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A Hemispheric Bargain
FALL 1993
Cafés in Buenos Aires, like hotel lobbies in Hong
Kong, are abuzz with the pulsating rings of portable phones. You can hear the bustling entrepreneurs scheduling appointments, checking the
the latest French fashions, Japanese electronics
and North American videos, though, everyone
has to stumble along crumbled sidewalks that go
unrepaired due to the fiscal crash diet of the once
bloated state.
The broken sidewalks of Buenos Aires are an apt
metaphor of what is most worrisome about Latin
America’s remarkable economic opening during
the s: As the private sphere flourishes, the
public sphere is being largely left to flounder, calling into question the sustainability of the democratic trend in the region.
Will racing growth in a place like Argentina,
surpassed only by the fast-track East Asian economies, trip on the crumbling state? How will the
Thatcher and Reagan-come-latelies who are “disappearing” the state in much of Latin America
(often only to the advantage of private monopoly)
be able to narrow the destabilizing gap between
rich and poor or raise the  billion the World
This computer file is the property of Steven Rachwal
The broken sidewalks of Buenos Aires are an apt metaphor of what
Design. Steven Rachwal Design maintains ownership
is most worrisome about Latin America’s remarkable economic
opening during the 1990s: As the private sphere flourishes, the
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the sustainability of the democratic trend in the region.
the use of this file to make film and printing plates
stock market and making deals over their morning
café con leche. It is the sound of growth.
At night — late at night — the trattorias and
asado grills in the center of town overflow with customers loosening their belts after a prosperous meal.
To reach the shops abundantly stocked with
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Steven Rachwal Design.
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SPECIAL ISSUE 2000
with a lean, but aggressive role for the state —
financed by tax increases on the wealthy and
business — through social spending on housing,
health and education, an incomes policy raising
the minimum wage and policies encouraging the
formation of microbusiness.
The result has been that in Chile, alone among
Latin American countries following the privatization path, the gap between rich and poor is narrowing, not growing. Budgets are balanced, inflation is
minimal, growth is strong at an annual rate of six
percent, investment rates surpass those of the Asian
tigers and unemployment is below five percent.
Of course Chile does not suffer the crushing
weight of population growth that mires hope in
large nations like Brazil and Mexico. But it possesses the right mix of policies that, if adapted by
others, can sustain democratization in Latin
America and successfully integrate the region into
the world economy.
Indeed, Chile’s growth with equity policies go
a good distance in responding, over the long term,
to fears in the United States concerning NAFTA
and hemispheric free trade. Enduring prosperity
could come to the entire hemisphere if US markets were opened to Latin American countries
following the Chilean development model. Trade
flows would swell between Americans, north and
south, who could buy each other’s goods while
avoiding a debilitating all-out bidding war based
on the lowest wages.
As it is now, Latin America’s take off is butting
up against the US slowdown. The economic
opening in the south is being met with a menacing tide of protectionist anxieties north of the Rio
Grande. Just as Latin America finally gave up
decades of nationalism in favor of integration, the
Yanquis are poised to give it back through the
defeat of NAFTA.
The best way to stop the historical clock from
being turned back is to pursue an approach that
does more than liberate enterprise from Anchorage
to Tierra del Fuego. A “hemispheric bargain” that
joins open markets to a development strategy of
growth with equity is the best hope of the Americas
in the next century.
V. , N. , F 
Growth in the South:
Latin America Takes Off
This computer file is the property of Steven Rachwal
Bank estimates is needed over the next half decade
just to meet electricity demand, let alone other
infrastructure?
Saddled with a weak middle-class tax base and
facing long-term loss of revenue resulting from
privatization, how can the state provide the kind of
education for its people that is required to compete
in the global economy into which Latin America is
plunging head first with export strategies, balanced
budgets, falling tariffs, convertible currencies and
rising prices? Can the bureaucrats trained to dominate economic life in these countries now learn to
regulate it without corruption and without killing
the golden goose?
These are the questions posed by the next turn
of the transformation in Mexico, Argentina and
elsewhere. The experience of Chile points the way
toward some answers.
The impressively mature political class of that
vigorous sliver of a nation on the edge of the Pacific
has discovered a postideological “middle way” for a
continent torn between the historical alternatives
of statist economics and unbridled free enterprise.
Since General Pinochet left the Palacio de la
Moneda in , Chilean leaders have melded
together the military regime’s orthodox monetarism, fiscal conservatism and privatization efforts
PATRICIO AYLWIN
CARLOS SAUL MENEM
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one time. Any additional use of this file, whether for
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out written permission and fair compensation to
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GUILLERMO O’DONNELL
MARIO VARGAS LLOSA
ABBA EBAN
NABIL SHAATH
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BILAHARI KAUSIKAN
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