Gwynne Dyer: The truth about Bolivia’s and Brazil’s economic miracles

    1 of 1 2 of 1

      To nobody’s great surprise, Bolivia’s president, Evo Morales, has won a third five-year term by a landslide majority. It’s no surprise because Bolivia’s gross domestic product (GDP) has tripled since he took office in 2006. The number of people living in poverty has fallen by a quarter, even the poorest now have the right to a pension, and illiteracy has fallen to zero. Of course he won.

      What has happened in Bolivia seems as miraculous as what happened in Brazil, where another left-wing president, Luiz Inacio “Lula” da Silva, took office in 2003. The economy started growing at five percent a year, unemployment fell steeply, and some 40 million Brazilians, almost a quarter of the population, were lifted out of poverty. Lula’s former chief of staff and successor as president, Dilma Rousseff, is also likely to win another term in office.

      Is there some secret they share? Many other South American economies have been growing fast too, but without the dramatic change in the distribution of income that has happened in Brazil and Bolivia. Even the late Hugo Chavez’s “Bolivarian revolution” in Venezuela, for all its anti-imperialist rhetoric and despite the country’s great oil wealth, has not delivered a comparable transformation in the lives of the poor.

      Evo Morales has another claim to fame, too. He comes from the poorest of the poor: “Until I was 14, I had no idea there was such a thing as underwear. I slept in my clothes...[which] my mother only removed for two reasons: to look for lice or to patch an elbow or a knee,” he wrote in his recent autobiography. He spent only a short time in school, and he did not become fluent in Spanish until he was a young adult.

      Morales grew up speaking Aymara, one of the languages spoken by Bolivia’s indigenous peoples. They are a two-thirds majority of the country’s population, but in almost 200 years of independence Morales is the first indigenous Bolivian to become president (all previous presidents were drawn from the 15 percent white minority). And his government passed a new constitution in 2009 that entrenches indigenous rights in politics and in law.

      So should we hail the arrival of a new and better model for economic growth and social justice? Unfortunately, no. The only economic secret that Lula, Dilma, and Evo all share is that if you want the economy to grow, you must not frighten the horses.

      The international markets got ready for a meltdown when Lula, a self-taught former trade union leader with a penchant for radical rhetoric, became president of Brazil, but he turned out to be the very soul of fiscal responsibility. And although Morales nationalized a large part of the Bolivian economy—oil, gas, tin, and zinc mining and key utilities—he negotiated deals that compensated foreign investors and kept the markets happy.

      All the rest of it—things like Morales calling Barack Obama “an imperialist” at the UN General Assembly meeting in New York last month, and Rousseff cancelling a scheduled state visit to the United States last year after Edward Snowden revealed that the U.S. National Security Agency had been spying on her emails—simply doesn’t worry serious investors so long as the numbers come out right and the financial and fiscal environment is predictable.

      So Morales has not been punished by the markets for being a “socialist”, and neither has Rousseff. Both still have strong support at home, too. Unlike Morales, Rousseff didn’t get enough votes in the first round of the presidential election earlier this month to avoid a run-off on October 26, but she will probably win again even though the Brazilian economy is now teetering on the brink of a recession.

      Despite all the similarities, however, comparing Brazil and Bolivia is rather like comparing apples and oranges here. Brazil has a very large and diversified internal market (fourth largest car-maker in the world, for example), and has 20 times as many people as Bolivia. The latter has an economy that is almost totally dependent on the export of commodities, mainly oil, gas, and minerals.

      Bolivia’s soaring GDP of the past decade, and the modest prosperity it has brought to what was South America’s poorest country, is mostly fairy gold. What goes up usually comes down again eventually, and what drove Bolivia’s GDP up was almost entirely rising commodity prices. When they come down again, so will the GDP, the government’s income, and its ability to support even the sketchiest outline of a welfare state.

      In the meantime, Morales has spent the extra money wisely, and it will be very hard for any successor to abandon this kind of “social spending”. He has also made it normal for Bolivia’s indigenous majority to have a big say in policy decisions at the national level, and that too will be almost impossible to roll back. He has even built up big financial reserves to cope with falling commodity prices. But he has not really transformed the economy.

      Gwynne Dyer is an independent journalist whose articles are published in 45 countries.

      Comments

      9 Comments

      I Chandler

      Oct 14, 2014 at 12:18pm

      Dyer: "The truth about Bolivia’s"

      The truth about Bolivia's "economic miracle" involves H2O - Congressman Evo Morales became President in 2005 after Water Wars raised his profile. The privatization of water by Bechtel brought people to the streets faster than the CIA's NED. The water supply issue in Bolivia was the main theme of the James Bond movie Quantum of Solace, and featured in the 2003 documentary film The Corporation. The broad nature of Law 2029 led to a concern that a license , be required for people to collect rainwater from their roofs: http://www.youtube.com/watch?v=HfFhN-tINoU

      Oliver Stone's South of the Border shows how Morales and Chavez are/were demonized:
      http://www.youtube.com/watch?v=6vBlV5TUI64

      DYER: "Even Chavez did not delivered a comparable transformation in the lives of the poor."

      Under Chavez , a measure of income inequality, dropped from 1998 to 2011, putting Venezuela behind only Canada in the Western Hemisphere... During the economic expansion, the poverty rate cut by more than half, from 54 percent in 2003 to 26 percent at the end of 2008. Extreme poverty fell by 72 percent. These poverty rates measured only cash income, and do not take into account increased access to health care or education. In 2007 primary education enrollment was around 93%. Venezuela also has one of the highest literacy rates ( 95% ) in the region.

      http://en.wikipedia.org/wiki/Hugo_Ch%C3%A1vez#Economic_and_social_policy

      P.Peto

      Oct 14, 2014 at 12:49pm

      What Gwynne seems to be saying is that the economic prosperity and increased social justice in Bolivia and Brazil or for that matter in Ecuador, Venezuela and perhaps Chile and Argentina is not due to their political leadership forging their own economic policies but is rather due to the benign self interest of foreign investors. Therefore, if and when foreign investors can no longer profit by doing business in these countries and their is a flight of foreign capital their political and economic systems will inevitably collapse. However, the whole point of the Bolivarian Revolution is to build a mass movement to implement a genuine populist democracy, economic independence from American finance capital ,and to promote equitable distribution of income ,and end chronic political corruption of the ruling political classes which were invariably bribed and controlled by America. The net effect so far has been a South American renaissance made possible by breaking the hold of American economic imperialism and establishing greater economic ties with other BRICS counties. It has been the IMF and World Bank and the constant meddling of the CIA which has kept Latin America backward, bankrupt and in bondage, until recent times. We should cheer them on, support them in their struggles to free themselves from American hegemony and not belittle their accomplishments!

      MarkFornataro

      Oct 14, 2014 at 4:26pm

      @ I Chandler - thanks for the links. I just watched the Oliver Stone doc. which was very interesting.

      JeffE

      Oct 14, 2014 at 4:37pm

      Actually, indexes of world metal prices are pretty close to their average of the past ten years, or even a bit lower, while energy indexes are maybe a little bit higher than the 10-year average, but not much. They've been crazy volatile, of course, swinging wildly as pools of hot money the size of Antarctica careen around the globe looking to make a quick billion. So they'll definitely go up & down, but there's no reason to think they will drastically change from where they are now, especially in the middle of a global recession, over the next few years. So Dyer's suggestion that the Bolivian economy has been riding a wave of artificially high prices, and the piper is already waiting to get paid, is not really accurate. Morales actually seems to have been quite prudent in his use of export income to fund social change, and that prudence should help entrench it for the future. It would be nice if we had "moderates", or even "socialists", in Canada as radical & effective as the moderates of Bolivia & Brazil.

      doconnor

      Oct 15, 2014 at 6:23am

      @JeffE

      Morales has been in power for the last 8 years, so using a 10 year average isn't very meaningful. Prices have been high for almost 10 years. Look at a longer period.

      Mosby

      Oct 15, 2014 at 9:28am

      JeffE wrote: " It would be nice if we had "moderates", or even "socialists", in Canada as radical & effective as the moderates of Bolivia & Brazil."

      The reason we don't (yet) is because most working-class Canadians are more-or-less satisfied with the status quo, and the more we realize how relatively rich we are compared to the average Latin American citizen, the more thankful we are for our currently "elevated" status.

      Politicians of Canada's 3 main political parties are well aware of this, and don't want to say or do anything that might rock the boat.

      So the ongoing trend of the rich getting richer and the poor getting poorer will continue until the populace can no longer afford to sedate itself with shiny techno-gadgets and canned entertainment.

      Then, and only then, will "radical socialists" gain any traction in Canada. That day is coming, but not for a few more years.

      MD

      Oct 15, 2014 at 11:17am

      Mosby
      "Then, and only then, will "radical socialists" gain any traction in Canada. That day is coming, but not for a few more years."

      Keep waiting for you Messiah, and keep treating an ossified political philosophy (which at its heart is rather dynamic and predisposed to constant change despite the inherent conservatism and runaway egos of its dwindling adherents) like a religion, and I am sure Marxism will be as successful as setting up a Socialist Paradise as Christianity has been setting up the Kingdom of Heaven on Earth.

      I Chandler

      Oct 15, 2014 at 2:09pm

      DYER:"Morales spent only a short time in school, and he did not become fluent in Spanish until he was a young adult."

      One of Morales predecessors was called El Gringo because he only spoke American.
      The "Bolivian gas war" came to a head with the resignation of President Gonzalo de Lozada (aka "Goni"). Bolivians stopped a proposed pipeline to Chile:

      "Bolivians campaigned against the Chilean option, arguing instead the pipeline should be routed through the Peruvian port of Ilo. Peru claimed the difference in cost would be no more than $300 million. Bolivian proponents of the Peruvian option say it would also benefit the economy of the northern region of Bolivia through which the pipeline would pass."

      They also demanded a gas plant be built in Bolivia to process the gas and that domestic consumption had to be met before export.

      The gas war was violent. But Unlike the maidan violence in Kiev,the NED supported law and order for some reason...The NED issued a statement declaring "the international community and the U.S. will not tolerate any interruption of constitutional order and will not support any regime that results from undemocratic means"

      Playability

      Oct 19, 2014 at 5:19pm

      There is a lot of sour grapes in this article. In fact what we see in Bolivia is what should happen - the profits from the country's resources are going to the masses rather than a few capitalists. When the world realizes that electric cars are the future and that Bolivia has 70% of the worlds Lithium, you really need to start seeing Bolivia as a major player on the worlds stage, hopefullt with it's social model in tact.