End of the Latin Third Way


Old timers may recall that way back when, Brazilian President Luiz Inácio Lula da Silva was considered a potentially viable left-lite alternative to the hard leftism taking root in Latin America, a "moderating force" on Venezuela's Hugo Chávez, even a forward-thinking hipster. Now, as Lula's promise rots in an endless corruption scandal, the Independent Institute's Alvaro Vargas Llosa considers how it all went wrong:

The conventional wisdom was that, despite his radical Marxist roots and occasional concessions to his political base, Lula represented a healthy move away from the old left and toward the emergence of a new model for underdeveloped nations similar to Europe's social democracy. Many thought this model would have a moderating effect on the left across the continent and hold Hugo Chávez in check.

However, Lula's capacity to reinvent the left always hinged on something more than keeping interest rates high to stem inflation, maintaining a strong currency, riding on the high prices of certain commodities, and giving cash to poor families. He could either opt for simply managing the perpetual crisis or he could try to overhaul a labyrinthine political system that benefited certain pockets of industrial and agricultural production but keeps millions of people out of the realm of opportunity. He chose the former path.

While technocrats talk about a three percent rate of economic growth for Brazil this year and an export boom that has translated into a trade "surplus" of $40 billion, Lula's voters are indignant at the corruption scandal. But the real point is that corruption has developed naturally in an environment of limited opportunities due to asphyxiating government interference. And the absence of adequate limits on the power of the political bureaucracy is in turn an incentive for corruption at the top level. The corruption of Lula's government, therefore, should be seen more as a symptom than a cause.

Whole article.

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