The Virus is Spreading

Let me introduce the newest character in what seems to be a tragedy-in-the-making for Latin America. His name is Ollanta Humala, an ex-military colonel who is campaigning for the presidency of Peru on a very similar platform to that of Evo Morales, Kirchner and Hugo Chavez. Not surprisingly and in consistence with the reckless leftist trend in Latin America, Ollanta Humala came in second place in the latest opinion polls, behind by only three points of central-right candidate Lourdes Flores.

Reasons to be very worried:

Ollanta Hulama father, Isaac Humala, was the founder of Peru-based Institute of Ethno-Geopolitical Studies. It would be very naïve and foolish to assume that Isaac had no influence in the ideology of his son. The policies that the Institute advocates are:

• An Autarkic Economy (Autarkic: A policy of national self-sufficiency and nonreliance on imports or economic aid.)
• Stronger State and Military
• Restructuring of Private Pension Funds
• Limits to Debt Services in the Budget
• Renegotiation of contracts to exploit natural resources

Ollanta Humala has expressed admiration for former dictator Juan Velasco Alvarado, who nationalized the oil industry and expropriated lands in a sweeping agrarian reform after the coup that brought him to power in 1968. The same socialist regime that in 1968 immediately expropriated assets of US oil companies and many other sectors of the economy to establish a socialist state to help the poor of Peru. During the twelve years of socialist rule (that Ollanta Humala admires) real income dropped 40% and a country that had been able to feed itself for centuries ended up importing food. The wealth of Peru sharply decreased.

Ollanta Humala is an ex-colonel with military education and training. As Hugo Chavez, he has participated in presidential coups and has been jailed / released. If history has tough us anything, it is that this types of individuals, if elected (or by coup) President, tend limit and revoke the liberties of their citizens and rule their nation with an iron grip for many years in the likes of Alfredo Stroessner, Augusto Pinochet, Hugo Chavez and Fidel Castro.

The elections in Peru are set for April 2006. There will be a battle of ideas between Liberty, Private Property and Free Markets against Socialism, Collectivism and Ignorance. Hopefully, with the help of responsible and intelligent Peruvians and Latin Americans we will prevail.

THE LEFTIST TREND

The recent elections in Bolivia, Argentina, Haiti, and the ones to come for Mexico, Brazil, Ecuador, and Chile among other Latin American countries share a common trait: They all have favored the leftist candidates. This trend confirms what I long had suspected, that Latinos suffer from severe memory loss! It is the only way to justify the outcomes of what the polls show. The poverty and lag in economic development that our countries suffer are living proof of the failure of socialist inclined governments. The corruption, inefficiency, and economic drought that derive from these social reformers are the reasons why our countries still appear in the “Developing economy’s” list. It is inconceivable that people have forgotten the abuse that large centralized governments bring to the citizens. One would think that the Cuban example, or better yet, our own past experiences with these types of governments would’ve taught us better. But evidently that is wishful thinking on my behalf, and people need to be reminded that prosperity and development can be achieved only by limiting the power of government, the guarantee of private property and the promotion of free enterprise. For Bolivia, Argentina and the rest of the countries where the elections already took place, one can only wish them luck; but for the rest, this is as good a warning sign as they come. Let’s hope that this signs will find good interpreters that learn from the other countries experiences so that we all are not condemned to the same fate.

Good News for the Enemies of Liberty and Free Markets

Yesterday, Evo Morales was elected to be the new President of Bolivia. A victory for ignorant Bolivians who voted for this enemy of freedom with no understanding of the harsh consequences they will face in the next decades. I pity those Bolivians for having such terrible memory. They should remember that most of what their new elected President is proposing has already been tried in Peru when in 1968 a socialist military regime ousted the elected president. Although the military regime was not democratically elected and Evo Morales was, they both share the same flawed and rotten ideas. The regime immediately expropriated assets of US oil companies and many other sectors of the economy (as Evo Morales has publicly proposed) to establish a socialist state to help the poor of Peru. Capital fled the country since it was more profitable and safe to invest in other countries. During the twelve years of socialist rule real income dropped 40% and a country that had been able to feed itself for centuries ended up importing food.

Facts are Facts.

A note to Bolivians:

Prepare yourselves to experience time travel, since the wealth and prosperity of your country will go back to what it was decades ago. Mistakes like the ones that Evo Morales will make take many years to mend and repair. Bolivia might serve as a perfect case study for other Latin American countries of what NOT to do to increase the wealth and prosperity of a nation.

A Bolivian Mirage of Prosperity

Presidential Candidate Evo Morales is the long waited champion of Bolivia’s indigenous majority, a group that has long been left out from Bolivia’s Economy and Politics. It precisely this, their exclusion, that has brought them poverty, misery and despair for many decades. (Read Hernando De Soto condensed version of the Mystery of Capital here to understand this indispensable key insight in 10 minutes.)

Evo Morales, having experienced poverty growing up, thinks he understands why the vast majority of Bolivians are poor. In the following statement, Evo Morales explains:

“The worst enemy of humanity is capitalism. That is what provokes uprisings like our own, a rebellion against a system, against a neo-liberal model, which is the representation of a savage capitalism. If the entire world doesn't acknowledge this reality, that the national states are not providing even minimally for health, education and nourishment, then each day the most fundamental human rights are being violated."

This statement is pure evidence, in Evo Morales case, that there is an immense difference in having experienced something and understanding it. Ignorance is perhaps Bolivia’s worst enemy. Socialism and Collectivism, which represent the abolishment of liberty and private property, are disguised in popular and appealing phrases like: we call for “decolonizing” the state and installing a new “social economic model” favoring the “peasant family economy” and guaranteeing social rights and “distributive justice” for indigenous communities. These phrases seduce the ignorant mind and create a mirage of prosperity that Bolivians will never reach.

Evo Morales calls for the violation of the institution of private property by the nationalization of hydrocarbons and other natural resources. Keep in mind that it was foreign multinational companies that originally made investments in Bolivia to give Bolivians better, cheaper and more reliable access to energy. Nationalization would equal robbery to those foreign multinational companies. (In no civilization in the world is robbery tolerated) After nationalization, foreign investments in Bolivia will virtually disappear along with an exodus of Bolivian capital leaving the country. This will represent the start of a downward spiral for Bolivia that will in the future manifest in the form of more poverty and agony. The excellent book The Commanding Heights gives examples of countries that choose the path that Evo Morales is advocating and what a great disappointment it was.

On this December 18th, Bolivians will go to the polls and elect their new President. There is a decent probability that Evo Morales gets elected. If so, another enemy of liberty and freedom will join Chavez and Kirchner in carrying out policies that will sink Latin America’s poor and middle class deeper into agony, poverty and despair.