
as well....plus reasonably honest politicians which may be why this
works only in small countries where the leader’s actions are
easy to see by all.
Perhaps this system can be accelerated if
the leader is good. I watched Singapore emerge from a rag tag, poor City-State
when I first visited there in the late 60s into a modern powerful industrial
The Keys in both Scandinavia and Singapore
seem to be education to take advantage of enough opportunity to create
jobs for all.
If any new
government, left or right leaning enhances education for all and creates
real jobs that serve in the global
economy, then it will
help resolve this dilemma. If they are just robbing Peter to pay Paul
and shuffling what is already there..that’s not a solution. I have
been to Venezuela so I do not know if what Chavez is doing there is
good or not. However one of my friends is an attorney who specializes
in foreign business, and he says he has been swamped by small business people
trying to leave Venezuela to live in the U.S. This leads me to suspect that
Chavez is not educating and creating jobs.
How the dilemma will be resolved throughout
Latin America is beyond me. Merri and I try to do a small part by taking
people from rich nations to Ecuador where they spend money, buy products
and hopefully create some new infrastructures. Perhaps if more people
did this, the system would be
helped a bit.
This is one
reason why Merri and I like Ecuador, a small country with a long history
in Democracy. There are great
tensions between the rich and the poor in Ecuador, but a little bit of
success can go a long way. Those who come with us to spend and create
opportunity and employment can help. This is good.
Until next message, good global investing.