Liberty for Latin America: How to Undo 500 Years of State Oppression

March 22, 2005

Liberty for Latin America: How to Undo 500 Years of State Oppression by Alvaro Vargas Llosa

Introduction

JOANNE MYERS: I am Joanne Myers, Director of Merrill House Programs. On behalf of the Carnegie Council, I would like to welcome our members and guests, and to thank you for joining us as we welcome Alvaro Vargas Llosa to our Books for Breakfast program. He is discussing his book, Liberty for Latin America: How to Undo 500 Years of State Oppression.

Not so long ago, Latin America was the home of military regimes, of subversive activities, repression of civil liberties, and, in several places, guerilla warfare. Many important aspects of the economy were either state-owned or state-controlled. In sum, the region was a showcase for poor economic and social performance.

Today much has changed. Despite the corruption that still exists in several countries, political choices are usually made by votes, not guns. Although social and political progress is on the move, what is clear is that the region's population is still desperate for more change.

The ongoing challenge is not to question the progress that has been made, but to understand why Latin America has been so slow to reform, to find a way to encourage the inroads that have been made and to ensure that the existing institutions of democracy work more effectively. In Liberty for Latin America, our speaker this morning surveys the tradition of state oppression in this region, from pre-Columbian civilizations through the era of Spanish and Portuguese colonization, and finally through the twentieth-century space of economic nationalism. What follows is an incisive diagnosis of Latin America's woes.

Mr. Vargas Llosa emphasizes a centuries-long persistence of disproportionately concentrated economic, political, and social power which impeded the continent's development and prosperity. In the end, he offers a prescription for finally getting the region on the road to genuine progress and to the protection of human rights.

Alvaro Vargas Llosa is Latin America's foremost political journalist. Although a native of Peru, he has lived and worked as a journalist in many parts of Latin America, Europe, and the United States. He has been a member of the Board of the Miami Herald Publishing Company, an op-ed page editor and columnist at The Miami Herald. He has contributed to The Wall Street Journal, the Los Angeles Times, BBC World Service, Time, and with today's op-ed piece on the return of Latin America's Left, to The New York Times as well.

While having lectured widely on world economic and political issues, he is also known for his TV and radio political commentary, which he has delivered on three continents. He has published twelve books on subjects ranging from Peru, to poverty, to a guide on Latin America.

Among the many awards that have been bestowed upon him is the 2003 Freedom of Expression Award, given by the Association of Ibero-American Journalists. Currently, Mr. Vargas Llosa is a research fellow at the Center on Peace and Liberty at the Independent Institute in Oakland, California. To give us a better understanding about what has impeded Latin America's progress and what needs to be done, I invite you to join me in welcoming our guest today, Alvaro Vargas Llosa.

Remarks

ALVARO VARGOS LLOSA: Thank you for your wonderful introduction, and for pronouncing the double-L like a Y. You have won yourself a place in my heart forever for doing that. It is so rare.

I am here to talk about Latin America. My hope is that some of the related questions have an even wider implication, in that they involve the whole issue of the developing world coming to terms with some of the big challenges of our era—how to allow that half of the population that is still under the poverty line to participate fully in the opportunities of globalization and the modern era, or the capitalist system.

This book is an attempt to explain why Latin America is still a developing continent. If you look at Latin America on the surface, it is not doing so badly; last year we had a 5.5 percent growth. The Left is governing most of the region, and doing much better than it was in the 1980s. There is no hyperinflation. Populism has been toned down a bit. Some of the fiery demagogues in vogue in the 1980s are gone, with a few exceptions, like Venezuela. In general, there is a more conducive environment for foreign investment, business and the market economy.

My hope, though, is that we will look below the surface and identify certain areas where problems and challenges still remain to be addressed and tackled if we want to turn Latin America into a developed continent.

We have almost everything in Latin America. We have incredible natural resources, like oil in Mexico, Argentina, Venezuela, and Ecuador. We have fertile land, especially in Argentina and Uruguay. We have minerals in Peru and Chile. We even have a very educated population in some parts. We have immigrants from all over the world, from China, from Japan, from the Arab world, from Spain. About a hundred years ago, many Europeans would migrate to places like Argentina in search of a better future.

Why, with all of this potential wealth in Latin America, is half of the population under the poverty line? Why, in the twenty-first century, is at least 46 percent of Latin America's population poor? Why does a country like Argentina, with just under 40 million people, produce only about $100 billion worth of goods and services, whereas Spain, a country of similar size that exported people to Argentina a few decades ago, is producing seven to eight times more than that? Why are 40 million Colombians producing ten times less than Spain? What is happening in Latin America? Why is all this potential wealth not being realized, translated into real per capita wealth?

In researching relevant material for this book, I found that the deep structural causes of Latin America's underdevelopment have to do with the past. That doesn't mean that the past cannot be overcome. Spain and Portugal, the two countries that dominated Latin America for 300 years of colonial life, have themselves overcome their own past to become part of the modern world. They are not as wealthy as the United States and some of the wealthiest countries in the world, but they are doing much better than Latin America.

There isn't an eternal curse on us that we cannot overcome, but we must address this legacy from colonial times before we can open up the opportunities of the market economy and globalization to that half of the population that is not yet enjoying the benefits. Without that participation, democracy is not viable, as you can see today in Bolivia; the market economy itself is not viable, as you see in a country like Peru; stability and peaceful social coexistence is not viable, as you see in many Latin American countries.

I propose to affect this change, not through the left-wing demagoguery of the past, but rather through a real market economy under the rule of law. Why has free market reform, which supposedly took place in the 1990s, not quite worked? I identify five principles of oppression: corporatism, state mercantilism, privilege, bottom-up wealth redistribution, and political law. These principles were present in pre-Columbian times. They were present throughout three centuries of colonial life. They have been present for the last two centuries under republican, independent governments. They need to be overcome today if we want to open up our systems and turn them into functional democracies and free market economies, and create viable institutional environments with the participation of all.

1) Corporatism is a system that doesn't look at society as individuals that have inherent individual rights, but as a group of corporations, as different groups of people, with which the government, according to its own whims, necessities, and needs, negotiates certain rights. If I can get back from you certain benefits that I appreciate, then I will accord you certain rights that I will not give others.

There was a very powerful corporation in the sixteenth century called the Mesta, all the sheep owners in Spain. It was the first source of funding for the Spanish government that controlled Latin America. Since the government needed money to fund its wars in Europe, it would bestow a number of privileges upon the Mesta, which would in turn provide generous funding for the government. For example, the Mesta had the right to trample on all necessary land to move its flock of sheep from the north to the better climate in the south. This one particular corporation had a lot of privilege, and everybody else was left out.

>2) State mercantilism is a similar principle. The government determines the winners and losers in society. It is not the market, nor the free will and choice of individual citizens as consumers, or even as producers, but it is the government's decision making power that makes this determination.

In nineteenth-century Peru, a number of peasants and peasant communities owned their own land. It could have developed into a market economy, with a native legitimacy, a social legitimacy, that we would certainly appreciate today. But it wasn't possible, because this mercantilist system meant that the government would authorize certain corporations—in this case, wool traders—to encroach on peasants' lands. Peru's vast land was transformed into 700 haciendas governed by people who had the privilege of encroaching on peasants' lands, and simply, because they were close to government and in a position to exercise some influence, control part of the property.

The consequence was that many of the poor Peruvians were disenfranchised. In time, they harbored a certain resentment against the system, which was the root of our twentieth-century socialism in Peru.

3) Privilege—etymologically "privi""lege", or "private law"—means that there is no general law, no equality before the law. The government exercises an overwhelming power over society and distributes and administers law according to its own whims.

In nineteenth-century Brazil, for instance, coffee growers reaped all sorts of privilege from the government in exchange for funding. This was not done only through the exercise of their own imagination, effort and capacity, but because they were able to exercise influence. This disenfranchised many Brazilians, which was the root cause of many of the twentieth-century troubles.

4) Bottom-up wealth redistribution is the fourth principle of oppression. The word "redistribution" is one of the most-used words in the vocabulary of Latin American politicians, and elsewhere in the world. Every politician bases his career on the word "redistribution."

Ninety-nine percent of the time, it does not mean redistributing wealth from the rich to the poor. As soon as the government intervenes and decides to whom it will channel resources, it creates a number of corporations that are close to government and are the direct beneficiaries of those resources. Therefore, the government creates an oligarchy.

Redistribution is usually done in the name of fighting the oligarchy. But the tragic and dramatic irony is that the government, through redistribution, creates its own oligarchies, in the name of socialism, social justice, and redistribution.

You stifle productivity and the market economy. If you choose, under the guise of generosity and social conscience, to expropriate the producers in society—everybody who is able to produce anything, small and mid-sized companies especially, who create about two-thirds of the new jobs in any economy, including in the United States—then you will create an environment in which there is no incentive to produce. So the government, again through wealth redistribution, is not redistributing from the top down, but exactly the other way around.


5) Finally, political law is the instrument through which all of this exploitation takes place. It is the law, the capacity of the government to create norms, laws and legal instruments which all lead to oppression.

In colonial times, there were about a million laws passed in Latin America. It is impossible to conduct your life, let alone do any kind of business or engage in any type of enterprise, if you have this deadweight on your head.

This has been present throughout our history and up until today. In the 1990s, there was a great opportunity to reverse this course of history, because of the crisis point that we reached in Latin America. With hyperinflation and the total devastation of our economies, we had an opportunity for reform.

Reform takes place when the vested interests that support the status quo come under attack by other interests that try to survive at their expense, once the government, because of political illegitimacy or simply fiscal disarray, is no longer in a position to guarantee all the different parties their parasitic rewards.

This happened in the 1990s when some people wanted to nationalize banks, as happened under Alan García in Peru or in Mexico in 1982. Some people wanted to spend and spend and spend, and print more and more and more money, as happened under Alfonsín in Argentina. In other countries, this was stopped or partially stopped by other interests, who were also protectionist, but were scared that this environment would kill them.

You had interesting infighting within the corporatist/mercantilist system, which led to the opportunity for real free market reform. The tragedy is that we didn't quite go far enough with these reforms. The result is the halfhearted backlash against free markets today in Latin America.

It could be worse. Lula [Luiz Inácio Lula da Silva] in Brazil is doing quite well. He is being very cautious. But you have people like Néstor Kirchner in Argentina, who have the tendency to go the wrong way. You have instability in Bolivia, which could become a huge mess any day. If that were to happen, then neighboring Peru might follow suit. In Venezuela, you have Chávez who is a complete lunatic, but exercises a lot of influence. He gets $25 billion worth of oil money every year that allows him to fund radical movements which are causing trouble, especially in countries like Colombia which is making a serious and responsible effort to get its act together.

This situation can be overcome and defeated. Because the 1990s failed to become the decade of meaningful free market reform for Latin America, in the way that New Zealand, Lithuania, Estonia or even Chile, which is an isolated case in South America, were able to achieve, this problem remains today.

We need to push for further reform. We need to make these governments understand that, unless they engage in further and deeper free market reform under the rule of law, this backlash against will continue to expand and create troubles.

Let me give you a few examples of how free market reform in the 1990s was not quite what it was supposed to be.

If you ask anybody about Argentina in the 1990s, they will say, "That was radical free market reform." Yet I would question that idea. Argentina saw its public spending go up by about 100 percent, as its economy was growing about 40 percent. So public spending was growing at two-and-a-half times the rate of the economy. Many of trade barriers were slashed; about two-thirds of the tariffs came down. But at the same time, the government created trading blocs, especially Mercosur, the South American common market. In Argentina, about seventy-one out of ninety-seven different groups of items saw their tariffs go back up.

Protectionism, which was supposed to have been eliminated in the 1990s, was entrenched through the creation of these trading blocs.

There was little progress in labor legislation. In Argentina, rules and norms and laws that were passed in the 1950s and 1940s, modeled upon Mussolini's example from Italy in the 1920s and 1930s, are still on the books. If you are manufacturing submarines in Argentina, you are still subject to exactly the same type of interventionist legislation as if you are manufacturing nails. In the financial system in Argentina, however, some of the old-fashioned rules and capital controls were eliminated.

But, still, the government in Mexico in the 1990s chose to give, in a very corporatist and mercantilist way, too many guarantees to a number of cronies, so that they behaved in a very irresponsible way when it came to lending money. So you had FOBAPROA [Banking Fund for the Protection of Savings], which was a huge financial collapse that meant that the taxpayers had to foot the $70 billion bill, which, for a country like Mexico, is a huge amount of money.

Even the privatization of many of these state companies that were a complete disaster and had to be privatized—under monopoly conditions—meant that, rather than have competition that would lower tariffs and prices and make these companies much more efficient, you had a system in which the population immediately identified privatization with high tariffs, prices and rates. It is very hard in this new decade for many of these governments to privatize anything. Peru still has forty companies under government control, all of them completely inefficient, and in need of privatization. Nobody wants to do it, because the popular reaction would be very violent.

We need to tackle these five principles of oppression to create an institutional environment that is much more conducive to the real market economy. This depends upon our ability to create a situation in which individual, as opposed to corporatist, rights are protected and guaranteed, in which the market, and not the government's whim, is responsible for creating winners and losers, in which there is no privilege, in which there is equality under the law, in which redistribution is not a pretext for stifling creativity and entrepreneurship, and in which the law is not an instrument of exploitation, but a safeguard for all of us in society, rich or poor, in order that we can exercise our activities in the best possible way.

JOANNE MYERS: Thank you very much for a wonderful presentation. I would like to invite your questions.

Questions and Answers

QUESTION: I have two questions. One, you haven't mentioned strengthening the middle class, which is one element that would help with the distribution.

Secondly, you have been talking about Latin America as if it were a whole. But one of the main questions is how to bring greater unity in Latin America, when Brazil and Argentina, Peru and Bolivia, may be neighbors, but how well do they get along?

ALVARO VARGOS LLOSA: Argentina, about a hundred years ago, had a per capita income which was about 70 percent the per capita income of the United States. It was a middle-class country. Today's European per capita income is about 70 percent of that of the United States. Whenever you have that kind of ratio, you have some poor and some rich, but the driving force of the society is the middle class.

Today Argentina has a per capita income that is about 22 to 25 percent that of the United States. It has deliberately and consciously chosen to underdevelop itself. When I say 22 to 25 percent, I am taking into account what economists call purchasing power parity, what you can buy with that per capita income in Argentina compared to what you can buy in the United States. Argentina, through my five principles of oppression and thanks to Perón, destroyed its middle class.

But a very different story is taking place in Chile, a country that has been able to reduce dramatically its number of poor as a percentage of the entire population in the last decade—from about 36 percent of the population, which was low to begin with by Latin American standards, to 18 percent. Only a fifth of the population today in Chile is under the poverty line.

The other side of that coin is the emergence of a middle class which participates in the modern economy.

What did Chile do right? What did Argentina do wrong? Chile is still too dependent on primary products, which means that when prices are high in the world markets, they do well, and when they are not, they don't do so well. But, in general, the institutional environment in Chile is much more conducive to entrepreneurship than it is in Argentina. The natural consequence of these reforms in Chile has been the emergence of a middle class, and the absence of those reforms, or reforms of the wrong nature, has been the dwindling of the middle class in Argentina.

As for your second question, Peru and Chile, Costa Rica and Nicaragua, Venezuela and Colombia, Brazil and Argentina—this is the consequence of nineteenth-century nationalism, which is still lingering in Latin America's subconscious or consciousness. In the modern era, we need to do away with trade barriers, with impediments to the free circulation of capital, goods and services, and also people. Unless we do that, we will not create the trust needed. We must engage in a more meaningful type of integration.

My fear is that today the emphasis is not on this type of integration, eliminating the barriers that still stand in the way between our people, but going about it in a different way. We are trying to integrate our governments, our states, our bureaucracies, through Mercosur, for example. When Lula in Brazil and Kirchner in Argentina talk about integration, they don't mean the integration of their people and the free flow of capital and goods. They mean the integration of government bureaucracies, a constructivist type of integration. We need to be very careful, because that does not create the environment needed to reduce the mutual distrust that still exists.

QUESTION: Latin American countries mainly have presidential systems. Don't presidential systems have an inherent problem which inhibits the development of full political life, and the creation of a different environment for a rule-of-law change which is necessary in Latin America? Would a movement for a constitutional change to more parliamentary systems be helpful?

What are the chances of success of democratic security policies given the setbacks that have been suffered recently in Columbia?

ALVARO VARGOS LLOSA: The type of constitutional system is an ongoing debate. If we see that in two centuries of republican life, we have not been able to create decent institutional environments, then maybe there is something wrong with the presidential system. That brings up the question of parliamentary systems and other constitutional systems that limit power.

In theory, if we went towards parliamentary systems, we would do away with the overwhelming figure of the Latin American president, a tyrant who is elected and reelected every five years, even if he changes names. The parliamentary system would go a long way towards either eliminating or reducing this all-powerful figure.

However, the political culture is such that whoever, or whatever institution, was the depository of power, including the parliament and our congresses, would exercise that power in much the same way. This might be a superficial type of reform, whereby we would eliminate the power of the president and invest all his power in parliament, which might behave in exactly the same very interventionist and authoritarian way.

We need to place institutional limits on power so that whoever exercises power, whether it be the executive or the parliamentary, or even the judiciary, would be perhaps not unwilling, but certainly unable to exercise power in such a forceful and extreme way.

Colombia is a fascinating and tragic case. Álvaro Uribe is trying his best. He is a great leader with a vision. He has the incredible courage to put his life on the line every single day. However, that is not enough.

He has managed to invert the terms of the conflict. A few years ago, the initiative was on the part of the guerillas and the drug traffickers, and the government was on the defensive. If you went to Bogot?, let alone other parts of Colombia, you felt incredible, overwhelming force haunting the government from the outside. Today, you feel that the government has retaken control from some of these groups, and it is on the offensive. But it has not been able to penetrate some of the areas that are under control of the guerillas and the drug traffickers.

Uribe is very popular for the moment, because people deeply believe in his capacity to lead them towards that victory. But, over time, if he is not able to penetrate those areas, the popularity may wear off.

Repression is not the way to go about eliminating the drug business. The lessons of Prohibition are exactly the same types of lessons that we learn from the war on drugs. We throw more money, helicopters, military personnel and training at the problem each year. Yet the business is still in place. As long as this continues to be the focus, we will not eliminate the problem.

It will take a cultural change, not in Colombia or Peru or Bolivia, but in the United States, before a politician can stand up and say, "Let's do away with the drug war, and let's replace this with other methods, like persuasion," methods used in the Netherlands or Switzerland.

QUESTION: Your five principles of oppression are fascinating, all the more so because they discount the usual reasons given for Latin American underdevelopment. I can think of three off the cuff: the Catholic Church, its power to influence governments and subvert any progress or, alternatively, be involved in subversive movements itself; the fact that the majority of the land is in the hands of a few; and, last but not least, the United States and its policies in Latin America.

Without making a judgment on how important these factors might be, how do you discount them? Are they totally out of the picture in your paradigm for Latin America?

You say that the tragedy of the last ten years in Latin America is that people haven't gone far enough in the consensus. One could argue that despite the resurgence of the Left in Latin American politics, there is also a resurgence of popular participation. People have said, "We'll go this far, and not far enough." This is an example of greater democratic participation and penetration, and not necessarily a failure.

ALVARO VARGOS LLOSA: The Catholic Church is a crucial element in Latin American history. In many countries—Mexico, Peru—the Church was the corporation par excellence. It was so powerful that when, in the mid-nineteenth century, some of the liberal reformers in Mexico tried to limit its power, they went to the extreme. They snatched properties and privileges from the Church, and took them for themselves, thereby becoming part of the corporatist system.

The reaction of the ordinary people in Latin America against the Catholic Church has created an opportunity for a number of Protestant churches and evangelist cults. This has been a massive social phenomenon in Guatemala, Peru, Brazil, and Mexico. The Catholic Church is feeling a great challenge from other churches, grassroots cults and movements. It is reacting in a positive way by trying to make a connection with people, turning away from privilege.

I don't share the view that the United States is to blame for our underdevelopment. It is, however, still making mistakes today, in conditioning any type of relationship or free trade agreement on the war on drugs. Peru, Ecuador and Colombia are negotiating a free trade agreement with the United States, but the American negotiators are placing so many conditions regarding the war on drugs that the message we get in Latin America is that you are not interested in free trade; you are interested in the drug war.

If you are really interested in free trade, let's talk about that, and let's not make this side issue a precondition. If you are interested in free trade, then why do you keep subsidizing your own agriculture in the United States and Europe?

Although I would not excuse the United States from any mistakes in its foreign policy towards Latin America, I will always start by saying that we are to blame for our own underdevelopment. Many other countries have developed themselves without any help from the United States. If we get real help from the United States in reducing subsidies and placing fewer conditions in relation to the drug war, then all the better.

QUESTION: I hope breakdown of the entire society isn't the only tool for Latin American reform. Would the free trade area help? Are you facing a new economic imperialism coming from China?

ALVARO VARGOS LLOSA: A free trade area would certainly be a big step forward. Unfortunately, there is resistance to the idea in South America. Lula believes that Brazil needs to be a counterweight to the United States, which is okay, but his solution is to create a South American trading bloc opposing the North American bloc. That conspires against the whole idea of FTAA [Free Trade Area of the Americas].

We need free trade, period. Free trade within the Americas is better than free trade within South America. Free trade within South America is better than just free trade at home. But if we could go beyond that and have free trade with the rest of the world too, that would be great. Chile has signed so many free trade agreements that it now has an average tariff of 3 percent. It is not as good as Estonia, which has 0 percent, unilaterally, without placing any conditions on some of its trading partners. Estonia has had a 7 percent rate of growth every year in the past decade. The idea that doing away with trade tariffs destroys home industries is nonsense.

On Chinese imperialism: President Bush meant to focus attention on Latin America at the very beginning of his first term. He went to Mexico, and then he came to Peru and Colombia. But 9/11 completely changed that.

China has very cleverly identified an opportunity. Their officials are traveling throughout Latin America where there is promise of huge investment. Much of the recovery in the region in these last couple of years has had to do with the booming demand for our traditional exports in China.

Competition is always good. If the United States senses that China can become a competing presence, then maybe it will get its act together and focus attention again on Latin America. I hear that Condoleezza Rice is planning a big trip down there. Welcome.

As long as it becomes a healthy competition for strong relationships throughout this hemisphere, then I am not worried.

QUESTION: The Catholic Church was an institution, but it also became part of liberation theology, which worked with the revolutionary leftist movements in Central and South America. The Church was destabilized as part of the establishment.

But even these revolutionary movements have brought forth people like Castro and the Sandinistas of Ortega and others in Nicaragua, in South America. How do you change that culture? Although there is a movement to create a South American trading bloc to rival the United States, Chávez is creating another, in line with Fidel Castro. Chávez recently turned over his whole security apparatus to the Cubans. They are responsible for the implementation of the left-wing, the real revolutionary, type of security in Venezuela. He is also pushing Lula and Kirchner in that direction.

How do you see that emerging, not only as an antagonistic force to the United States, but that revolutionary force throughout South America that is preying on Peru and Bolivia?

ALVARO VARGOS LLOSA:
First, on the Catholic Church: yes, that was one of the consequences of the Church being part of the system of privilege. In the sixties, the big divide between conservatives and liberals, or right-wing and left-wing, led to liberation theology, which was a form of introducing Marxism into the Catholic Church. It was very powerful in Central America, even in Peru. Gutiérrez, who is one of the ideologues of this movement, is Peruvian-born.

Although liberation theology was a very powerful movement, it became discredited, for two reasons. One, the fall of the Berlin Wall had an important effect on them. Second was the failure of their economic vision of structuralism, which dominated Latin American economics for decades. The idea was that there were unjust terms of trade between Latin America, or the developing countries in general, and the rich countries. We were called the periphery countries, and you guys were called the center countries. We were exporting cheap primary products to you, and you were exporting expensive manufactured goods, which created a structural imbalance. In order to redress that imbalance, we needed to protect our economies through tariffs, grants, foreign aid and nationalization. The result was, in the 1980s, total stagnation, hyperinflation, complete political disaster. Now we are trying to reverse course, after so many decades of this disaster.

The liberation theology branch of the Catholic Church was a crucial factor in this economic nationalism vision. Today it has become a museum. We visit it with interest. We read some of their literature. Gutiérrez now gives fine speeches—just like former president Henrique Cardoso of Brazil, who was one of the guys who believed in all of this in the 1960s and who became a sensible man in the 1990s.

We haven't always had civic participation. We have had elites participating in the political debate, the political system, democracy. Unless we give this social support and legitimacy, it will never work. So it is wonderful that whenever there is a political, economic or social issue today in Latin America, people take to the streets, organize themselves, let the press know what they think.

But the danger is that this participation often takes the form of a mass movement following a lunatic leader. For some reason, we have not been able to turn this social energy into anything constructive. We turn it into a mass movement that votes for, or causes riots on behalf of, leaders who turn out to be like Chávez. Venezuela, for four decades between 1958 and 1998, had been under a democratic system, in the sense that there were clean elections, and different people ruled the country. There was a system of institutional sharing of power. But it was a very mercantilist system. The elite had a stranglehold on the economic system. There was no real competitive market economy. People were left out of this great adventure. The oil boom was not felt by the large population who took to the streets and started this mass movement.

But again, Chávez, who led this movement to victory, then turned into a perfect oligarch. What is the source of his power today? It's oil. His 1998 speeches are all against oil—"all these elite that are living off oil, and all this oil that we're depending on. Why do we have to depend on this primary product?" Every time he wants to threaten the United States, he uses oil.

We need to turn these mass movements into something more constructive.

JOANNE MYERS: Thank you for an extraordinary presentation.

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