Q: The majority of Latin American countries are now on the path to economic stability after some turbulence. Some governments have applied market policies similar to those which you yourself advocate. Venezuela and Bolivia, however, have chosen a very different road….
AH: Sooner or later they will have to once again learn the lessons of this kind of populism. Whoever says that those types of economic policies will benefit their (Venezuela and Bolivia’s) economies could teach me a thing or two. Chávez is lucky enough to be enjoying oil at US$ 60 to US$ 70 a barrel, but this isn’t going to help Venezuela’s production – it’s not stimulating investment for future production. Instead of doing that, he’s handing out petro-dollars willy-nilly to everyone, trying to buy their approval. Each dollar that he gives to another Latin American country is a dollar that could have been spent improving the standard of living for Venezuelans.
Q: But don’t you think the governments of Chávez and Morales are a result of the failure of policies imposed by Washington?
AH: Who knows? I’ve worked a lot with the International Monetary Fund (IMF) and one of the things we did was study the trajectory of countries before and after signing an agreement with the Fund. It turned out that, in the vast majority of cases, the growth rate was higher than the previous year and higher than the average growth rate over the last 10 years. We also studied whether social spending decreased after signing an agreement with the IMF and it didn’t.
Q: What kind of reforms does Latin America need most urgently?
AH: There are lots of reforms that could be made, but I’ll tell you one: it’s scandalous that most university students come from the 10 or 15 percent of the population with the greatest financial power and they pay very low fees. It’s the poor subsidizing the rich, when universities should do the reverse. That one change would smooth over social discontent and help reduce the social gap.
Q: Is the Chilean model still relevant?
AH: I would ask: what elements of Chile’s economic policy would I change to improve it? Right now we don’t have the answer. I was in Colombia last summer to participate in a conference and the person speaking right before me was former-President Ricardo Lagos. His speech could have been given by an economics professor during the golden years at the University of Chicago. He’s an economist and he explained things in exactly our words. The fact that left-wing political parties have finally embraced the lessons of good economic science is a blessing for the world.
*Somebody needs to expand Arnold Harberger's entry in Wikipedia.
Related;
Interview with Arnold Harberger from The Region
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