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Eye on Americas By: Bill Steigerwald
FrontPageMagazine.com | Friday, October 12, 2007

Mary Anastasia O’Grady writes and edits the Wall Street Journal’s “Americas” column each Monday, which means she has to keep a sharp eye on the politics, economics and business of Latin America and Canada. At the invitation of St. Vincent College’s Alex G. McKenna School of Business, Economics and Government, she'll visit Pittsburgh Friday, Oct. 12, to deliver a luncheon lecture titled “Threats to Liberty in the Western Hemisphere and How to Confront Them.” I talked to the Journal editorial board member by telephone on Oct. 3 from her office in New York City:

Q: First off, tell us some good news about the Americas.
A: Well, the region is really bifurcating and some countries are going hard to the left and other countries are really struggling hard to reform. In fact, the 2008 “Doing Business” report from the World Bank shows Colombia as one of the top 10 reforming countries in regulation in the world this year. It’s done many, many regulatory reforms to try to ease the burden of government on entrepreneurs. Colombia is one example -- with a very brave president and ally of the United States -- that is really trying to restructure the economy and make the country modern and integrated into the modern global economy. It’s really hard. These are all democracies, and so they have the same public choice problems that we have in this country -- the most powerful interests are the ones who don’t want anything to change. So it takes a really strong leader.

Mexico also did a lot of reforming. It still has monopoly problems and a lack of competition but it has reformed a lot in terms of regulation and trade openness, which are really important to innovation and growth. Chile was a great reformer in the '80s and '90s. It really hasn’t done much reforming in at least 20 years, but at least it hasn’t lost too much ground. It has been able to defend the free-market reforms that were done during the dictatorship. El Salvador has been a good reformer. It has a big crime problem. The judiciary and law enforcement have been starved by a lot of spending in social programs. But in terms of its friendliness to investment, openness to the world and its effort to deregulate and become competitive, they’ve done a very, very good job. So there are good stories, but they are fighting a very strong status quo and that’s what makes reforming so hard.

Q: Is it the same old status quo -- a combination of the Catholic Church, the ruling class, too much socialism?
A: I think the emphasis on the church is a little bit overdone at this point. It’s one of those things that people have been saying and it’s repeated a lot because nominally speaking most of the region is Catholic. I would say that the way the status quo manifests itself is where the economic centers of power are.

For example, in a country like Argentina, labor has a lot of privileges that they don’t want to give up. You think of the status quo and the oligarchs as super-rich people against sort of these feudal slaves. But in the case of Argentina, which has a fairly strong middle class, the labor laws are so rigid and make it so hard for businesses to hire and fire people and basically take away any flexibility that the economy might have.

That’s harmed the country a lot but they haven’t been able to reform because the labor movement is so powerful. That’s also true in Costa Rica. It’s true to a large extent in Mexico. Of course, on top of that you also have domestic producers who benefit when an economy is closed and there are very high import tariffs and those sorts of things. Those elements have started to give in. Latin American economies are far less protectionist than they were 20 years ago. But they are still too closed. The reason they are closed is the same reason in this country we can’t open the sugar market. It’s the same problem, basically; it’s a problem of human nature. I don’t think it is anything special about the Latin mentality. It’s just much more difficult to solve the problem when you have large gaps between the haves and the have-nots, because economic power is really political power.

Q: Is the pendulum in Latin and South American swinging back to the anti-American side of things?
A: Again, I would say that the region is really bifurcating. I think some of the most anti-American people are journalists -- maybe in this country -– so I think the anti-American activism might perhaps get overstated. You always hear that Mexico has this sort of anti-Americanism and yet if you go to Mexico you really don’t feel it as an American. There are very activist groups that are very vocal about that. In Costa Rico right now we are seeing a lot of anti-Americanism against the Central American Free Trade Agreement. In Argentina, after the collapse of the currency in 2001-2002, you saw a lot of anti-Americanism.

But my sense is that even in countries where the pro-market, classical-liberal view is not prevailing right now, you still have about 40 percent of the population that would vote for a free-market candidate. They may elect a left-of-center president but I think we should be careful not to just assume that the whole country falls into that category. I meet a lot of young people in Latin America who are very interested in engaging with the world -– not just America, but with Europe an Asia -– and they are frustrated with their governments that want to maintain this isolationism.

Q: Who should we be most concerned about in the Americas?
A: I’d say it’s certainly Venezuela. It’s very hard to know how anti-American Venezuelans are at this point because the government -- as the monopoly producer of the economy, with oil being so important -- is basically tied to almost everyone’s job. Either you work for the (state) oil company or you work for someone else that the oil company buys or sells to. So people can be intimidated in terms of their politics because of their work. They can be told that they are going to lose their jobs and, in fact, there is some evidence that the government has in fact done that. It’s very hard to know exactly how people there feel because I don’t think that speaking publicly is considered a safe thing to do in Venezuela. But the government is definitely very anti-America, very pro-Iranian. The Venezuelan government is mismanaging the economy -- there’s no question about that. But they have a lot of discretionary income with oil at $80 a barrel. They have the potential to cause a lot of problems. They’ve been going through a weapons buildup and meddling in the politics around the region trying to fund militant activists.

Q: Is Hugo Chavez more dangerous because of his ideology or his money?
A: Well, I think it’s that combination. There are lots of left-wing ideologues in Latin America but they don’t have that kind of oil money and that’s why he’s the most dangerous. The president of Ecuador is equally extreme but he doesn’t have nearly the assets that Venezuela has.

Q: Are there Latin American countries friendly to us who will help us counter the influence of Chavez?
A: The Salvadoran government has been an ally for us. The Colombian government has been an ally for us. But most leaders in these countries don’t want to be seen as too pro-American. It’s not because they are hedging their bets or anything else, but these countries want to feel like they are sovereign. If they look too much like they are throwing their whole lot in with the U.S., it makes it difficult for the leader. The problem with a lot of these countries is that they are not strong enough to stand up to Chavez on their own.

If the U.S. wants, for example, Colombia to stand up to Venezuela but Colombia can't rely on the U.S. to send in the Marines or anything like that, then Colombia has to think for itself about the best way to deal with Venezuela. It can’t go too far out on that limb, because it knows that in the end it’s going to have to deal with the problems.

I think a lot of countries -- and I’ve been told this privately -- are afraid of Hugo Chavez and that’s why you don’t necessarily see them extremely vocal against him. The most important thing in Latin America is for these countries to grow economically. That’s the biggest antidote to Hugo Chavez.

Q: What are your politics and how do they affect your coverage of the Americas?
A: I would say I am almost a libertarian -– not quite. Libertarianism means different things to different people. But Bob Bartley, who passed away a couple of years ago and was editor of The Wall Street Journal (and its editorial pages) for many years, used to say that “we believe in free markets and free people.” That pretty captures my politics. I’m very pro-immigrant. I think the migrants are an asset to this country. I think we should figure out what’s wrong with our immigration system that we haven’t been able to respond to the demand for labor in this country in a way that would allow these people to come and work here legally. I know that in New York City, the city would be dead without them. They’re fantastic. So that’s an example of my belief in free markets and free people.

Q: At home and abroad.
A: At home and abroad, yeah. I’m just looking at this regulation study from the World Bank and basically when you heap a lot of government regulations on an entrepreneur, that person is less free. I think we should work to be as free as possible and have a small government. Morally, that is a superior system because it allows people to decide their own destiny – and that’s a basic human right.

Q: Can you give us a hint of what you'll be talking about here Friday?
A: Basically, my main point would be that we -- people who believe in liberty and freedom and the rule of law -- often get upset when we see Hugo Chavez. But I think we need to think about what were the circumstances that made it so possible to walk into that situation and become president of that country. I’m not so sure we know right now the outcome of any of the elections over the last few years but, in very beginning, when he was elected in 1998, he was legally elected. There was a reason he was elected -- people were really thoroughly disgusted with the corruption and the abuse of power on the part of people who refer to themselves as small-“d” democrats, who pretended to believe in the constitution and the rule of law and property rights but in fact did not.

They abused that power to their own benefit. That has happened over and over again in so-called democracies. If we are going to combat the Hugo Chavezes, we have to think about what is the system that provides not equality of outcome but equality under the law for people. When we fail to deliver on that promise, we create the circumstances for people like Hugo Chavez.

Bill Steigerwald is the Pittsburgh Tribune-Review's associate editor. Call him at (412) 320-7983. E-mail him at: bsteigerwald@tribweb.com.

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