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Populism For a Price
New policies promoted by Bolivian President Evo Morales emphasize clinics and education. About two-thirds of the nation's 9 million people are poor.
(By Peter S. Goodman -- The Washington Post)
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Detractors say Morales is handing the poor instant gratification at the expense of long-term prospects. Energy nationalization discourages foreign firms from sinking capital into Bolivia, jeopardizing efforts to attract investment to expand production, economists say.
In interviews, Bolivian ministers acknowledged that money from energy royalties extracted from the foreign energy companies outstrips the country's capacity to spend it. About $500 million sits at the central bank, reserved for local governments that have yet to formulate projects.
"There's not yet really a system to absorb this money," Planning Minister Gabriel Loza said.
By accepting cash from Chávez to distribute at will, Morales has undermined Bolivian democracy, opponents say. He has tied his country's fortunes to an impetuous Venezuelan leader who has promised more than he can deliver, they say.
In El Alto, a grim assemblage of low brick houses sprawled across parched plains above the capital, La Paz, the government is sprinkling businesses with grants through a Chávez-funded program.
Elias Condori runs a boot factory in an airless shed in his back yard. For years, Condori applied in vain for bank loans. He says he is grateful for the four new sewing machines he received from the government, along with $3,000 to hire three workers. But without sophisticated stitching machines costing $50,000, Condori cannot compete with factories in Chile. "This doesn't really address my needs," he said.
Economists say such programs could choke the development of competitive businesses.
"As long as they depend on handouts, these small industries are never going to get to a level where they actually create jobs," said Napoleon Pacheco, director of the Milenio Foundation, an economic research institute in La Paz.
Given how little Bolivia's poor have benefited from past policies, the new course is widely embraced here and elsewhere in the region.
Under the direction of the International Monetary Fund, Latin American governments have in recent decades been pressured to welcome foreign investment, privatize industry, limit spending and attack inflation -- a recipe known as the Washington Consensus. That course is widely credited for taming hyperinflation, and it helped spur dramatic economic progress in Chile. But it failed to spark economic growth in some countries, while fostering widening gaps between rich and poor.
Venezuela and the four countries most closely aligned with Chavez -- Bolivia, Ecuador, Argentina and Nicaragua -- collectively saw economic output per person shrink by 10 percent between 1980 and 2003, adjusted for inflation, according to data from the Penn World Table at the University of Pennsylvania. Those countries reported 40 percent economic growth in the two previous decades.
The growth failure helps explain why voters have embraced leftist prescriptions, elevating leaders who have turned away from Washington.
