Writing in The New Republic, Alvaro Vargas Llosa, a senior fellow at the libertarian Independent Institute and son of the great Peruvian novelist Mario Vargas Llosa, takes a look at Eduardo Galeano's Open Veins of Latin America, the book Hugo Chavez bequeathed to President Obama on his visit to the Summit of the Americas in Trinidad. According to Vargas Llosa, the anti-capitalist, anti-free trade tract, which shot to number two on Amazon.com's bestseller list this week, is wrong on every front: "Everything that has happened in the Western Hemisphere since the book appeared in 1971 has belied Galeano's arguments and predictions."
The author claims that relations between Latin America and rich countries have been so pernicious that "everything … has always been transmuted into European–and later United States–capital." Actually, for years that relationship has transmuted into the exact opposite: Latin American capital. In the last seven years alone, Latin America has benefited from $300 billion in net capital flows. In other words, a lot more capital came in than went out.
The book rails against the international division of labor, in which "some countries specialize in winning and others in losing." That division of labor in the Western Hemisphere has not changed–Latin American countries still export commodities–and yet in the last six years, poverty in the region has been reduced to about one-third of the population, from just under half. This means that 40 million were lifted out of that hideous condition. Not to mention the 400 million pulled out of poverty in other "losing" nations worldwide in the last couple of decades.
The author pontificates that "raw materials and food are destined for rich countries that benefit more from consuming them more than Latin America does from producing them." Sorry, amigo, but the story of this decade is that Latin America has made a killing sending exports abroad–the region has had a current account surplus for many years. Rich countries are so annoyed with all the things poor countries are exporting to them that they are asking their governments to "protect" them in the name of fair trade. The "buy American" clause in the fiscal stimulus package approved by Congress a few weeks ago is a case in point. The U.S. had a trade deficit of more than $800 billion last year. The poor, if I may echo Galeano's hemophilic language, are sucking the veins of the rich.