Globalization in Latin Globalization in Latin AmericaAmerica

• NeoliberalismNeoliberalism

• The “Chicago Boys”The “Chicago Boys”

• NAFTANAFTA

• The Promise of NeoliberalismThe Promise of Neoliberalism

• The Performance of The Performance of NeoliberalismNeoliberalism

NeoliberalismNeoliberalism• "The policies of privatization, austerity, and trade liberalization "The policies of privatization, austerity, and trade liberalization

dictated to dependent countries by the International Monetary dictated to dependent countries by the International Monetary Fund and the World Bank as a condition for approval of Fund and the World Bank as a condition for approval of investment, loans, and debt relief." investment, loans, and debt relief."

• Since the late 1990's activists have used the word 'neoliberalism' Since the late 1990's activists have used the word 'neoliberalism' for global market-liberalism ('capitalism') and for free-trade for global market-liberalism ('capitalism') and for free-trade policies. Neoliberalism is not just economics: it is a social and policies. Neoliberalism is not just economics: it is a social and moral philosophy, in some aspects qualitatively different from moral philosophy, in some aspects qualitatively different from liberalism liberalism

• "Neo" means we are talking about a new kind of liberalism. Such "Neo" means we are talking about a new kind of liberalism. Such ideas were "liberal" in the sense of no controls. This application of ideas were "liberal" in the sense of no controls. This application of individualism encouraged "free" enterprise," "free" competition -- individualism encouraged "free" enterprise," "free" competition -- which came to mean, free for the capitalists to make huge profits which came to mean, free for the capitalists to make huge profits as they wished.as they wished.

Practical meanings of Practical meanings of neoliberalism as applied to neoliberalism as applied to

Latin AmericaLatin America• Opening economies to foreign Opening economies to foreign

competition by removing tariff barrierscompetition by removing tariff barriers• Privatizing state owned companies and Privatizing state owned companies and

reducing the work forcereducing the work force• Elimination price ceilings on food, gas, Elimination price ceilings on food, gas,

electricity and other items of necessityelectricity and other items of necessity• Turning government pension funds over Turning government pension funds over

to the private sectorto the private sector

The “Chicago Boys”The “Chicago Boys”

• First seen in Chile after the overthrow First seen in Chile after the overthrow of Allende in 1973of Allende in 1973

• 30 Chilean economists who had studied 30 Chilean economists who had studied at the University of Chicago began to at the University of Chicago began to dismantle the Chilean economy and dismantle the Chilean economy and open it to world trade during the open it to world trade during the Pinochet dictatorshipPinochet dictatorship

• Experiment lasted for 16 years and was Experiment lasted for 16 years and was proclaimed an “economic miracle”.proclaimed an “economic miracle”.

Social Consequences of the Social Consequences of the “Economic Miracle”“Economic Miracle”

• Designed to place the costs of restructuring the Designed to place the costs of restructuring the economy on the pooreconomy on the poor

• Unemployment rose from 9 to 18% as inflation Unemployment rose from 9 to 18% as inflation fellfell

• Opponents to neoliberalism “disappeared” and Opponents to neoliberalism “disappeared” and many never reappeared.—Over 11,000 people many never reappeared.—Over 11,000 people “disappeared”“disappeared”

• Initial consequences were negative growth Initial consequences were negative growth rates that only later were followed by rates that only later were followed by impressive growth ratesimpressive growth rates

• By 1980 workers were earning less than in By 1980 workers were earning less than in 1973, while the wealthy became even wealthier1973, while the wealthy became even wealthier

• By 1989 Chile’s poverty rate was 41.2%By 1989 Chile’s poverty rate was 41.2%

The North American Free The North American Free Trade Agreement (NAFTA)Trade Agreement (NAFTA)

• Implemented in 1994 by the U.S. after Implemented in 1994 by the U.S. after bitter debates in the United Statesbitter debates in the United States

• U.S. labor opposed it because jobs U.S. labor opposed it because jobs would be lost to Mexicowould be lost to Mexico

• Environmentalists were concerned Environmentalists were concerned about a series of issues including the about a series of issues including the entry of polluting Mexican trucks in to entry of polluting Mexican trucks in to the US; the deterioration of public the US; the deterioration of public health inspections along the border, health inspections along the border, and, eventually, the export of and, eventually, the export of genetically-engineered agriculture.genetically-engineered agriculture.

The realities of NAFTAThe realities of NAFTA• US jobs have been lost to Mexico and other US jobs have been lost to Mexico and other

countriescountries• The distribution of wealth in Mexico has The distribution of wealth in Mexico has

gotten worse, not bettergotten worse, not better• The cost of living has increased The cost of living has increased

tremendously in Mexico, along with tremendously in Mexico, along with pollution, especially in Mexico Citypollution, especially in Mexico City

• More women than ever before began to More women than ever before began to enter the labor force to help make ends enter the labor force to help make ends meet. Seen in all classesmeet. Seen in all classes

• Mexican wages dropped by 29% during the Mexican wages dropped by 29% during the 1990s, Americans lost 440,000 jobs as the 1990s, Americans lost 440,000 jobs as the result of the agreementresult of the agreement

Other Regional Free Trade Other Regional Free Trade AgreementsAgreements

• MERCOSURMERCOSUR– A common market among Argentina, Brazil, A common market among Argentina, Brazil,

Paraguay and Uruguay, known as the "Common Paraguay and Uruguay, known as the "Common Market of the South" ("Mercado Comun del Sur"). Market of the South" ("Mercado Comun del Sur"). It was created by the Treaty of Asunción on March It was created by the Treaty of Asunción on March 26, 1991, and added Chile and Bolivia as associate 26, 1991, and added Chile and Bolivia as associate members in 1996 and 1997members in 1996 and 1997

• CAFTACAFTA– CAFTA is a free trade agreement that includes the CAFTA is a free trade agreement that includes the

United States, El Salvador, Nicaragua, Guatemala, United States, El Salvador, Nicaragua, Guatemala, Honduras and Costa Rica. The Dominican Republic Honduras and Costa Rica. The Dominican Republic may also be added to the group. This agreement may also be added to the group. This agreement has not been finalized in Congresshas not been finalized in Congress

Who is affected by Who is affected by Neoliberalism?Neoliberalism?

The New Poverty in Latin The New Poverty in Latin AmericaAmerica

• In 2002, more than 43% of all In 2002, more than 43% of all Latin Americans lived below the Latin Americans lived below the poverty linepoverty line

• In countries like Argentina that In countries like Argentina that have suffered severe economic have suffered severe economic reverses, the poverty level has reverses, the poverty level has doubleddoubled

• Results in Latin America are Results in Latin America are somewhat mixedsomewhat mixed

Latin American Poverty, Latin American Poverty, 20042004

Crash Course Video!Crash Course Video!

•Globalization: Good or Bad?