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Movement to the Left in Latin America

By Harry Moroz* | HACER.ORG

08.07.05 | Over the last year, editorials and opinion pieces in many Latin American newspapers have identified a “movement to the left” sweeping through governments and people of the Latin American region.

The populist, sanguine, empty promises of Hugo Chavez in Venezuela, who uses the poverty which his policies sustain as a rallying cry for his continued quasi-dictatorship, are the best example, but are only the beginning.

In Panama, a popular movement against social security reform is threatening the solvency of the Torrijos government. Calls for the nationalization of oil production in Bolivia threaten to drive out the foreign investors who remain in the impoverished nation: the opposition leader Morales (supported, no surprise, by Chavez) is pushing for Bolivia to renege on its contract with the Spanish oil company Repsol.

One of the most worrisome aspects of this movement to the left is a breakdown of property rights, particularly recognizable in Venezuela. With the nation increasingly weakened by poverty, many Venezuelans – lacking both jobs and stable homes – resort to an insidious – yet hardly culpable – form of squatting: an impoverished and homeless family moves into the backyard of a middle class family. There is little that the latter can do short of violent removal.

But this situation is even worse than the Lockean state of nature, in which a lack of governance allows violence and forceful coercion to dominate social life. In Venezuela, government exists, but uses its monopoly of power to frame social interaction in such a way that the costs and benefits of individual actions are hidden, while governmental remunerations are the only identifiable source of social progress.

The hollow, statist rhetoric of Chavez rings true to the Venezuelan people because it carries behind it billions of dollars in oil revenues to be spent haphazardly on whatever social cause is most exacerbated at a given moment.

The Heritage Foundation’s Index of Economic Freedom reports that before the August, 2004 national referendum that sought to oust Chavez, the Venezuelan leader spent $1.7 billion in oil revenues “to fund new social programs”. Chavez recently raised the Venezuelan minimum wage by 26% (official inflation is less than 20%, according to the blog This past Friday, he raised army pay somewhere between 50 and 60%, either responding to a lack of support in the army or solidifying his support in the ranks before a full-scale movement to military dictatorship.

Yet, as Andres Oppenheimer reported in the Miami Herald on March 31, the percentage of the Venezuelan population living in poverty rose from 43% to 54% during Chavez’s first four years in office.

The alarming contradiction is, of course, that the poverty and social distress which the Chavez government has created and now perpetuates are the very problems which allow it to remain in power.

Economists refer to this phenomenon as the creation of hidden costs. In everyday speech, we might refer to it as the merger of facts with fictions. This mixing is, of course, not limited to the Latin American governments of the renewed leftist movement, but instead is typical of – even endemic to – all governments.

But what differentiates Chavez’s “reality creation” is that his is a concealment of the costs and benefits of individual actions: his speeches of distaste for private gain and private property produce a situation in which government seems not the best, but the only means to deal with social problems.

When economists speak of the effectiveness of individual rights, particularly the right to private property, for the solution of problems ranging from pollution to poverty they do so because these rights are both individually and socially beneficial. Such rights strongly enforced enable all individuals to perceive clearly the costs and the benefits of their actions given the capabilities they possess and the incentives they are offered. There exists no possibility for large-scale “duping” when power is dispersed, that is, when both costs and benefits are dispersed.

The movement to the left in Latin America today is the result of the removal of incentives for individual action by governments able to hide individual costs – whether weak property rights or economic losses noticeable only in long-term poverty statistics – behind false social benefit.

* Harry Moroz is a student at the University of Chicago.

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