Structurally Maladjusted

Where do remittances come from?

2010-07-20T15:53:00.005-04:00

Courtesy of the Inter-American Development Bank, we get this nice map breaking down the sources of US remittance flows to Latin America by state (click to enlarge).

No real surprises here but it's a kinda nice map, no?

Toward a better understanding of poverty (wonkish)

2010-07-19T22:48:00.000-04:00

Allow me to get my wonk on. It's becoming an increasingly mainstream idea that our traditional poverty measures just don't cut it. For years the UN Human Development Report has been playing with alternative measures. Well, this year we get the latest: the Multidimensional Poverty Index (MPI). In their own words, the new index "measures the combination of deprivations that each household experiences. The MPI uses microeconomic data to reflect the percentage of households that experience overlapping deprivations in three dimensions—education, health and living conditions." This month we get a lil taste of what's to come. The Oxford Poverty & Human Development Initiative (OPHI), with the support of the United Nations Development Programme, have released some preliminary results (104 developing countries) in advance of the upcoming 2010 Human Development Report to be released in the fall.

First off, a little bit more about the MPI. The idea is that by looking beyond mere income poverty, one can ascertain a better understanding of the specific things (health, education, sanitation, electricity), that contribute to the overall picture of poverty. Governments, NGOs, or even random bloggers can then look at the data to figure out what the greatest needs are, and where it makes sense to intervene. The MPI also calculates the intensity of poverty by looking at how many different measures a certain population is lacking. As OPHI notes, "A person who is deprived in 70% of the indicators is clearly worse off than someone who is deprived in 40% of the indicators."

Sounds good in theory, but what about in practice? Well, some countries have already adopted a similar index, including Mexico. The index can be tailored to individual countries specific circumstances, different countries have different needs, different areas in need of improvement. In Mexico for instance the indicators used are: Current income per capita, Education, Access to healthcare, Access to social security, Housing quality and space, Basic services in homes, and Access to food. In December 2009 Mexico became the first country to implement a form of the MPI, with some astonishing results. As OPHI writes:

The results show that there is a striking contrast between deprivation in income-only and the multidimensional measure: only 1.2 per cent of indigenous people are vulnerable strictly in terms of income. Even across the entire population, only 4.4 per cent of Mexicans are income vulnerable only, whereas 44.2 per cent live in multidimensional poverty.

The measure distinguishes between a household which is poor in one dimension and one that is poor in several dimensions simultaneously. It is also decomposable by population group (indigenous/non-indigenous, over 65, under 17, etc) and by geographic regions.   

For example, comparison of Mexico City and Oaxaca shows that households in Oaxaca are more deprived in terms of basic services at home, but residents of the Mexico City are lacking in healthcare access. Nationally, the rate of extreme multidimensional poverty (defined as at least three deprivations plus insufficient income) is 10.5 per cent with an average of 3.9 deprivations, whereas among the indigenous people of Mexico the rate of extreme multidimensional poverty is 39.2 per cent with an average of 4.2 deprivations.

Some really interesting and positive findings. Positive in the sense that one can gain a much more accurate picture of what the problems are, and where they are. I would think that these sorts of measures would gain in popularity pretty quickly, maybe especially in Latin America. Venezuela, although not included in the preliminary findings, would stand to be an ideal candidate for this measure. Poverty measures in Venezuela largely rely solely on income, but over the last decade access to health care, education, food, etc. have, by and large, all increased dramatically. A new poverty measure may more accurately reflect that reality.

In any case, onto the data. One thing to remember though is that not all these numbers are from the same year. Bolivia for instance is calculated based on 2003 data, Argentina with data from 2005. Also, for each country measured there is a more detailed country breakdown, so if you got a hankerin' to see the complete breakdown of poverty in, say, Burkina Faso, look no further. Perhaps the coolest thing about the data is the interactive map that lets you scroll over countries, sort the data every which way, and is pleasing on the eyes as well. But, since it's not embeddable, we'll just give you less pretty, but just as useful charts. I suggest checking out the site though and playing with the data yourself.

Let's take a look at the three dimensions the MPI looks at, deprived in education, deprived in health and deprived in living standards. But first a look at the percent of people who are MPI poor, after being put through Maladjusted Charts™:

Pretty interesting stuff here. First thing that jumps out at me is the low levels seen in many countries, especially Ecuador for example, with just 2.2% of people MPI poor (2003 data). Compare this to the 51.2% poverty rate from 2004, based on CEPAL's numbers. My gut reaction is that this could be counter-productive by making it look as though poverty isn't as big an issue, although maybe it's just a reflection of some really outstanding social policies. On the other end of the spectrum, free market darling Peru has an outstanding 19.8% of her people MPI poor (the data is from 2004). This puts Peru closer to the Central American countries than to most of South America.

Next, we'll take a look at the breakdown of those "poor and deprived in education":

So for instance Brazil, who is at the lower end of MPI poverty rates, still has a significant problem with access to education. This is the type of analysis these alternative measures allow. On the other hand, it seems like Peru's high MPI poverty rate is not being driven by a lack of access to education, but perhaps health? Let's take a look:

So, it doesn't look like access to health care is driving Peru's high MPI rate, must be the final measure, "poor and deprived in living standards". Colombia, where there is currently a pretty large debate over health care, ranks pretty poorly here with 17.5%. Argentina, middle of the road for education, has the top rank in health. Finally, a look at living standards, which includes things such as electricity, sanitation, having a floor, cooking fuel, etc.

Indeed, here we see that Peru's high MPI rate is largely driven by deprivation in living standards, even topping Bolivia and Honduras in this category. Although for the most part you can tell what is causing the MPI rates by looking at these three measures, the specific country breakdowns provided by OPHI are even more detailed and contain pretty lil pie charts like this one, for Peru:

You might need to click that for a larger image, but you can see the green shaded area (living standards) makes up the largest contribution to MPI. Although it's pretty evenly distributed, a lack of cooking fuel is a significant driver. Overall, a high level of child mortality is the leading contributor to Peru's MPI. Each country that the researchers look at are broken down like this, so I chose to look at Peru, but go to the site and pick your poison. The country breakdowns also include comparisons to the national poverty measure, and other measures like % living on $2 a day, $1.25 a day, etc.

There's a lot to chew on here, and plenty more you can find out over at the database, but definitely some food for thought. I'm not sure if this is the best measure, and as the example of Mexico shows, it may be more beneficial to tailor these indexes on a country level, although this would sure make comparisons harder. What is clear is that how one calculates poverty has a significant impact on the results, and it would certainly behoove us all to have a more accurate picture of what poverty is, and how to combat it. I'm sure there are flaws here, not the least of which is the outdated data, but I commend the researchers at OPHI and UNDP with a solid step in the right direction.

(cartoon from Polyp, check out the website for more)

Do financial markets think Spain will default?

2010-07-19T12:32:00.004-04:00

Sorta!

But that won't stop the government and european authorities from inflicting pain on their populations in the name of fiscal austerity.

As I'm sure Maladjusted's readers already know, Spain is the latest object of European sovereign debt fears. Following Greece's lead, Spain's borrowing costs have increased over the last two months on concerns that the government won't be able to service it's debt and will face a rollover crisis. As a consequence the government is moving ahead with large austerity plans--cutting spending and raising taxes while unemployment remains above 20 percent.

Advocates of austerity claim that if the government doesn't make tough choices to bring down its deficit and reassure creditors interest rates will spike emerging market-style, causing the debt to explode. Spain, the argument goes, will find itself forced to default on its debt, potentially bringing down the whole Eurozone with it.

Austerity advocates, in other words, argue that markets think Spain is in danger of defaulting, and if we don't heed their warning we'll have serious trouble. But first of all, that's a stupid anthropomorphism (markets don't have agency or thoughts, last time I checked). But more to the point, assuming markets are capable of "thinking" anything, do they actually think Spain is in danger of defaulting?

Well, one way of answering that question is to use the price of credit default swaps (CDS) on Spain's public debt--that is, how much it costs to insure oneself against the possibility of a default.

[Spain: Implicit probably of default, April-July, 2010]

The graph above, courtesy of Maladjusted Graphs™, shows the "implicit" probability of default on Spain's government bonds. The idea is simple: the price of ensuring oneself against a default should reflect the chance of default and how much of their money investors expect to get back in the event of a default (i.e. how big of a "haircut" bondholders expect). In other words, the price of a CDS should equal the chance of default times the haircut rate. The price to insure oneself against default is higher the higher the expected chance of default and the larger the haircut.

So, the orange line above shows the implicit probability of default under a relatively optimistic assumption about the size of expected haircuts. In this case, I'm assuming markets only expect to lose $10 on every $100 worth of bonds. As can be seen above, under this assumption at the beginning of April markets only thought there was an 11% chance of default. But then as all the sovereign debt hysteria surrounding Greece started making headlines markets started to "think" the chance of default was much higher, reaching 28% on May 6.

But here's the thing. This is only the case if markets expect the default to be a very small one. Getting back 90% of your money when a government defaults is relatively rare in the history of sovereign debt crises.

So, what if we assume Spain is like Argentina or Russia and if the government defaults investors would only get back $30 for every $100? Well, the yellow line above shows just this scenario, and as can be seen the chance of default is really, really low. In fact, the crisis hysteria back in May shows up as nothing but a tiny blip, peaking at a terrifying 3.9%!

So what's the moral of the story?

The fact of the matter is that if markets really do think a default is likely, it's not reflected in market prices, which are, after all, the only coherent measure of what markets "think." That, or they don't expect to take a very big hit in the unlikely event the government decides to default.

In other words, markets either think Spain is like Argentina but the actual chance of default is really low or they think the chance of default is high but don't expect to actually lose any significant amount of money.

Then do the markets think Spain will default? Sorta! Should the government heed their warning? No! But that doesn't mean it can't seriously structurally maladjust itself to fight imaginary threats in the meantime.

Weekend Update

2010-07-18T15:24:00.000-04:00

Shall we begin:

Our journey through the intertubes begins with the 10 year commemoration of beloved Plan Colombia, which was last Tuesday. WOLA has the good word. Despite the popular belief that it has been a "success", WOLA writes:

Looked at more closely, though, Colombia’s security gains are partial, possibly reversible, and weighed down by “collateral damage.” They have carried a great cost in lives and resources. Progress on security has been stagnating, and even reversing. Scandals show that the government carrying out these security policies has harmed human rights and democratic institutions. Progress against illegal drug supplies has been disappointing. And wealth is being concentrated in ever fewer hands.

Check out the link to read the whole report, complete with all the statistics (complete with pretty charts) to back it up.
In the polling department, Otto's got the breakdown in Peru. Puts it better than I could, so in his own words: "Lord help the world, Keiko "I'm not the continuation of Fujimori policies" Fujimori (make that Fuji-Freakin-Mori) is ahead with 22% of voter intention. Second is Luis "Interesting" Castañeda and third....still creeping up...is ex-Pres Alejandro Toledo, who still has my five bucks as most likely winner right now (and I'm no real fan of his, before you say anything)."
Sue Myrick (R-NC) takes home the "wild-eyed theory of the week", from Peter Krupa at Lat/Am Daily. Ladies and gentleman, your U.S Congress.
Great post at the Mex Files on a Spanish vocab website that is "entertaining and instructing in equal measure". Check out some hilarious examples. Or check out the site itself, "Effective Swearing in the D.F."
Colombia made a totally unsurprising announcement, saying there are guerilla camps on the Venezuelan side of the border. They even gave the coordinates, 23 kilometers from the border. C'mon Colombia, that's a pretty big, remote border. I'm not impressed. I also would disagree with Boz that Uribe is doing Santos a favor by taking the hit right before he leaves office. If Santos denounces the whole thing and calls for dialogue with Chavez directly then maybe he makes out okay, but it is pretty unreasonable to think that Chavez wouldn't hold Santos, who was responsible for the raid into Ecuador, as equally responsible for this. There was just no need to make a big public display over this except to do exactly that; make a big public display. Now Colombia says they will take it to the OAS on Thursday. If you want to listen to the whole thing, you can do it at the OAS website, might prove entertaining.
Benjamin Dangl at Upside Down World, shares his Foreward to Raul Zibechi's book, "Dispersing Power: Social Movements as Anti-State Forces", recently translated into English. To read some recent article's of Zibechi's, check them out at Foreign Policy in Focus.
Good and bad news out of the case that pitted "Crude" director Joe Berlinger against Chevron, another subplot of the $28 billion lawsuit against Chevron brought by communities in Ecuador's Amazon. Lisa Derrick, at La Figa (FDL) has the dirty details. Berlinger still has to hand over footage to Chevron, but conversations "with defendants, lawyers and their families are protected."
The New York Times has a long article on "cattle-ranching drug barons" who are destroying parts of the Maya Biosphere Reserve, the largest swatch of protected land in Central America.
Great article (in Spanish) in La Jornada, on the reasons why both the National party and Liberal party are pushing for Zelaya's return to Honduras. The National party wants to gain recognition from countries other than Peru and Colombia, the Liberal party needs him to avoid marginalization, and it's the first priority of the Resistance, who just appointed him coordinator. For more on Zelaya's relations with the Liberal party and the Resistance, and for all your Honduran needs, be sure to keep apace with Honduras Culture and Politics.
In the latest example of the US' intervention in Central America coming back to haunt them...and others, the Washington Post has a long report on how Mexican drug cartels are stepping up their use of grenades. And where did they find all these grenades? From the WaPo: "The administrations of Ronald Reagan and George H.W. Bush sent 300,000 hand grenades to friendly regimes in Central America to fight leftist insurgents in the civil wars of the 1980s and early 1990s, according to declassified military data obtained through the Freedom of Information Act by the Federation of American Scientists." And according to the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, some 90% of the grenades in Mexico are at least 20 years old. Check out the article for more.
A real interesting article in the Economist on Brazil becoming "one of the world's biggest aid donors." Like China, Brazilian aid does not come with "Western-style conditions". The head of Brazil's development agency explains, "Marco Farani, the head of ABC, argues there is a specifically Brazilian way of doing aid, based on the social programmes that have accompanied its recent economic success. Brazil has a comparative advantage, he says, in providing HIV/AIDS treatment to the poor and in conditional cash-transfer schemes like Bolsa Família. Its tropical-agriculture research is among the world’s best. But Brazil also still receives aid so, for good or ill, its aid programme is eroding the distinction between donors and recipients, thus undermining the old system of donor-dictated, top-down aid." Sounds like a positive development, although problems clearly remain as the Economist article notes.
The generally odious Andres Oppenheimer writes something worth a damn for a change. Comparing the US' denial of a visa for Hollman Morris to "a page right out of the Cuba-North Korea-Iran playbook." Most interesting fact from the piece though comes from the PEN Club, a free press group, who estimate that "about 250 academics, journalists and writers had their visa denied between 2001 and the end of the Bush administration," for ideological reasons.
Finally, mad props to Argentina, who passed a law recognizing same-sex marriages last week. Glenn Greenwald has a nice take and relates it to the treatment of the issue in the U.S. Greenwald writes, "That's what is most striking here: this is not happening in some small Northern European country renown for its ahead-of-the-curve social progressivism (though gay marriage or civil unions are now the norm in Western Europe). Just as is true for Brazil, which I've written about before with regard to my personal situation, Argentina is a country with a fairly recent history of dictatorships, an overwhelmingly Catholic population (at least in name), and pervasive social conservatism, with extreme restrictions on abortion rights similar to those found on much of the continent. The Catholic Church in Argentina vehemently opposed the enactment of this law. But no matter. Ending discrimination against same-sex couples is understood as a matter of basic equality, not social progressivism, and it thus commands widespread support." For the contrast with the U.S., check out the link.

Warning: This movie may contain revolution footage

2010-07-17T17:06:00.000-04:00

From the San Francisco Chronicle review of "South of the Border":

Advisory: Violence, corpses, revolution footage.

Really? Don't want to rile up the youth I suppose.

(image from vencentral)

Who said the press was free

2010-07-15T18:28:00.000-04:00

This needs no additional commentary, from Jeremy Bigwood writing for NACLA:

Buying Venezuela’s Press With U.S. Tax Dollars

The U.S. State Department is secretly funneling millions of dollars to Latin American journalists, according to documents obtained in June under the Freedom of Information Act (FOIA). The 20 documents released to this author—including grant proposals, awards, and quarterly reports—show that between 2007 and 2009, the State Department’s little-known Bureau of Democracy, Human Rights and Labor channeled at least $4 million to journalists in Bolivia, Nicaragua, and Venezuela through the Pan American Development Foundation (PADF), a Washington-based grant maker that has worked in Latin America since 1962. Thus far, only documents pertaining to Venezuela have been released. They reveal that the PADF, collaborating with Venezuelan NGOs associated with the country’s political opposition, has been supplied with at least $700,000 to give out journalism grants and sponsor journalism education programs.

Until now, the State Department has hidden its role in funding the Venezuelan news media, one of the opposition’s most powerful weapons against President Hugo Chávez and his Bolivarian movement. The PADF, serving as an intermediary, effectively removed the government’s fingerprints from the money. Yet, as noted in a State Department document titled “Bureau/Program Specific Requirements,” the State Department’s own policies require that “all publications” funded by the department “acknowledge the support.” But the provision was simply waived for the PADF. “For the purposes of this award,” the requirements document adds, “ . . . the recipient is not required to publicly acknowledge the support of the U.S. Department of State.”

Before 2007, the largest funder of U.S. “democracy promotion” activities in Venezuela was not the State Department but the U.S. Agency for International Development (USAID), together with the National Endowment for Democracy (NED). But in 2005, these organizations’ underhanded funding was exposed by Venezuelan American attorney Eva Golinger in a series of articles, books, and lectures (disclosure: This author obtained many of the documents). After the USAID and NED covers were blown wide open—forcing USAID’s main intermediary, Development Alternatives Inc. (DAI), a Maryland–based contractor, to close its office in Caracas—the U.S. government apparently sought new funding channels, one of which the PADF appears to have provided.

Although the $700,000 allocated to the PADF, which is noted in the State Department’s requirements document, may not seem like a lot of money, the funds have been strategically used to buy off the best of Venezuela’s news media and recruit young journalists. This has been achieved by collaborating with opposition NGOs, many of which have a strong media focus. The requirements document is the only document that names any of these organizations—which was probably an oversight on the State Department’s part, since the recipients’ names and a lot of other information are excised in the rest of the documents. The requirements document names Espacio Público and Instituto Prensa y Sociedad, two leading organizations linked to the Venezuelan opposition, as recipients of “subgrants.”

I urge you to go read the whole thing. Seriously, do it. Also make sure to check out the documents for yourself.

I told you to come back for an update....

2010-07-15T18:24:00.000-04:00

As most of you have already realized, and some of you have let me know in comments, the statement from the French Foreign Ministry that I posted yesterday was an extremely well done and brilliant hoax. Did I know that when I posted it? Yes (astute readers may have noticed the post was tagged with "yes-men").

So why didn't I tell you, the faithful readers? Simple, it would have blown their cover! As of last night, I wasn't aware of anybody who had publicly labeled it a hoax, you think I could be the first? No way. The point was for the statement to get as much attention as possible, and downright shame the French government...what if some press agency used da google and saw my blog post outing it as a hoax? I would have ruined it all! And so I'm glad I didn't, even if it was slightly deceptive. So, did any major news outlets pick it up? I don't think so, but here is a snapshot of AFP's website this morning (not sure if the link will still work):

The headline reads: "France Pledges € 17 Billion to Help Haiti".

Okay, so my guess is that this is actually just part of the hoax (I swear, I don't know). In any case, today there are multiple news stories about how a fake press statement went out, but you know what? Mission accomplished. As Brooke Jarvis writes for YES!:

While the fake news release—a common tactic of the prankster activists the Yes Men, but not yet traced to a particular group—doesn’t seem to have fooled any major news outlets, it did bring the debt (and its contradiction with France’s public stance) into the spotlight.

And after all, that is what it is all about. So to those aspiring "Yes-Men" out there, keep up the good work.

BREAKING NEWS: France finally agrees to pay colonial debt to Haiti

2010-07-14T23:01:00.000-04:00

The following is a press release that went out this morning from the French Ministry of Foreign Affairs, check the link for the video:

FOR IMMEDIATE RELEASE

JULY 14, 2010

France leads Haiti donors with €17 billion pledge
New reconstruction framework marks "new era of cooperation"

Video: www.diplomatiegov.fr/

PARIS--France today announced the boldest initiative yet for Haiti's reconstruction following the devastating January 12 earthquake. In a press conference this morning, the French Ministry of Foreign and European Affairs unveiled a new bilateral Framework Initiative for Haiti's Reconstruction (FIHR).

A spokesperson for Minister Bernard Kouchner emphasized in a special Bastille Day address that the new agreement marked "the dawn of a new era of cooperation between France and Haiti."

"Whereas our nations' relations were, historically, at times tumultuous, today we start with a clean slate united by compassion and cooperation," Ministry spokesperson Natalie Lacroix stated.

Under the FIHR, France has committed to pay back the historic indemnity of 90 million gold francs which Haiti paid to the French republic following the Caribbean nation's independence from France. Including adjustments for inflation and a minimal interest rate of 5 percent per annum, this sum is today valued at € 17 billion (21 billion USD).

Lacroix stated: "In the context of the present global financial crisis, some will say this is no time for the launch of such an ambitious initiative. Yet it is precisely in such times of crisis, particularly as we work to rebuild the global financial system, that our deepest-held values are most important. 'Liberty, equality and fraternity': these must be the pillars of the new global financial architecture if we want to assure that-this time around-Haitians too can share in economic development."

The Ministry is encouraging other governments to follow the French example, and "take responsibility and action to correct the mistakes of the past in this hour of Haiti's greatest need."

The Ministry's full statement is available at: www.diplomatiegov.fr/

Media Contact:
Laurence Fabre
Tel : (+33) 970 44 6727
Email : presse@diplomatiegov.fr

Great statement, and about damn time! Hopefully other governments follow this extraordinary move by France. Check back tomorrow for an update.

More on capital controls from writers less lazy than me!

2010-07-13T01:03:00.002-04:00

That's right: more productive corners of the intertubes have been busy covering the ongoing debate on capital controls. As our readers might recall, the IMF reversed it's long standing opposition to their use, accepting them as part of a macroeconomy's "policy toolkit." Dani "master of development policy" Rodrik referred to the IMF's policy change as "the end of an era of finance." True Stuff.

Well that was sooooo a few months ago.

Now Ilene Grabel over at Triple Crisis quite correctly points out that capital controls have become part of the "new normal" of the aftermath of the financial crisis. In other words, what was considered sacrilege before the world downturn has been, if not openly endorsed, for the most part accepted:

"But something happened on the way out of the global financial crisis. Policymakers have been quietly imposing a variety of capital controls, often marketing them with Madison Avenue savvy simply as prudential tools (akin to what Epstein, Grabel and Jomo KS termed “capital management techniques”)...The “market’s response” to these various controls—a surprising silence and, in some cases, tacit approval. The response by economists at the IMF has been in the same vein... And so it is that capital controls have quietly become another element of the new normal."

Also, Kavaljit Singh over at Vox has a very nice column reviewing new capital controls to curb volatility and increasing speculative financial flows in South Korea and Indonesia:

These new curbs are in response to growing concerns over short-term capital inflows. Given the historically low levels of interest rates in most developed countries, Indonesia has received large capital inflows since 2009. Unlike other Asian economies such as Singapore and Malaysia, the Indonesian economy showed some resilience during the global financial crisis. Despite hiccups in the financial markets, the Indonesian economy registered a positive growth of 6.0% in 2008 and 4.5% in 2009, largely due to strong domestic consumption and the dominance of natural resource commodities in its export basket... Yet due to the massive speculative capital inflows, the Indonesian authorities remain concerned that its economy might be destabilised if foreign investors decide to pull their money out quickly... Analysts believe that these policy measures may deter hot money inflows into the country and monetary policy may become more effective. Yet they expect tougher measures in the future if volatility in capital flows persists.

In anycase, quit hanging around here and go read these two excellent pieces yourself.

The free trade sickness

2010-07-13T00:58:00.002-04:00

From a new NBER working paper we learn that free trade agreements are like a virus. Yes indeed, FTAs are "contagious" in that countries are more likely to "catch" the free trade bug if a nearby country is already ill. True story... sorta.

Abusing an already over-abused metaphor, the paper mentioned above seeks to explain why new waves of trade liberalization are usually clustered in particular geographic regions.

And you know what? No developing region of the world caught the bug quite as bad as Latin America.

[Developing regions: number of free trade agreements]

One thing to notice: the bug doesn't seem to have been very contagious before 1976. Why?

Well... you see, when the famous British virologist, Dr. Adam Smith, discovered the free-trade virus towards the end of the 18th century it simply wasn't very contagious. Yes indeed, discovered during a brief visit to a pin factory, the virus was seemingly benign and exhibited the potential to improve welfare around the world by causing the infected to divide their labor--but it was very difficult to become infected. Upon further experimentation by Smith's colleague, Dr. David Ricardo, it was discovered that the virus, if capable of infecting entire nations, would cause those infected to specialize in that which they had a comparative advantage in.

Unfortunately, after years of experimental trials, it was concluded that intense and prolonged ideological exposure was necessary for the virus to spread, relegating its existence to the deepest and darkest backwaters of the world economy.

But all of this began to change in the late 20th century when, due to an unknown event, the virus mutated into a highly contagious and extremely dangerous version. During this time countless developing countries fell ill, lowering their tariffs at alarming rates exhibiting a reckless disregard for their national health... and stuff.

Anyway, the moral of the story is that I read dumb academic shit so that you don't have to! Oh, and even frivolous scholarly articles that revolve around silly metaphors sometimes have a grain of interesting information.

The End.

Weekend Update

2010-07-12T02:28:00.000-04:00

Lets keep it brief today:

The mainstream media finally noticed that Colombia journalist Hollman Morris was denied a visa by the US. A week or so later, not too bad. With more coverage comes more details, and this looks pretty bad. From the WaPo, "He was ineligible, U.S. officials told him, under the "terrorist activities" section of the USA Patriot Act." Really, the Patriot Act? Mother fuckers. I mean the only evidence of any "terrorist activities" is Uribe calling him "an accomplice to terrorism" last year. Amazing what a US ally can get though, right?
On the same subject, Forero, the author of the WaPo story linked above, makes the same point both maladjusted and others made when the story first broke, "According to documents prosecutors have made public, the DAS had begun a campaign to discredit Morris by tying him to the FARC. Among the strategies were plans to "press for the suspension of the visa." I thought the US cut ties with the DAS though? Hmmm. At least the "DAS's possible role in providing the United States with information on Morris has raised concerns among some Democratic lawmakers on Capitol Hill."
To Panama, where the latest seems to be an agreement being reached between dem gov'ment and striking workers. Official numbers have two killed with plenty more injured over the last few days. Reports indicate that the strikers have secured a temporary suspension of at least part of the law that caused all this. Check out Bananama Republic for some background and commentary, as this isn't getting the attention it deserves in the eng. lang world.
Honduran Foreign Minister Mario Canahuati announced that Honduras will be opening a new military base in Guanaja, one of the Bay Islands. The US supported it, presumably with cash flow. But hey, the possibility of Zelaya closing down the Soto Cano air base definitely had nothing to do with the coup, no way.
Also on Honduras, a new documentary that looks worth a watch. head over to Quotha, where you'll find the appropriate links.
Finally, big ups to Spain. Also to Uruguay's Diego Forlan, who was my favorite player to watch during this years Cup, and took home the Golden Ball as the tourney's best player. So we'll end this with a video breakdown of each of Forlan's five goals. The best one's are 3-5, but watch them all:

Mid-Week Update

2010-07-07T23:16:00.001-04:00

Posting has been light on accord of certain holidays and certain weather patterns that make computer use uncomfortable. But it's time to catch up with a lil journey through the intertubes.

From the current edition of The Nation, a detailed look at corn and Mexico. Clearly corn has a special cultural and historical place in Mexico, yet from NAFTA to GM crops farmers are under increasing pressure. On a similar note, Jan McGirk reports for Huff Post on the upcoming harvest of Mexico's first GM crop. The ban on GM crops was recently overturned. Money quote, from Clinton's science and tech point-woman, "We preach to the world about science-based regulations but really our regulations on crop biotechnology are not yet science-based."
A pair of articles over the week or so look at the role foreign political consultants played in the recent Colombia election. First, Marc Ambinder at The Atlantic writes on Ravi Singh, who's role maladjusted had previously pointed out. Singh runs Electionmall.com, and is widely credited with leading Obama's social media campaign. Ambinder writes that after Santos lost ground in the polls to Mockus, "Then Singhs's team, working with the Web 2.0 Victory Team, along with local agencies and talent including Sistole, SigmaMovil and Servinformacion, kicked into gear, live-streaming his campaign speeches (Colombia has a 45 percent net penetration level), collecting 4 million emails, producing a "SuperSantos" video game (fight drug dealers!), organizing debate-watching parties, and helping voters find their polling places." Impressive.
Next is the Miami New Times' report on J.J. Rendon, who is referred to as "Latin America's Karl Rove". Ouch! He's another character that maladjusted wrote a bunch about back during the campaign. About how this guy was basically Karl Rove, running a smear campaign. Guy is a seriously shady character, linked to the right in Venezuela, Mexico and most recently before Colombia, Honduras. The article is a must read.
Via The Harpers blog (on the Blog Roll to your right), new information comes to light about Nixon and Kissinger's involvement in a string of assassinations in Chile. Scott Horton quotes Jeff Stein from the WaPo Spy Blog, "President Richard M. Nixon and his national security adviser, Henry A. Kissinger, joked that an “incompetent” CIA had struggled to successfully carry out an assassination in Chile, newly available Oval Office tapes reveal. At the time, in 1971, Nixon and Kissinger were working to undermine the socialist administration of Chilean President Salvador Allende, who would die during a U.S.-backed military coup two years later." Click here to see the transcript. Horton adds the necessary background, "The comments plainly revolve around the death of Chilean General René Schneider, who was the commander-in-chief of Chile’s armed forces around the time of the 1970 presidential election that brought Allende to power. Within the Chilean military, Schneider resolutely opposed any coup d’état and insisted that the democratic process be respected. The CIA and Kissinger apparently concluded that he had to be eliminated so that the Allende government could be removed."
Our fav secretary of state HRC went to Europe last week, using the equation to slip in some insults towards Venezuela. But don't worry, the next day she made a statement congratulating Venezuela on their independence day (July 5). Water under the bridge right? Wrong: "This new attack against our country from Hillary Clinton ... demonstrates a policy of intrigue, aggression and desperation," foreign minister Nicolas Maduro said. She did manage to slip in some backhanded shit in the congratulations though.
The one year anniversary of the Honduran coup was a little while ago, today, news from Chile that the US is still actively lobbying governments that have yet to recognize Pepe "reconciliation" Lobo. Chile is apparently quite divided over recognizing the Honduran government, there is currently a bill in the Senate which will be voted on next week that asks Pinera to recognize Lobo.
Also on Honduras, and for those in the greater DC area. Tomorrow there will be a showing of the documentary "Quien Dijo Miedo", supposedly a real solid movie on the coup. It's playing at the E Street Cinema for one night only, tomorrow at 6:30.
Throughout the blogosphere we go....to Otto, who gives us the best take on the federal lawsuit against the Arizona immigration law. Check out the linky to watch the video. Also props to Otto on a real nice smackdown of some douchey LA Times film critic who apparently doesn't know his ass from his elbow when it comes to Latin America. The WaPo, the NYT and the LATimes now all with epic fails on "South of the Border".
Also on Arizona, a nice short post from The Mex Files on the success of the Sonora boycott of Arizona, titled "Immigrants don’t kill jobs… stupid politicans do". This is great, "The Sonoran boycott alone has cost 30 Arizonians their jobs: probably all “native born” citizens. They can thank their idiot governor for that."
This has already gotten a lot of attention, but Peter Krupa over at Lat/Am Daily wrote over the weekend on the invasion of Costa Rica by the yankees. Okay, not exactly, but go check it out. Love this line, "Anyway, keep ironing around that wrinkle fellas. You’ll win the war on drugs any day now." Well said.
On the "war on drugs", the Just the Facts blog has a long post debunking 5 assumptions of the war that is worth a read.
This is also a bit old, and got passed around the web pipes like a, well, a pipe, but is worth pointing out in case anybody missed it. Glenn Greenwald had the story last week. A study done by the Harvard Kennedy School shows how the mainstream media covered waterboarding over the last 100 years, concluding "that the technique, almost invariably, was unequivocally referred to as "torture" -- until the U.S. Government began openly using it and insisting that it was not torture, at which time these newspapers obediently ceased describing it that way". Greenwald's description is spot on, as always, writing that the study "provides the latest evidence of how thoroughly devoted the American establishment media is to amplifying and serving (rather than checking) government officials."
Dean Baker, at his Beat the Press blog, points out some "affirmative action" with regards to Mexico in Simon Romero's latest New York Times piece (cribbed from Otto, and not like the guy has a stellar rep anyway). Baker calls out Romero for citing Mexico's 4.5% first quarter growth as impressive. Baker writes, "This is actually rather weak growth given that Mexico's economy contracted 6.5 percent last year. By comparison, Brazil and Peru, two of the other countries highlighted in the article anticipate growth of more than 7.0 percent in 2010. Neither experienced a downturn as sharp as Mexico's."
Last, but certainly not least, over at Tim's El Salvador blog, we get the latest in the ongoing case in Spain over the 1989 killing of 6 Jesuit priests in El Salvador. Tim writes, "The bombshell revelation was that the witness apparently testified that president Alfredo Cristiani had advance knowledge of the assassinations and approved them." And who is this Alfredo? Well none other than "the current head of ARENA following that party's loss of the presidency to the FMLN in 2009". Awesome!

Now hopefully we can get back to your regularly scheduled programming.

The Count

2010-07-02T20:27:00.006-04:00

31...

...is the gap in percentage points between male and female hourly wages in Latin America. That's right, the region has made great progress in addressing gender disparities but income gaps nevertheless remain quite large.

For the full scoop head on over to Eclac, where you'll find a new report out this week on regional progress towards achieving the UN's Millennium Development Goals (MDGs). As usual, this publication is a wonk's statistical wet dream and contains far more fascinating information than could ever be adequately covered here. So go check it out, here.

But what's there to learn about gender equality in the region from the report's myriad of tables and graphs?

Insight number one is that gender disparities don't seem to be driven by educational differences. In most countries of the region men and women exhibit very similar levels of enrollment in both primary and secondary schooling (but not so similar when it comes to tertiary schooling).

Insight number two is that in most countries women have begun to diversify away from purely agricultural employment. In this area, both Venezuela and Colombia stand out for making the most progress.

Insight number three: wage equality has steadily improved since 1990 but the gap with respect to men still remains large. However, as can be seen below, the gap is significantly smaller for salaried employees.

[Average hourly and salaried income of women, compared to men, urban areas (in percentages)]

The blue line shows women's average hourly income in relation men, the purple line shows average salaries in relation to men and the black line, 100 percent, represents men's wages. The first thing to notice is the big improvement since 1990. However, as can be seen from the dotted trend line to the right of 2008, the gap continues to narrow at the current pace it won't completely close even by the year 2015.

Now, an implication of the difference in relative gaps between hourly and salaried employees is that the lower your income, the less equality you should expect vis a vis men. And this takes us to insight number four: Latin America has A LOT of women in politics. No, seriously. It beats every other developing region of the world except for the Caribbean.

[Percentage of members of parliament that are women, 1990, 2005 and 2009]

So the moral of the story is... more equality for women in the heights of power and wealth but significantly less futher down on the socioeconomic stratum.

But hey. Stop reading my ramblings and go enjoy your freakin' weekend.

Lat/Am Daily is back...

2010-07-02T00:25:00.002-04:00

...and Peter Krupa has been making up for lost time with several good posts well worth a read. Who's this douche Obama appointed to head USAID's programs in Latin America? Why does so much cash on the US/Mexico border smell like laundry detergent? Go find out.

Argentina, where economic growth is a bad thing

2010-07-01T19:41:00.000-04:00

Only with Argentina, whom investors and the business community (and press) clearly haven't forgiven for defaulting in 2001, can rising GDP forecasts be reported as a bad thing. Bloomberg reported yesterday that RBS raised their estimate of Argentina's GDP growth this year from 4.4% to 7%. Amazing you might say, that would put Argentina at the top of the hemisphere, and be a seriously nice way to rebound out of the world recession, but wait. According to RBS:

“This ‘full throttle’ growth strategy is likely to exacerbate current distortions in the economy,” RBS economist Boris Segura wrote in a report today from Stamford, Connecticut. This would leave “a heavy legacy to the next administration,” Segura said.

You know, if the US undertook a serious stimulus and our GDP forecast went up that much, this would probably be straight from a set of Republican talking points. I can see it now, "This 'full throttle' government spending is only going to drive the nation further into debt. Mr. Obama is going to leave this country in ruins for whoever our next President will be."In fact, I bet they've already said that.

Just a reminder that when reading the mainstream media's coverage of Latin America, it reads more like FOX News' coverage of Obama than what passes for good journalism on domestic issues.

Ideological Labels Are Fun: Colombia and Chile

2010-07-01T14:11:00.003-04:00

Did you know that, despite simplistic labels to the contrary, the US' favorite client state actually is not the free-market paragon most people think? That's right, I'm talking about the supposedly "free-market" darling Colombia, which according to a new Inter-American Development Bank (IADB) working paper has been pursuing extensive industrial policies for quite some time.

The economic merits of these policies aside, this underscores that just because a country has a horrible human rights track record and is in the State Department's pocket, it doesn't necessarily mean it's also "neoliberal." In other words, the media (especially up north) likes to assume Colombia is "market-friendly" simply because it is US-friendly and has signed a handful of Free Trade Agreements. But in reality it has also been pursuing fairly heterodox policies for a while.

One obvious example of this is Colombia's long-running affair with capital controls. As maladjusted has pointed out before, Colombia's regulations on international capital flows are currently the highest in the region. During the 1990s, when South America regained access to international capital markets and all the cool kids on the block were liberalizing, Colombia had smart regulations in place to tax inflows. This helped reduce flow volatility, prevented excessive exchange rate appreciation and lengthened the maturity of foreign liabilities (which lowers the likelihood of experiencing a financial crisis).

In any case, the point is that when it comes to labeling a country's economic policy, what's accurate is seldom the same as what is politically sexy. The truth in South America has always been more nuanced than "neoliberal countries grow, leftist countries don't."

A natural parallel in this regard is the case of Chile, which to much fanfare staked out claims to first world status last year when it was officially admitted to the OECD. The conventional narrative holds that Allende's socialist policies were destroying the country before the free-market champion Pinochet took power and, with help from the Chicago boys, set the foundations for the country's future prosperity. But, of course, the reality isn't so simple.

Chile hasn't prospered because of pure neoliberalism. It has prospered because of resource nationalism (even Pinochet was smart enough to keep the state-owned copper company, CODELCO), the state promotion of exports (salmon, wine, and virtually every other major export success have received extensive gov. assistance) and, on the macroeconomic level, well devised capital controls (Chile is actually the paradigmatic example of success in this area).

Whatever.

Dichotomies challenged. Reality trumps ideological labeling. And I'm a closet post-modernist. The End.

U.S. to Hollman Morris: Stay Out!

2010-06-30T22:38:00.000-04:00

Just in case you needed further evidence that the Obama administration is continuing with the same policies towards Latin America as the Bush administration, prominent Colombian journalist Hollman Morris, who Big 'Al Uribe once called a "an ally of terrorism," was denied a visa by the US embassy in Bogota, this according to Matthew Rothschild at The Progressive. Morris was headed to the US after being selected as a fellow by the Neiman Foundation at Harvard.

You may remember from a post awhile back, that Morris was the target of a smear campaign by the DAS. The link was to Plan Colombia and Beyond who had the documents outlining DAS movies against not only Morris, but other opposition groups and journalists as well. Adam Isaacson wrote at the time:

Here are the files obtained by Hollman Morris, with English translations. They go beyond surveillance and wiretapping to reveal what it calls a “political warfare” campaign of dirty tricks and threats against President Uribe’s political adversaries. They date from 2005, the last year of Jorge Noguera’s tenure as DAS director.

The guy digs deep, goes where people don't want him to go and is a verifiable bad ass. As Rothschild writes, quoting heavily from Human Rights Watch, who gave him a "Defender of Human Rights" award in 2007:

“A journalist and human rights activist, Morris has dedicated his career to uncovering the truth about atrocities committed on all sides: by right-wing paramilitaries, left-wing guerrillas, and government authorities,” said Human Rights Watch in granting him the award. “Morris has faced serious harassment and death threats for his work. . . . Human Rights Watch honors Morris for his courage and unfaltering dedication to exposing Colombia’s most egregious human rights abuses.”

But I suppose he's been just a bit too critical of the US' favorite ally to be welcome into the States, eh? Lets get this right, guy exposes DAS misdeeds, the US needs to cut off assistance to DAS, Colombia needs figure out a new way to spy on the president of Ecuador, and run smear campaigns against their opponents, and then the US denies this guy a visa? Sure sounds like the State Department is on the right side of this one! In fact, if you look at the image above, you'll see "Gestionar la suspension de la visa" as one of DAS' courses of action against Morris...Really State Department? Really? Straight outta the DAS playbook? Damn, that's just low.

(image from Plan Colombia and Beyond)

Making the Case for Argentina

2010-06-30T21:47:00.000-04:00

Not sure who to root for with the quarterfinals of the World Cup starting tomorrow? Well, Dave Zirin makes the case for Argentina, who in addition to playing "with the wicked grace of decades past", brings it politically as well:

At a training session in South Africa, the entire Argentine team unfurled a banner that read, "We Support the Grandmothers of the Plaza de Mayo for the Nobel Peace Prize." The group has in fact been officially nominated for the prize and Abuelas president Estela de Carlotto, is in South Africa, meeting with Nelson Mandela and other world leaders. She has also been publicly and literally - embraced by Maradona. The critical work that Abuelas has done will only receive a greater spotlight if Argentina continues to advance. This makes all those connected with Argentina’s dirty war, who still hold tremendous power in the country, increasingly, and deliciously, apprehensive.

I can certainly understand, and have heard from numerous people, that these kinds of political concerns shouldn’t play into our rooting interests when it comes to the World Cup. It should just be about the game. But this is like wishing a double cheeseburger didn’t have cholesterol. There is simply no sporting event on earth more entangled in politics than this brilliantly bombastic tournament. Anytime you have half the earth tuned in - as colonies play their former colonizers and dictatorships challenge democracies - politics follow like rainbows after rain. As long as politics are part of the mix, we might as well support a team that in addition to epitomizing the beautiful game stands with a beautiful cause. Viva Argentina!

I urge you to go read the whole thing, only Dave Zirin can quote from Galeano and Yahoo! Sports writers in the same piece. For those of us who enjoy our sports almost as much as our politics, Zirin is a must read.

(image also from Zirin)

How Not To Normalize Relations in One Easy Step

2010-06-29T02:37:00.000-04:00

This must have made for one hell of a phone call. Following Santos’ victory in Colombia's presidential elections last Sunday, Ecuadorian president Rafael Correa called him to congratulate him on his victory. Needless to say relations between the two countries are a lil rocky, I mean, a court in Ecuador recently issued an arrest warrant for the Colombia president-elect. In any case, following the phone call there was much hoop-la about the normalization of relations, yadda, yadda…well, how’s this for normalization (via Bloomberg):

Colombian police have been tapping the telephones of Ecuador’s President Rafael Correa and government and military officials since 2008

But what's more is it’s not like Santos was an innocent bystander in any of this, the report includes this juicy lil nugget:

Colombian President Alvaro Uribe and incoming President Juan Manuel Santos have been briefed at least three times on the operation, which began in the aftermath of a Colombian raid on a rebel base camp inside Ecuador in March 2008

Which brings us back to that phone call. Can’t you just imagine Santos answering Correa’s call, while three giggling DAS agents in a sixth story apartment in Quito listen in? Yup, got it.

Not to worry though, it’s not like Ecuador is the only one to get this special treatment. From EUObserver:

A group of MEPs is calling for action as further details of an alleged covert operation conducted by the Colombian intelligence agency (DAS) continue to emerge, with one of its reported aims being to undermine the authority of the European Parliament.

Recently released documents that were confiscated from the DAS by the Colombian Attorney General's office highlight the nature of "Operation Europe."

Its objective was to "neutralise the influence of the European judicial system, the European Parliament's human rights sub-committee, and the office of the United Nations High Commissioner for Human Rights," reads one text seen by this website.

And yes, the “alleged action in Europe includes phone tapping and the interception of emails”.

Weekend Update

2010-06-27T20:51:00.000-04:00

South America continues rolling through the World Cup, Uruguay and Argentina advance, Chile and Brazil meet tomorrow...

This is some serious structural maladjustment shit right here: While calling for austerity in Greece and elsewhere, the IMF and World Bank approve "have pushed ahead with pay raises above the rate of inflation for thousands of workers". WaPo has the story.
More Jessica Jordan is a good thing. The Telegraph takes a look at their native beauty's new role as "Director for Development of Frontier Zones and Macroregions" in Bolivia. For background, check out El Duderino's profile of Jordan from awhile back.
With the one year anniversary of the Honduran coup tomorrow, 27 US lawmakers sent a letter to Hillary Clinton concerning ongoing rights violations. The number of slain journos so far this year is 9, for those at home counting.
Earlier in the week, various places got nose deep in some stats on cocaine production in South America. Bottom line, the UN and US have very different numbers, Colombia is doing better, Peru much worse...down in one place, up in another...how long are the suits really going to keep up this nonsense "war on drugs", seems like they "learn" the same lessons every few years or so.
The vultures are circling again after the latest round of debt swaps in Argentina. Finance Minister Bodou says that that "a total of 92.4 per cent of the nearly $100bn on which the country defaulted in 2001 has been restructured after including the results of an earlier swap in 2005." But fear not, billionaire hedge fund managers and all around douchey-douche vulture funds are still bitching and moaning about evil Argentina.
The Huff Post is a wonderful place, but they need some better oversight. On Friday they let Nancy Soderberg use their space for pure propaganda without even identifying who she represents. Soderberg is the former US ambassador to the UN under Clinton (which the Huff Post says), but she also represents the American Task Force Argentina, a group led by vulture funds that has continually railed on and brought litigation against Argentina for the better part of the last decade. On Friday, she wrote:

Last month, Argentina put forward its Global 2017 bond offering but the markets are not buying, forcing the government to extend its offer until June 22, a stunning vote of no confidence in the policies of President Kirchner. The international message to Argentina was loud and clear: No deeds, no prize. Investors don't trust you, or your policies. Looking over Argentina's record on financial responsibility, it's no wonder why.

Nevermind that Argentina has reached an agreement with 92.4% of bondholders; these assholes bought in late for cheap and intend to reap massive profits no matter how they get 'em, and Nancy Soderberg has been enlisted to do their bidding. It's a shame the Huff Post allowed this without having her disclose her troubling ties.
Juan Forero in the WaPo takes a look at the daunting back log of human rights cases facing Colombia, and the implications for both Santos and the US. I know Maladjusted has ragged on Forero before, but he does a nice job of showing how the US support for Colombia despite the serious rights abuses has prevented improving relations with other countries in the hemisphere. Money quote:

But Washington's closest ally in the region, Colombia, has been the source of the most serious cases of abuse before the commission, investigators familiar with the cases said. In all, the commission is evaluating 1,055 cases. Dozens of the cases of serious violations took place during Uribe's administration.
Finally, as a follow up to this post from last night, and for a good laugh, a picture of the best mis-pic in recent memory...maybe even better than the old dusty farts at WaPo not knowing who Evo is, courtesy of The New York Times, via Howard Kurtz:

Presidential edition of Whats Wrong With This Picture?

2010-06-27T02:43:00.002-04:00

UPDATE BELOW

Last Wednesday the Washington Post style section ran a story on the front page about Oliver Stone's new movie "South of the Border". The story included a picture of the six current South American presidents that Stone interviewed. But, wait, there was one tiny little problem...take a look at the picture below:

(Top, Chavez, Correa and de Kirchner. Bottom, Lugo, Morales and da Silva)

You may have noticed, something is amiss.....got it yet??? Answer and more after the jump.

Well, in case your eyes are bad, let's get a close up of the mis-pic:

Yes, that would be the picture provided for Evo Morales, first indigenous president of Bolivia, that Evo Morales. Really WaPo? Really? How do you fuck up a photo of Evo? And who is that other guy in the picture?

Well, over at the "South of the Border" website they have some video clips from the film, and I'm pretty sure the picture the WaPo used is of the guy with Evo who is translating for Stone. Check it out for yourself:

One might presume that the photo the Post used was taken from the movie, which begs the question, were you really confused as to who the President of Bolivia is in this scene? And since the answer is clearly no, how might someone fuck this up? Well, I'll leave it to your imagination...best theory wins a prize (yet to be determined).

On the other hand, at least someone over at the Post finally noticed, and today we get this:

A set of pictures with a June 23 Style article about film director Oliver Stone included an incorrect photograph for Bolivian President Evo Morales, one of several leftist leaders Stone meets in his documentary "South of the Border." Morales is pictured here.

Unfortunately, the online article doesn't have a picture, so I tracked down today's Post, and here's the updated picture for Morales:

Okay, maybe not. That's just Stone rockin' a Chullo, but ya never know...the Post just never ceases to amaze.

(h/t to my local bodega for having a Wednesday edition Post lying around)

UPDATE: Thanks to El Duderino for letting us know in comments the name of the WaPo's errant "Morales", Government Minister Sacha Llorenti.

The Count: childhood poverty

2010-06-25T22:22:00.007-04:00

45 and 17.9...

...are the percentages of children and teenagers in Latin America living in poverty and extreme poverty defined in terms broader than simple income. That's right, ECLAC has a new research bulletin out giving us a sneak peek of an upcoming ECLAC and UNICEF report on poverty trends throughout the region.

The idea is simple. Much like the World Bank's Human Opportunity Index (HOI), which sets out to measure access to the resources that grant a child the opportunity to succeed in life, this new measure of childhood poverty is based on the notion of human rights--both social and economic. In other words, going beyond the mere notion of income, a child is considered poor if any of his or her basic rights are violated. The six rights explicitly considered are:

Nutrition: defined in terms of weight and size by age.
Clean drinking water: taking into account it's origin, supply and accessibility.
Sanitation: defined as relative access to a sewer system.
Housing: considering the number of people per room, the building materials of the roof, floor and walls.
Education: in terms of assistance and number of completed school years.
Information: defined as access to electricity and having a radio, tv or telephone.

So how much of a difference does this new measure make? A LOT. The pie chart below shows the percentages of different poverty classifications for the whole region. Light blue is outside of poverty, dark gray represents income poverty, light gray is poverty in terms of both income and the absence of rights, and green is poverty just in terms of the violation of rights. In other words, without the new methodology, we'd be ignoring all of the green chunk and a big part of the light gray chunk.

Now, as usual, the Count asks: what does the country breakdown look like? And you'll find just such a thing right below, courtesy of Maladjusted Graphs™.

[Percentage of children and teenagers living in poverty and extreme poverty, circa 2008]

As can be seen above, the top five on the list are, in order, Costa Rica, Chile, Uruguay, Argentina and Venezuela. On the other extreme, the five countries where children are worse off are, again in order, El Salvador, Guatemala, Nicaragua, Bolivia and Peru. (so much for Peru's economic miracle, no?)

Well there you have it folks. Yet another welcome attempt to challenge the misleading simplifications of standard statistical indicators.

Cocaine+Futbol+World Cup=Great Documentary

2010-06-24T22:05:00.001-04:00

If the equation above confuses you, or pops up on your screen when your boss is looking over your shoulder, apologies. But bear with me here. First off, I'm back and props to my comrade Gringo Juan for holding it down while I was off gallivanting through the woods. I also got to catch up on some reading and watching, the reading recommendation is still a few days off, but let's get to the movie recommendation: "Two Escobars".

It's a documentary by Jeff and Michael Zimbalist which aired as part of ESPN's 30 for 30 series. I know, ESPN, not exactly who you would turn to for your documentary needs, but this one is well worth the time.

It traces the rise of Pablo Escobar and Colombian futbol (and star player Andres Escobar, the only Colombian ever to be offered a spot on Inter Milan). Everyone knows Pablo, but not everyone knows he was a futbol fanatic and also played a huge role in the barrios in Colombia, especially Medellin. In his more formative years, he donated soccer fields in poor neighborhoods throughout the country, but even in his later years the passion for soccer never left him. Colombia was far from a soccer powerhouse and much of the top talent often left for bigger money and more fame overseas in Europe....until the cocaine cash started to flow, that is.

All of a sudden not only could club teams keep the top talent, but players from all over the region were coming to play in Colombia. Turns out a soccer organization is a really good way to launder money, ticket sales being in cash and all. Every drug lord had a team, or two. Pablo was no exception, and the other Escobar, Andres was quickly rising to the top of his profession.

Colombia became one of the favorites to win the 1994 World Cup, and as violence raged at home, the national soccer team became the Colombian government's best PR tool. The team was a way to show the world that Colombia was not just about violence and to give Colombians an escape from the everyday hardships. But, just as Pablo's notorious run came to a crashing halt, so did Colombian soccer.

I really don't want to give much more away, it's a tragic and fascinating story, and incredibly informative to boot (not bad for an ESPN docu). As much as the story can carry the movie on its own, the historic footage is really the icing on the cake. Colombia, in their bright jerseys, played some beautiful futbol back in the day and they've got the footage to prove it. As an example of some of the team's flair, here's a clip that you may have seen before, Colombian goalie Rene Higuita's infamous scorpion kick:

Damn. Unfortunately, Higuita was not on the team for the '94 World Cup, for reasons that you will find out when you watch the movie. Not only is there amazing footage of the national team, but also of the brutally deadly drug war, including some footage of Pablo that is really stunning. Pieced together with interviews with such characters as Pablo's right hand man (in jail for murder) and his cousin, it makes for a must watch. It doesn't paper over the massive atrocities that Pablo is responsible for, but neither does it just give you one side of the story. Footage from his funeral shows the thousands and thousands of grieving Colombians, mostly from the barrios, who had lost one of the only men who had truly provided for them. Nor does it overlook the heavy hand of Carlos Castano and Los Pepes (later of AUC paramilitary fame), and their support from El Norte. Perhaps, since its a sports network, the political considerations don't weigh as heavily, but good for ESPN for airing this informative, entertaining, and deeply tragic documentary.

Here is a 5 minute introduction to the movie, and below, the upcoming schedule for when it will be on ESPN, ESPN deportes, and ESPN classic.

Saturday June 26, 10PM ESPN Classic, Friday July 2, 1am ESPN 2, Sunday July 4, 1pm ESPN 2. Check your local listing, all times EST.

For the record, I was not paid to shill for this movie, it just kicks ass.

Pinera's approval rating now 54%

2010-06-23T20:11:00.003-04:00

Chile's Center for the Study of Contemporary Reality (CERC, for it's spanish initials) today released the results of it's new public opinion poll. It shows Piñera's approval rating at a solid 54%. Though not directly comparable, this is one point higher than the Adimark poll released last month.

Not surprisingly, Piñera's approval rating is significantly lower in the areas most affected by last February's earthquake, coming in at 48%.

On an interesting side note, the CERC poll also shows that while Piñera's approval is high, 68% still want Bachelet to be president again. This is the bizarre state of affairs of Chilean politics today. One of the most successful political coalitions in the history of Latin America is voted out of office and replaced by a centrist conservative pledging change...who then proceeds to behave exactly like the coalition he replaced while his predecessor remains as popular as ever.

The impact of large natural disasters on economic growth

2010-06-21T23:47:00.006-04:00

In the aftermath of the earthquakes in Haiti and Chile it is natural to wonder what impact these two terrible events will have on these countries' future economic growth. Will the damage permanently lower output and burden future generations with the reconstruction bills? Or will the post-disaster construction boom and opportunity for structural change act as an economic stimulus, ushering in a new period of rapid growth?

Well, the folks over at the Inter-American Development Bank have clearly pondered these two questions more than I have. And their results are not exactly what one would expect.

Using a large comparative sample of severe natural disasters, the authors take advantage of the fact that natural disasters are a random event to tease out their causal effects on growth. In other words, the paper attempts to approximate a laboratory setting by also putting together a "synthetic" counterfactual of what would have happened in disaster countries if the natural disaster had never happened (they do this by grabbing a bunch of similar countries and weighting them to approximate the initial conditions of the disaster countries).

The results can basically be summarized with the graph below. It shows the path of real GDP per capita in actual disaster cases and in the counterfactual cases. Real GDP per capita is set to zero on the year of the crisis.

So what does this tell us? Well, disasters appear to have no effect on per capita income. In fact, the path of real GDP per capita following disasters perfectly mirrors the counterfactual index.

There were, however, two exceptions to the rule:

"Contrary to previous work, we ﬁnd that natural disasters, even when we focus only on the effects of the largest events, do not have any signiﬁcant effect on subsequent economic growth. Indeed, the only two cases where we found that truly large natural disasters were followed by an important decline in GDP per capita were cases where the natural disaster was followed, though in one case not immediately, by radical political revolution, which severely affected the institutional organization of society. Thus, we conclude that unless a natural disaster triggers a radical political revolution, it is unlikely to affect economic growth."

So there you have it. From the perspective of GDP per capita, a profoundly flawed but nevertheless indispensable measure of economic welfare, even the most severe natural disasters do not have an effect. So what's the moral of the story here? Is this a tale about human resilience in the face of calamity? Or is it another sobering lesson in the perils of statistical abstraction?

Chávez serenades Hilldog...sorta

2010-06-21T22:54:00.003-04:00

Translates roughly to:

"I'm unloved...
by Hillary Clintooooooooon.
I don't like her eitheeeer....
dahdahdaaaah."

Weekend Update

2010-06-20T20:37:00.003-04:00

In the woods and out of touch, but never too far away for a 'lil weekend update. This weeks theme, must read blogs.

But before we get to that, in case anybody missed it, Santos will be Colombia's next president. According to the LA Times, "With 99% of votes counted, Santos had garnered 69% of the votes in the runoff election to his challenger's 27%." So maybe the polling companies aren't quite as bad as we had thought....
But wait, thanks to a diligent Huff Post investigation, it seems Colombia's new president isn't any stranger to controversy....I guess he should fit in fine in the Casa Narino. The whole article is a must read, but here is the intro to give you a taste: "The man most likely to become Colombia's next president this Sunday has played a previously undisclosed role as a corporate officer of the company hired to run the nation's elections over the last decade, while he was a political leader, business records obtained by the Huffington Post Investigative Fund show."
Now to our week's theme. We start with a blog I've been meaning to introduce for a long time, Gerardo Esquivel's El Placer de Disentir. He's a Mexican economist who knows his shit. Yeah, it's in Spanish, but if that's in the cards then definitely go check it out. His latest post is a rundown on the electoral scene in the DF, but make sure to check out some of his previous posts as well, especially the ones on inequality.
Keeping with Spanish language blogs, check out Politica y Economia, economics and politics from a heterodox perspective. The most recent post takes a detailed look at Ecuador.
Next, on to Triple Crisis, not exactly Latin America oriented, but well worth your time. Its run by a host of well known and distinguished academic types, including my personal favorite Kevin Gallagher, whose breakdowns of everything NAFTA are simply the best. This week, one of the contributors of Triple Crisis, Martin Kohr, has a nice article via the South Center on the Bolivia climate summit.
Finally, another link to FiveThirtyEight, they simply do numbers better than anyone and we should all be encouraging them to do more and more about Latin America. This week they look at the World Cup as South America continues to rip through the field. I can't say I agree with everything in their analysis, but this is pretty interesting, "The five teams this year are from the continent's five southernmost countries, which, incidentally, are among its richest and (excluding Paraguay) rank highest on the human development index."
Onto some actual news; Brazil has suspended their WTO retaliation against the US. FT got the story, "The deal will extend until 2012 a holding arrangement in which the US pays Brazilian farmers $147.3m a year and promises to cut subsidies in future. In return, Brazil will hold off imposing blocks on imports or ignoring patents and copyrights, which it is entitled to do after a World Trade Organisation panel declared the US cotton support programme illegal."
Staying with the WTO, and keeping with this weeks theme of plugging blogs, Timothy Wise at Triple Crisis has a real great breakdown of the hypocrisy of developed countries in trade negotiations...and surprise, the criticism isn't just directed at the US: "But what about middle-income hypocrisy? Isn’t Brazil one of the world’s largest agro-export powers with a well-cultivated reputation for defending the interests of other countries’ small-scale farmers? Isn’t Brazil also guilty of hypocrisy? Absolutely. In fact, as part of its side agreement on cotton with the United States, Brazil got a multi-million dollar fund for investment in its cotton sector. Talk about hypocrisy: Africa’s Cotton 4 will now have to compete in global markets not only with subsidized U.S. cotton but with Brazilian cotton subsidized by the United States!"
Via Just the Facts blog, a new paper released last week takes a look at the ongoing DAS scandal in Colombia. Check out the linky to read more, but the title says it all...."Far Worse than Watergate"...How Uribe has managed to stay in the presidency with such a high approval rating is beyond me...Tricky Dick must be mad jealous.
Ricky Singh in the Jamaica Observer, writes on the hypocrisy of the US' extradition policies. Singh compares the US' requests for Christopher "Dudus" Coke from Jamaica, to their systematic denial of Venezuela's requests for Luis Posada Carriles. "Posada and Bosch have long been identified as the chief plotters of the bombing of the Cubana aircraft on October 6, 1976 when all 73 people on board -- 57 Cubans; 11 Guyanese and 5 North Koreans -- died. Instead of facilitating their extradition as fugitive terrorists from justice, then President Bush, in response to urgings from the anti-Fidel Castro lobby in Miami and Washington as well as from his son Jebb Bush, then governor of Florida, granted a Presidential Pardon to Bosch." Hopey and Changey hasn't sung a different tune either, for the record. Singh makes the case for CARICOM taking a leading role in all this...very compelling.
Finally, for some entertainment, check out these two videos from the Larry King Show. Oliver Stone is joined by Jessie "The Body" Ventura and Florida Republican and all around douche-bag Connie Mack. The real purpose was to discuss Stone's new movie South of the Border, but it quickly becomes a hilarious shouting match between Ventura and Mack. I mean, it takes a hell of a panel to make Stone look like the level-headed guy in the room. So go check it out.

Be back in a few days, until then enjoy Maladjusted's better half.

Chile's new ambassador to Argentina

2010-06-19T11:07:00.003-04:00

Last week maladusted brought you the controversy surrounding the idiotic and neanderthal comments made by Chile's now former ambassador to Argentina. Long story short, Mr. Otero told people the Pinochet dictatorship wasn't a big deal or anything, cuz, you know, "most chileans didn't feel its impact."

Piñera proceeded to fire his ass and now hired a new guy named Adolfo Zaldívar. Well, courtesy of the always irreverent The Clinic, here's what Zaldívar had to say about his new boss late last year:

"Sebastian Piñera is the purest expression of the concentration of wealth and speculative capital that rules the world. He is not in a position to guarantee a behavior in line with what Chile needs from its head of state."

Awkward. Awkward indeed.

The Count

2010-06-19T00:37:00.002-04:00

8...

...is the number of years it takes workers to reallocate into new industries after a 30% drop in manufacturing tariffs. Or at least according to simulations ran by researchers at the World Bank, the University of Virginia and Koç University in Istanbul.

Ok, perhaps we should back up for a second. Everyone knows that freer international trade is good cuz of stuff and junk. And by stuff I mean lower prices for consumers and by junk I mean efficiency gains from exposing domestic firms to international competition. The aptly named "gains from trade" can be bountiful, economists say, but reaping it's benefits involves adjustment costs as the less productive firms that can't compete "exit" the market (this is a euphemism for going out of business and firing workers) and the newly freed up resources (read: the newly unemployed) are reallocated.

Trade liberalization, in other words, produces both winners and losers, and the overall gains, proponents of free trade hold, outweigh the costs incurred by displaced workers.

But did you know that while every economist and their semi-literate grandmothers have attempted to estimate the value of the gains from trade, virtually no one has set out to comprehensively estimate the associated costs?

Well, Bernard Hoekman and Guido Porto, from the World Bank and the University of La Plata, respectively, have a nice summary of the most recent research on the subject. While the gains from trade can be huge, their collection of recent research shows that in practice workers displaced by liberalization often find it extremely hard to resettle into new and more productive work.

And this takes us to today's count. One of the studies cited by Hoekman and Porto, using data from the U.S., sets out to simulate the impact of a 30% reduction of manufacturing tariffs on labor adjustment costs. They find that the costs of moving between industries are very large, often several times a worker's average annual income. Perhaps more importantly, after liberalization it takes up to 8 years for 95% of the displaced workers to settle into a new line of work. This dramatic and lengthy period of adjustment implies sudden and large movements in wages, with displaced workers experiencing lower wages in both the short and long-run.

Colombia, Venezuela and Exports: Biggest Loser Edition

2010-06-19T00:13:00.008-04:00

A Bloomberg article today touches on how the diplomatic dispute with Venezuela is affecting Colombia’s economy, as it has resulted in plummeting trade with their second most important trading partner. Maladjusted wrote awhile back about how a Mockus presidency could be good for business if it means a reopening of trade between Venezuela and Colombia. Well, it doesn’t look like Mockus has a snowball’s chance in hell to actually win this thing, but as updated numbers are out from Colombia’s DANE, it’s worth taking a look to see how continued diplomatic problems (almost assured with Santos) will continue to weigh on the economy. Already, as Bloomberg points out, Colombia has the second lowest growth forecast in the region, and the collapse in trade is at least part of the problem. So, lets run some numbers through Maladjusted Charts and see what we can find out, has Colombia found new markets for these goods? What sectors are the worst hit?

First off, lets get the basics down, just how much has trade with Venezuela collapsed, and who has picked up the slack?

Before the drop off from Venezuela, the US was still Colombia’s largest trading partner, but was followed by Venezuela (all alone in second place), Ecuador and of all places, Switzerland. But through the first 5 months of this year, the US has remained its dominant position, while China has catapulted from obscurity to accounting for nearly 8% of total exports, about double that of Venezuela or Ecuador, as the chart below shows.

So from the above, it does seem that Colombia has fared pretty well finding alternative markets for their exports to Venezuela, indeed total exports increased over the same period last year. Unfortunately for some, looking at the breakdown of goods reveals a slightly different picture. Some 23% of exports with Venezuela during the period of Jan.-April 2009 were animals and animal products, a sector that accounted for around 5% of Colombia’s total exports. This year, however, Venezuela has stopped buying these products, and the sector has taken an extreme hit, making up less than 1% of total exports so far this year. The chart below shows how while exports to the US have skyrocketed, none of it has come from animals and animal products.

So what has accounted for the rapid rise in exports to the US? Well, simply, oil. Colombia has increased their oil production this year, and coupled with a rise in prices from last year, exports of combustibles accounts for nearly the entire rise in total exports, with most of the surplus going to the US.

Another sector that seems to have taken a hit from the Venezuela dispute is textiles. Overall, despite being a smaller component of total exports, textiles accounted for the second largest drop from last year to this year after animals and animal products. Exports to Venezuela of textiles dropped by $125 million, while overall exports of textiles fell by $105 million. As the chart below clearly shows Colombia has been unable to replace the Venezuela market for textiles.

In the end, what this means is summed up nicely in a quote from the Bloomberg article referenced earlier, “Colombia is selling more oil to the U.S.,” said Sandy [an economist with Credit Suisse Group AG]. “For the industrial sector and food producers, more sales to the U.S. don’t do anything.”

So while total exports have increased over 2009, it’s really not saying much as 2009 was clearly not the best year. And although trade has increased greatly with China and with the US, there have been sectoral shifts more so than straight replacement. I would say that the increased trade with China is definitely a good thing for Colombia, since before the recent increase Colombia exported less to China as a percent of total exports than just about every other country in South America. On the other hand, increasing dependence on the US may not be the most desirable outcome here. I’m sure the US will be happy to buy up Colombian oil…especially over Venezuelan oil, but look at Mexico…do you really want to be that tied to the US economy? Not to say that being tied to Venezuela’s economy right now sounds very good either, but looking at the next few years up north is not very promising. The UCLA Anderson Forecast was just released and projects growth for the next three years below the 3% long-term nominal growth rate. And yes, unemployment is expected to still be over 8.5% by 2013. Not exactly a booming export market.

But more importantly, and certainly more importantly for those most affected in Colombia by the trade fall off, are the sectoral shifts that will occur over the medium term if exports to Venezuela don’t return, or if new markets for those products can’t be found. While the overall export picture doesn’t seem dire, the industries that have been most affected, animal farmers and textile producers have been severely hit. Farmers, while they account for a smaller percent of GDP, make up nearly 20% of the workforce and have been the worst hit by the dispute with Venezuela.

Well, I’m sure this is WAY more than you ever wanted to know about trade between Venezuela and Colombia, I think it may be more than I wanted to know, but there ya have it. Next time maybe we can see if Venezuela has found new markets to import all that food that they no longer get from Colombia….then again, it’s probably just rotting in a container somewhere anyhow…

Import Substitution vs. the Washington Consensus: Dani Rodrik knows his shit

2010-06-17T19:13:00.004-04:00

Dani "master of development policy" Rodrik has a nice breakdown of a recent Inter-American Development Bank report on productivity changes in Latin America. Discussing the changes in productivity during the years of import substitution and then during the Washington Consensus, Rodrik writes:

"For all its faults, IS promoted rapid structural change. Labor moved from agriculture to industry, and within industry from lower-productivity activities to higher-productivity ones. So much for the inherent inefficiency of IS policies!

Under WC, firms and industries were able to accomplish a comparable rate of productivity growth, but they did so by shedding (rather than hiring) labor. The displaced labor went not to higher-productivity activities, but to less productive lines of work such as informality and various services. In other words, the WC ended up promoting the wrong kind of structural change."

Good thing I was too lazy to read that IDB report when it came out, because instead of giving you another dose of my ramblings, I could instead bring you Rodrik's far more insightful account. In any case, go check it out, here.

Stop the presses!

2010-06-15T22:54:00.002-04:00

Maladjusted has just received breaking news that's sure to overturn everything we know about market efficiency: privately operated airports in Latin America are not more efficient than publicly operated ones! According to a study published by the World Bank! THIS. CHANGES. EVERYTHING.

That's right, the authors of the new World Bank working paper, Sergio Perelman and Tomas Serebrisky, set out to address a seriously urgent shortcoming in the obscure airport efficiency literature (usually filed in academic journals under the "who the fuck cares?" category). In their words:

"To the best extent of our knowledge, there has not been any study that computes the efficiency and performance of a representative sample of airports in Latin America. The main objective of this paper is to fill this gap in the literature."

But just imagine their surprise when they realized that they had accidentally stumbled upon research that is vaguely interesting to more than three other people who study the subject. From the report:

"Probably the most unexpected result is that privately operated airports in Latin America have not outperformed publicly operated airports. Given the wide variety of private participation schemes used by Latin American countries, this result should lead to more detailed and case by case research to assess the effects of private participation on airport performance. In addition, future research should also assess the impact of private sector participation on the financial efficiency of LAC airports as well as on the quality of service they deliver."

Well consider me among those whose worldview has just been shattered. Snark aside, I was pleasantly surprised that what seemed like an otherwise trivial and pointlessly obscure research brief (measured against other World Bank research papers, which are usually in a triviality league of their own) turned out to be modestly insightful.

Weekend Update

2010-06-14T20:11:00.004-04:00

It's not the weekend anymore, but shouldn't everyone just get the next month off for World Cup anyway? I mean, just read this, why bother pretending to work?

Thanks to Adriaan Alsema of Colombia Reports for responding to Maladjusted's post on the Colombian government misquoting Hillary Clinton. CR had linked to the Colombian government statement that used the misquote.
A Wall Street Journal editorial praises Hillary Clinton's "diplomacy" as it relates to Honduras. Congrats Hillary you and the down right deranged WSJ editorial board are in agreement...at least if Hillary were the president she wouldn't be secretary of state.
Meanwhile, the sun rose in Honduras and just as unsurprisingly there was another attack against someone opposed to the coup. Porifirio Ponce, the VP of STIBYS (large, influential union), was attacked when traveling with some family members, one of them was killed. Must be the "strong and consistent commitment to democratic governance and constitutional order," that Hillary was talking about.
Also on Honduras, Daniel Altschuler expands on a point Maladjusted brought up a little while back on the similarities between the US' policy towards Israel following the flotilla attack and the US' policy after the coup in Honduras. Altschuler writes, "In fact, the United States predictably shielded Israel from harsher United Nations Security Council condemnation and has expressed preliminary support for Israel's internal inquiry. The United States ultimately played a similarly unhelpful role in Honduras, removing pressure at a critical moment for Zelaya's reinstatement as a condition for recognizing the November elections."
An interesting article in the New York Times about coca cultivation in Peru. Pretty simple point, when production decreases in one place, it increases in another...might demand be the issue here? Article includes this nice graph though...and wait, which one of these countries is considered to be "failing demonstrably" in the war on drugs? Nah, it couldn't be political!
We linked to Justin Delacour's take down of Phil Gunson awhile back, well, it seems like Gunson responded, which prompted a response, which prompted a continued debate in the comment section. Delacour gives the predominantly incoherent Gunson a thorough take down. Read the original, then read this...and make sure to check out the comments.
Hillary Clinton, while pledging her undying love, er, "support" for Colombia, also promised a "very intensive effort to try to obtain the votes to get the free trade agreement with Colombia finally ratified”. From vowing to re-open NAFTA to an intensive effort to pass something that much of the democratic party has blocked for years because of human rights abuses....hopey and changey for real.
I wholeheartedly support Fernando Lugo giving all public workers the afternoon off today to watch the match against Italy....I mean c'mon, nobody was going to work anyway.
Bloomberg cites a recent Datanalisis poll on Chavez's approval rating. Maybe Democrats in the US could learn something from him, he went after the speculators and financiers and saw a 6 percent increase in his approval rating last month, up to 48 percent. [Read: go after the damn bankers dems] This means we are probably within a few days of the next Jackson Peep rant, and surely there will be plenty of commentary about his popularity crumbling because it's below 50 percent, which, ya know, means he has the exact same approval rating as Obama. Also worth pointing out that Datanalisis is about as reliable as the Colombian press secretary, and it's no secret they're not the biggest Chavez fans, and I mean even the head of the organization doesn't think their polls are accurate!
Bloomberg also has the recent Gallup numbers from Colombia, where the all of a sudden uneventful presidential run-off election will go down next weekend. Santos is favored 66.5 to 24.7. But hey, given how far off the first round was, that's still practically in the margin of error!
In ongoing news concerning Maladjusted's new favorite movie, The Cove, haters are censoring it in Japan. Also, an investigation by the UK's The Sunday Times, apparently shows that Japan offers up prostitutes (among other things) to get countries to vote their way at the IWC. Among the countries who had been offered such sexy treats were two Caribbean countries referenced in the documentary, St. Kitts and Nevis and Grenada.
More importantly than anything else though, its the fuckin' World Cup! Go get something with your team's colors, make a friendly wager, drink too many beers during the day, and celebrate The World.

The Count: LAC 2009 unemployment

2010-06-11T20:36:00.005-04:00

0.8...

...is the percentage point rise in unemployment in Latin America and the Caribbean during 2009. That's right folks, ECLAC and the International Labor Organization have a new report out, showing that contrary to fears about the potentially grim effects of the global financial crisis, unemployment in Latin America and the Caribbean only increased from 7.3 percent to 8.1.

Following almost a decade of decreasing unemployment rates, the onset of the global crisis posed the threat of erasing all that hard-earned progress. Indeed, during the first quarter of 2009 many countries saw an alarming spike in unemployment rates. So then what happened next? To quote ECLAC:

"Although the crisis caused a drop in employment, an increase in unemployment rates and the deterioration of the quality of employment, the impact was mitigated by the signs of economic recovery as of mid-2009 around the globe, the countercyclical policies adopted in many countries and the stability of the purchasing power of wages due to decreasing inflation, which restrained the fall in domestic demand."

But how did each country fare individually? Well, below are the ECLAC/ILO numbers presented all pretty like courtesy of Maladjusted Charts™:

[South America: Percentage point change in unemployment, 2008-09]

For a while now the Count has been getting a little bored of seeing Chile "bestest-society-ever" scoring highest in every freaking social indicator around (except inequality, haha!). So it is surprising to see it leading the pack in unemployment increases. But what's most remarkable about this picture is Uruguay on the opposite end, showing unemployment actually decreasing by 0.2 points.

Not bad Uruguay. Not bad at all.

Early warning crisis indicators: truth in orthodoxy?

2010-06-10T23:43:00.004-04:00

With the main drama of the world financial crisis behind us policy makers have lent increased urgency to coming up with ways to anticipate and thus prevent future crises. In other words, governments from around the world are looking for improved "early warning indicators" to keep this mess from ever happening again. Because, of course, NO ONE saw this crisis coming, right?

Whatever. The National Bureau of Economic Research has a new working paper out this week taking a fresh look at the early warnings literature. Unlike most papers studying the issue, which focus on particular variables specific to each past crisis in question, this paper approaches the 2008-09 crisis as if it didn't know anything about it before hand--prioritizing the variables most often identified in the past.

The authors, Jeff Frankel and George Saravelos from the Harvard Kennedy School, essentially ask the question: without the benefit of hindsight, would the standard crisis indicators have been able to successfully predict the 2008-09 crisis?

The paper starts with a very thorough review of past empirical studies to identify what indicators have most often been found to be statistically significant crisis predictors. Reviewing over 80 studies, the authors come up with these numbers, presented here courtesy of Maladjusted Charts:

[Number of times found to be statistically significant]

As can be seen above, there's no real shockers in this list as most of the top variables are the usual suspects. Foreign reserves has been found to be statistically significant by 50 different studies, followed by the real exchange rate (48), GDP (25), credit (22) and, of course, the current account (22).

Now, quite naturally, this on its own says more about the state of the economic literature than it does about what variables actually predict crises more accurately. The more orthodox variables have probably been studied for longer and hence more papers have found them significant. Similarly, variables like debt composition and capital flows only began to receive attention in the wake of the Asian crisis and the literature surrounding their role in financial crises has really only picked up in recent years.

So given this conceptual issue, a thorough empirical investigation--using innovative measures of crisis severity and incidence--might give less importance to the orthodox indicators, no? After all, a pattern in recent studies is that traditional indicators like foreign reserves to GDP or real exchange rate overvaluation do not predict crises as powerfully as previously thought.

Well, not so fast the authors of this paper say. After crunching the numbers they find that, without the benefit of hindsight and ignoring the particulars of the 2008-09 crisis, the two variables that predicted it's impact the best were foreign reserves and real exchange rate overvaluation.

Truth in orthodoxy? I wonder... That's really too bad though. I was kinda rooting for debt composition and capital flows.

Diplomacy Colombia Style, Starring Hillary Clinton

2010-06-10T22:39:00.004-04:00

So this post was going to be about the irony of Hillary Clinton acknowledging Colombia's advancement in human rights at the same press conference that Big Al' Uribe criticized the sentencing of former Army Colonel Alfonso Plazas Vega to 30 years in prison. I mean all the guy did was get convicted for the forced disappearances of 11 individuals in 1985. Or, as Uribe described it "someone who was simply trying to fulfill their duty", adding, "That hurts. That makes me sad." Awww. Just fulfilling your duty eh? Is that what you have to say about killing peasants and dressing them up as guerrillas to fulfill quotas too? Whatever, in any case, as ridiculous as his statements may be, the post was ruined because, well quite simply, Hillary Clinton didn't exactly say what I thought she had.

So what happened?

I read this Colombia Reports article that included this line, "Clinton also recognized advances that Colombia had made in terms of human rights." And where did that link take me? Well, the website of the President of Colombia of course! Where I read that Clinton said:

“Reconocemos los avances en derechos humanos que ha hecho Colombia, los retos que aún persisten y la necesidad de la vigilancia, del compromiso en ese tema"

Or, loosely translated:

We recognize the advances in human rights that Colombia has made...blah blah blah

And I'm like damn, Hillary Clinton is recognizing some advances, at the same press conference that Uribe slams the jailing of a human rights abuser and a few days after the International Trade Union Confederation announced that half of the killings of unionists in the WORLD happened in COLOMBIA. But because it's the Colombia government, there is just this hint of doubt about everything they have to tell me, so I check the quote with the State Department's transcript (more trustworthy? Eh, probably), and this is what I find:

We also discussed Colombia’s efforts to enhance human rights, the strides made, the challenges that remain, the ongoing need for vigilance and commitment.

Wait, what? "We discussed Colombia's efforts to enhance human rights"? I mean, even loosely translated that's not "We recognize the advances in human rights". At least she did include discussing "the strides made", but fair to say this statement from the Presidents website is grossly overstated, right?

So not exactly the post we set out to write, but hey, on the same day Uribe criticizes the jailing of a big time rights abuser, the President's press secretary grossly exaggerates the US secretary of state's comments concerning so called "advancements" in human rights....yes, just another day in sunny Colombia!

Venezuela, Millenium Development Goals, and Graphs...lots of Graphs

2010-06-09T21:19:00.006-04:00

Below, a series of fascinating graphs ripped from a report from Venezuela's INE (the nat'l stats institute) looking at Venezuela's progress towards achieving the Millennium Development Goals.

As can be seen in almost all these charts there are large spikes during the 2002-2003 period, which no doubt had its fair share of hardships, including the coup in April 2002 and the opposition oil strike in 2003. Just something to keep in mind.

Poverty and extreme poverty:

Gini coefficient:

Unemployment:

Primary education:

Literacy rate:

This and oh so much more, all available here. Check it out to find out way more than would be possible to put here.

Chile: Another Public Relations Victory

2010-06-08T09:09:00.004-04:00

Before his election last December, many commentators on the left expressed concern at the possibility of a Piñera presidency. And yet, despite it all, Piñera's first few months in office haven't turned out all that bad as he has largely stuck to Concertación policies. Robert Funk quite poignantly commented that Piñera's State of the Union address to Congress even sounded more like a fifth Concertación government than the return of the right.

So then why the concern before Piñera's election?

Well, because he's surrounded by people who say things like this:

"The majority of Chile didn't feel the impact of the dictatorship. On the contrary, they were relieved. Because before you couldn't buy anything imported, you had to pay for what was produced in Chile--expensive and bad. Over night, you started to find out what was missing. The people won. Then the streets were cleaned and people started to have jobs."

And who's the dumbass who said that? It's Miguel Otero, Chile's ambassador to Argentina and Renovación Nacional insider. Maladjusted has argued before that Piñera and his government lack a certain sensistivity when it comes to human rights and addressing the dictatorship's legacy, but this is just too much.

Will Piñera act with the same swiftness as in past scandals and fire Otero? Let's hope so.

Update:

Otto at IKN has the scoop: Piñera has booted Otero out of his post as ambassador. Props are definitely in order.

Photo of the Day: Haitian Farmers Burn Monsanto Seeds

2010-06-07T21:10:00.005-04:00

For the background, check out this brief video report from independent journalist Ansel Herz, who has been providing some great reporting from Haiti.

Weekend Update

2010-06-06T15:34:00.005-04:00

(Update below)

Enough about military spending, what else is going on??

Okay, so maybe not totally off the military spending subject since I just saw this....Greg at Two Weeks Notice picks up a statement from Arturo Valenzuela arguing that there IS NOT an arms race in the region. He even says that "in fact, if you look at the statistics, the data, that there has actually been a significant decline in expenditures on armaments". Well, take a look at Otto's post, and Maladjusted's post from earlier in the day, where we do exactly that....look at the data. While Greg disagrees with Valenzuela's analysis, and sure total spending has increased, if you look at spending as a percent of GDP, most countries HAVE decreased spending over the last decade. Only Ecuador, Colombia and Uruguay have increased spending as a portion of GDP since 2000. Maybe Valenzuela knew that...or maybe he just realized the US looked like a bunch of jack-asses since they spend more than the entire world on military shit and their fav client state is increasing spending more than anybody else in the region.

Next, a movie recommendation, The Cove. A really disturbing, astonishing, moving, impressive, (insert laudatory adjective here), documentary about the slaughtering of dolphins in Japan. Led by the guy behind the TV show Flipper, a group of activists go all Mission Impossible on the slaughterers, hide secret cameras in the rocks and catch the seriously disturbing shit on video. Highly recommended.
Although the movie is about Japan, there are some regional implications. The International Whaling Commission (dolphins are whales), is where Japan goes to defend itself and convince others to end the ban on whaling. In any case, the area where Japan has found its most support seems to be the Caribbean. The documentary shows how Japan uses their foreign aid programs to influence Caribbean countries (sound familiar...think USAID). Well, I did a little googling, and it seems to be true. Check out this commentary in the Jamaica Observer today on issue. The author writes:

When people around the world think of whale-hunting nations, the Caribbean is the last place that crosses their minds. Yet, the governments of Suriname and the six independent members of the Organisation of Eastern Caribbean States (OECS) are in a pivotal position to end or continue a moratorium on commercial whaling that has been in place for 24 years

....
Several authoritative reports suggest that Japan pays the membership fees of Suriname and OECS governments to the IWC and also pays the costs of their delegates' attendance at IWC meetings, directing how they vote. In return, these countries get fisheries complexes from Japan.
The other reference to the region was that while Dominica has supposedly withdrawn their support, Japan has some new allies, including Ecuador. I know Correa has come under some heat from enviros in the country, but after watching the documentary, this shit is seriously disturbing. I was glad to see then, that ahead of the upcoming IWC meeting, Latin American countries (including Ecuador), have made a strong statement against the loophole that allows the killing of whales for scientific research. Hopefully the stand will extend to blocking all commercial whaling.
Boz reports on the Brazilian presidential election and how it may relate to foreign policy. Read the post, very interesting. We'll just post Lula's FA adviser's statement in response to presidential candidate Serra's comments: "Serra is intent on being the exterminator of Brazil's foreign policy. He destroyed Mercosur, wants to destroy relations with Bolivia and treats Ahmadinejad like a Hitler. That is not prudent conduct for someone who wants to be president."
Delacour is back at Latin America News Review and provides a nice 'lil round-up. An invaluable source, so hopefully the dissertation is done, and he's back at it.
AP reports on a Chavez foe who has been barred from competing in upcoming elections....and I mean why would someone who was just sentenced to two years in jail for fraud NOT be able to run, right? You know where else opposition candidates are getting barred from running? Mexico...
From a recent Jeremy Scahill piece on US Special Operations forces being deployed all over the world, we learn that Obama (Mr. Hopey-Changey) has actually increased the deployment of these special forces. Regional take: countries where they have been sent include Bolivia, Ecuador, Peru, Paraguay.
The New York Times remembers that just because Zelaya isn't in an embassy, the political conflict continues...and continues to divide the region.
Just in case you also forgot, check out this statement from Friday from Reports Without Borders, "300 soldiers and police storm community radio in continuing coup against media". Reconciliation Lobo is really coming through eh?
For more on Honduras, check out RAJ and RNS at Honduras Culture and Politics. A series of interesting posts over the weekend are well worth your time.
Finally, by the time of the next Weekend Update the World Cup will have started, so happy World Cup everybody! Productivity the world over is sure to see a strong decline over the next few weeks. Personally, I'm expecting (hoping) for an African team to make a deep run this year, and for Messi to break every scoring record possible. Enjoy the games!
UPDATE: Check out Abiding in Bolivia, who picked up on the Scahill article, and has a nice comment on that. Also a link to the Peruanista with a video montage for the one year anniversary of the Bagua massacre. We are all thankful that Abiding is back...

More on Military Spending in South America

2010-06-06T13:53:00.010-04:00

First off, props to Otto. I had a whole post ready to roll with pretty charts and data on military spending in South America when my RSSy turned blue and up pops "Military Spending in Latin America, 2009". So due props, but while the whole SIPRI study isn't available, the military expenditure database has been updated with numbers through 2009. So I'll add my two cents with a bit of a historical run-down. First, a look at total regional military expenditure 2000-2009 (in million US$, all $ figures are in constant 2008 dollars):

So there is clearly an increase in spending on military shit over the last ten years, but where is it coming from? Well, this provides some indication, as we break each year down by a country's share of the total:

It is a bit tricky to see since Brazil is such a large proportion, but that yellow one that gets much larger and the light blue above it...those are the only two countries who have seen their share of total regional military spending increase over the last 10 years. The countries, Colombia and Ecuador. The darker blue, all the way at the bottom (Venezuela), increases a bunch in 2006-2007, but is now at a lower level than in 2000.

Onwards; lets take a look at the major players but with some context, how about, spending per person (population numbers are from the IMF):

Again, as Otto points out, Hillary's scare stories about Venezuela just don't pan out in the data. Chile blows everyone else out of the water, spending over $300 per person. Next comes Colombia, followed by Brazil. In fact, both Ecuador and Uruguay spend more per person than Venezuela, but I wanted to include Venezuela in the above chart to make the point. Also interesting is that over the last four years, Chile's per person spending, while still significantly higher than anyone else, has been decreasing steadily. Not easy to take money from the Chilean military, who still have quite some clout, but well done by Ms. Bachelet, we'll see if Pinera can keep it up. On the other hand, Colombia continues to just spend more and more no matter how you look at it...how's that for "democratic security"? Poverty doesn't drop, military spending just keeps on rising...

Finally, as if to just hammer home the point, check out The Count breakdown how little money it would take to bring all the children in the region above the poverty line...hmm, wonder where they could come up with that....

The Count

2010-06-05T19:07:00.005-04:00

[editor's note: The Count would like to apologize for failing to count during his regularly scheduled counting time.]

0.84, 1.15, 2.7, 5.94...

...is the percent of GDP it would cost to transfer one poverty line to poor children in Chile, Brazil, Venezuela and Bolivia, respectively. Yes indeed, as promised, here's another excerpt from ECLAC's new report, showing that the relative cost of eliminating childhood poverty is rather low and well within reach.

The graph below shows the result of a simulation estimating the cost of transferring the income equivalent of one poverty line to children around or younger than five years old. The yellow line shows the estimates for every child and the blue line shows the costs for only children from vulnerable households. Also, as can be seen, the relative cost is lowest in countries with a higher level of development.

[Cost of transferring one poverty line to children younger than 5, around 2008, in percent of GDP]

Quite astoundingly, Chile could transfer enough money to eliminate poverty for every child with just 0.84 percent of GDP. Even Bolivia, with a far lower level of development, could theoretically get rid of poverty with a relatively small 5.94 percent of GDP.

Of course, this type of exercise is a pure abstraction and takes for granted all sorts of institutional and implementation hurdles. But it's certainly food for thought, no?

Best Breakdown of the First Round in Colombia

2010-06-03T23:06:00.003-04:00

Want the most detailed, complete breakdown of the first round available? Check out the coverage at FiveThirtyEight. Geographical breakdown? Check. Vote by poverty level? Check. Exactly how bad were the polling companies? Check. Does Mockus have a chance? Check (and the answer is pretty clearly no).

As a teaser lets rip the image showing the polling companies margin of error:

Gross. Go check out the whole post, which is definitely worth a read. Here's to hoping they keep the international coverage going.

(side note: congrats to FiveThirtyEight for partnering up with the New York Times)

Super Bear...

2010-06-02T23:46:00.003-04:00

...is a great new blog that's well worth your time. Interested in the politics of international development agencies from the perspective of an intelligent and all around cool multicultural dude? Want to brush up on your cultural theory and get smart excerpts from philosophy's greats? Or are just interested in a good read? Well, Super Bear will satisfy you in all of these departments. So go ahead and check it out, here.

ECLAC's Time for Equality

2010-06-02T23:39:00.003-04:00

A couple weeks ago maladjusted gave you a sneak peek of ECLAC's new document "The Time for Equality," outlining a regional agenda to promote social equality. Well, the final version is now out and it's safe to say it's a must read for anyone interested in the state of development in Latin America and where the region might be going in the future. This ambitious document is essentially a development blueprint for the region calling for a return of the State as a leading actor in the promotion of economic development and social equality.

The full report comes in at a whopping 290 pages, so this one will take a bit to digest since clearly I can't do justice to this high quality and book-length document in a single post. But you can be sure the Count will soon share many of its insights.

But in the meantime I'll leave you with a simple question included in the report: why equality and why now?

equality is tremendously important for social cohesion. When wealth is concentrated and growth isn't shared broadly an "expectations gap" is created that "increases social conflict, which erodes government legitimacy and threatens the sustainability of growth."

equality is more conducive to "authentic competitiveness." Which is to say that there are large long-term productivity gains from an egalitarian society in which everyone has the opportunity to make use of their talents and labor and the environment aren't over exploited. "In the long-run there's a virtuous circle between smaller social gaps, smaller productivity gaps and a more dynamic and sustainable growth. The evidence is conclusive, in the sense that economic development and social equality tend to converge."

the experience of the recent crisis suggests that highly unequal societies that are overly dependent on financial sectors tend to be more volatile and carry significant costs in terms of poverty and general welfare.

In any case, this is all just a really tiny flavor of all the good stuff included in the document, so I strongly urge all of you to check it out (no english version yet, but it should be out soon).

An Independent Foreign Policy

2010-06-01T21:36:00.003-04:00

By now you have all heard about Israel's attack agaisnt the aid flotilla, killing at least 19 people, and injuring scores more. So while virtually the entire world has been extremely vocal condemning the attack, the US has been conspicuously quiet. One region not scared to speak up and condemn Israel...the new power bloc of Latin America. So while we got a statement like this about the US:

"We'd like to express our thanks to the United States that worked behind the scenes to water down the [statement] at the United Nations," said Mark Regev, an Israeli government spokesman.

We get this from Brazil (via Xinhua):

The Brazilian Foreign Ministry in a statement said that "Brazil strongly condemns the Israeli attack, because there was no justification for the military intervention against a pacific convoy with strictly humanitarian character. The event is worsened, according to the available information, because it occurred in international waters."

"The event must be investigated independently to make completely clear the event based on Humanitarian and International Laws," the ministry said.

Brazil added that this event "once more shows the need of immediate lifting the embargo in Gaza, in order to guarantee people's freedom of transit and their free access to food, medicines and consumption goods in that region."

The article contains statements from Argentina, Chile, and Mexico in addition to Brazil. Venezuela was also quick to offer their condemnation. Nothing really to add here, just pointing out the latest example of one of the most profound changes in the region over the last decade, an independent foreign policy.

On a separate note, the fact that the US is working behind the scenes to dilute the UN statement reminds me a lot of the Honduran coup. The forum then was the OAS, but the US ambassador worked hard to dilute or block anything that the OAS tried to do. Good ol' U.S. of A, using their relative power to protect their right-wing "allies" since....well I don't know, always?

(image is a poster from a Brazilian cartoonist Carlos Latuff, via Canadian Dimension.)

Adimark poll: Piñera's approval rating goes up

2010-05-31T21:39:00.005-04:00

Last Friday the Chilean polling company Adimark released its latest monthly government performance poll. It shows Piñera's approval at its highest level since he took office, with 53% up from 50% last month. The overall gov.'s approval rating also went up 4 points, from 51% to 55% after having dropped sharply from 60% in April.

Also, there are no surprises here when it comes to the income demographics of Piñera's approval rating. The highest income groups, "ABC1" below, still supports him the most. And there's a clear downward trend down the income ladder.

Market Reaction to First Round in Colombia

2010-05-31T15:41:00.004-04:00

Just a quick look at the market reaction to Sunday's election. There was a lot of talk about how Mockus didn't scare investors, that may be true, but there is a lot of coverage today about how happy the markets are at Santos' big first round. As Marcelo Ballve pointed out, there was some risk surrounding the "unpredictability factor", and so Santos' big win appears to have taken that out of the equation.

First, Reuters:

The peso currency and benchmark TES bonds firmed on Monday, while the country's risk rating on JPMorgan's EMBI Plus index fell 8 points to 231 points.

"Now there is much more certainty about what might happen and what lies in store for the country. As well economic matters, the teams are well regarded. That generates stability and confidence recovers," said Alexander Cardenas, director of economic research at Colombian brokerage Acciones and Valores.

And, from Bloomberg:

The yield on Colombia’s benchmark 11 percent bonds due July 2020 fell three basis points, or 0.03 percentage point, to 8.04 percent at 11:02 a.m. New York time, according to Colombia’s stock exchange. The bond’s price rose 0.207 centavo to 120.003 centavos per peso.

…

“The market knows Santos,” said Bertrand Delgado, a senior Latin America economist at Roubini Global Economics, a research company in New York.

So Mockus may not have been bad, but the markets have spoke, and they clearly like Sunday's results. At least for now, it appears the country does too (I know polling in Colombia is notoriously bad, but seriously, you gotta wonder about this one, right?).

Weekend Update

2010-05-30T18:57:00.004-04:00

Lets jump right in:

Presidential elections in Colombia are headed for a run-off, no surprise there. The margin of victory for Santos in the first round is a shocker though; with 96% of the votes counted, Santos has 46% to Mockus' 21%. Santos is even carrying Bogota. Of course, anything can still happen in the second round. You want coverage on Colombia though, there are better places, check out Colombia Reports or La Silla Vacia. For a nice comment on what the markets are thinking, check out Marcelo Ballve.
Also on Colombia, Reports Without Borders released a detailed 9 page report on the DAS. Shit ain't pretty, but it is well worth a read. Most amazing part to me are that targeted journalists are provided with DAS security guards to "keep them safe", but they're really just keeping tabs on them and giving info to the DAS. Lovely organization really.
Otto flags the perfect Memorial weekend video. Nestor Kirchner tells Oliver Stone that George Bush told him that "the best way to revitalize the economy is war. And that the United States has grown stronger with war." Again, check out the whole video. The excerpt is from Oliver Stone's new documentary "South of the Border". Check out the website to read all about it.
Robert Baird stumbles on some recently declassified documents showing direct US support in the run up to the 1971 coup in Bolivia that brought Hugo Banzer to power: "Minutes from a July 8, 1971 meeting of the 40 Committee (an executive- branch group chaired by Henry Kissinger and tasked with oversight of covert operations) included discussion of a CIA proposal to give $410,000 to a group of opposition politicians and military leaders, money that they knew would be used to overthrow Torres." Read the whole thing, which includes a priceless conversation between Kissinger and Nixon.
Money question from above story...will it take 40 years to find out about US support for the recent coup in Honduras? (h/t HV)
Speaking of which, another week, more repression in Honduras. The Quixote Center translates a recent alert from Honduran human rights organization COFADEH. The alert reads, in part: "armed men dressed in white shirts, with black pants and caps violently entered STIBYS, and immediately fired on Douglas Gomez who is now in surgery at the Social Security Hospital in San Pedro Sula." STIBYS is one the main unions opposed to the coup. Read the whole alert, this shit isn't stopping.
And speaking of recently declassified documents. You may remember the news about the arrest of Gilberto Jordan in the US earlier this month. He was a former Guatemala special forces member who took part in the 1982 Dos Erres massacre. The Guatemala government took resonsibility in 2000, but the irreplaceable National Security Archives has released documents which clearly show the US was aware of the Guatemalan army's role in the massacre right from the get-go.
Continuing with this weeks theme of declassified documents, but on a much lighter note, the New York Times reports on a world-renowned British ballerina who was involved in a coup plot against the Panamanian government in the 1950s. British officials, while working to contain the incident, described it as a "slapdash comedy.''
Structural Maladjustment alert, via The Monkey Cage: New report finds correlation between IMF agreements and Civil War. From abstract: "Analyzing all data available for the period between 1970 and 1999, we identify an association between the adoption of IMF programs and the onset of civil war. This finding suggests that IMF programs to promote economic openness unintentionally may be creating an environment conducive to domestic conflict."
DSK of the IMF is in Latin America, and there have been plenty of articles on his praise of Peru, but a buddy points out that its not just Peru, but Bolivia that is getting praised by the IMF. Best part, Bolivian finance minister Arce, after being told how well the country is being run, says that IMF policies severely fucked things up in the 90s, and it was only when Evo changed things that they got better.
Chavez continues to "fail demonstrably" in the war on drugs....by detaining a top drug trafficker wanted by the US.

Is there more going on? Probably, but it's a holiday. Happy memorial weekend. Hope it's as beautiful wherever you are as it is where I am. And remember, there's nothing like war to revitalize an economy...so expect some more wars.

The Count: Latin America's infrastructure gap

2010-05-28T17:26:00.006-04:00

2...

...is how many percentage points Latin America's average annual growth rate would increase if it achieved the same levels of infrastructure observed in other middle-income countries. Or at least according to a new policy paper by the World Bank.

According to the report, the retreat of the State in Latin America during the 1980s and 1990s has resulted in a significant "infrastructure gap" in relation to other middle-income and newly industrialized countries. As the region rushed to privatize public entities and downsize the State, public investment in infrastructure dropped dramatically. At the same time, increased private participation in infrastructure development became the norm.

And in Latin America, private participation in infrastructure during the 1990s was larger than in any other region of the world. As can be seen below, there was a boom in private infrastructure investment between 1990 and 1998. Investment commitments increased from $10 billion in 1990 to more than $70 billion in 1998. These then crashed after 1998 in the wake of the Asian crisis and failed to recover during the early 2000s (due in part to Argentina's crisis and the completion of initial investments related to utility company privatizations).

[Private participation in infrastructure: investment commitments, millions of dollars]

But it seems that, despite this huge investment boom, when it came to infrastructure the private sector simply wasn't up to the task. To quote the report:

"Because private sector participation was not sufficient to offset the contraction of Latin America's public infrastructure spending, the ensuing fall in total spending resulted in a slowdown in infrastructure development in the region, and a widening gap vis-a-vis other world regions in terms of both infrastructure and growth."

Taking into account access to telecommunications, roads and electricity, the authors of the report put together an "infrastructure quantity" index for all of Latin America. The results: Latin America as a whole gets a low score of 0.88, compared to 1.02 for all other middle-income countries, 1.20 for East Asia and 2.09 for industrial countries.

Within the region, Central America is worse off, scoring 0.57. Chile, Venezuela and Brazil, in order, score the highest, with respective scores of 1.57, 1.37 and 1.12. These are well above the middle-income average and in the case of Chile and Venezuela, above the East Asia average--but nevertheless still far from the industrial average.

The gap is also quite large in terms of infrastructure quality, which is based on a series of polls:

[Overall infrastructure quality]

And now to the punch line. The result of all this is that Latin America would have supposedly been enjoying higher growth rates if it had levels of infrastructure on par with other middle income countries. To estimate this, the paper runs several standard growth regressions but incorporating its infrastructure quantity and quality indexes. It then takes the estimated impact of infrastructure on growth rates and combines it with the size of the gap.

The result is that on average, as the big two above says, annual growth rates would be 2 percentage points higher in Latin America without the infrastructure gap, with most of the increase due to higher quantity rather than quality. Significantly, countries in the Andean region would benefit the most from closing the infrastructure gap, with average growth rates 3.1 percentage points higher.

Full Text of Obama's Letter to Lula on Iran Nuclear Deal

2010-05-27T21:07:00.008-04:00

In case you somehow managed to miss the background here; Brazil and Turkey reached a deal with Iran on a nuclear swap, declared victory, only to have the US criticize both the deal and the effort. Then followed a barrage of articles from supposed experts saying how Lula has tarnished his legacy and is coddling dictators. So, understandably pissed, Brazil leaked excerpts of a letter Obama had sent to Lula weeks before the deal that suggested all the major accomplishments of the Brazil/Turkey deal (widely ignored in the US press). But what was really in this mysterious letter? Well, here it is, click it to get a larger view, or click here to view original. Bottom line: Brazil wins and the US needs a towel to get the egg out their eyes.

(h/t to Toma Rosa Bueno who posted a link to a facsimile copy of the original letter in the comments section of Robert Naiman's Huff Post smackdown of Friedman that maladjusted linked to yesterday)

Mockus goes all po-mo

2010-05-27T19:55:00.004-04:00

Ok, so we all knew Colombian presidential candidate Antanas Mockus has a background in math and philosophy, but who knew he'd turn out to be an avowed post-modernist too? Yes indeed, in a long interview in Spain's El Pais (spanish only), Mockus goes to great lengths to deconstruct the political dichotomy of "neoliberal" and "leftist," arguing that neither label suits him.

From the interview:

"Maybe I'm a bridge, maybe I'm someone heterodox with a vocation to pull together the fragments of various points of view. I have liquidated public entities, I have privatized, I have fired public officials and have been called a neoliberal. But I have raised taxes to an extent no neoliberal ever would, and I have defended public spending to promote equity. Labels are instructive but they can disguise many things. This might sound pretentious, but the new deserves a new name."

Might sound pretentious? Next thing we know he'll be quoting Derrida during his inauguration speech.

Ok, so it's not like he's the only post-partisan politician out there claiming to transcend ideological divisions. And there's certainly a nice ring to the notion that we should give up old ideological labels in order to simply govern pragmatically. But the belief that one has transcended ideology, to paraphrase the philosoher Slavoj Žižek, is the very imprint of ideological thinking.

Pseudo. Philosophical. Rant. Over.

Thomas Friedman SmackDown

2010-05-26T18:23:00.005-04:00

I'm down anytime someone lays the smackdown to Friedman, but this is exceptional, and follows an exceptionally heinous op-ed this morning. Thank god for FAIR:

Thomas Friedman is upset in his New York Times column today (5/26/10) because Brazilian President Lula da Silva negotiated a nuclear deal with Iran. Asks Friedman, "Is there anything uglier than watching democrats sell out other democrats to a Holocaust-denying, vote-stealing Iranian thug just to tweak the U.S. and show that they, too, can play at the big power table?" And he answers himself: "No, that's about as ugly as it gets."

Friedman quotes a source complaining that Iran had just executed "political prisoners who were tortured into confessions," but "didn't mention a word about human rights." Friedman presumably is aware that the U.S., too, has prisoners that it has tortured into confessions, and that it maintains the right to execute such captives. Should Lula have said a word about those human rights issues as well, or would that just be an attempt to "tweak the U.S."?

Friedman has another expert who accuses Lula of "the thwarting of democracy across Latin America." Friedman's evidence: "He regularly praises Venezuela’s strongman Hugo Chávez and Fidel Castro, the Cuban dictator...while denouncing Colombia, one of the great democratic success stories, because it let U.S. planes use Colombian airfields to fight narco-traffickers."

Please do click through and read the whole thing, the take town of Colombia as "one of the great democratic success stories" is priceless.

Also, for a more detailed, longer take down, see Robert Naiman in the Huffington Post. You want to see "ugly as it gets", watch this video of Friedman defending the Iraq War. Suck. On. This. Friedman.

Will the Real Dr. Doom Please Stand Up?

2010-05-26T17:47:00.004-04:00

...Up stands the plump, marshmallowy, Jackson Peep..more formally known as Jackson Diehl, member of the Washington Post editorial board. For a bit of background, we turn to one of Borev's final posts:

Followers of the Jackson Diehl oeuvre will remember that Chavez was totally on the cusp of being shitcanned two years ago over his economic policies. The polls said so! In November 2007 it was the HUMILIATION following dumb comments from the King of Spain that signaled his impending end. In March of that year the RCTV flap was going to do him in any day now. The polls, the polls! Those glorious/portentous/uncited polls!

Well, today we are treated with the latest installment, a Diehl blog post titled, "Hugo Chavez's implosion continues in Venezuela". It seems like we're back to the argument from two years ago...economic policies. And of course, we get more of "those glorious/portentous/uncited polls!":

The caudillo’s popularity rating around Latin American is now below 40 percent, and his backing in Venezuela has dropped below 50 percent.

Wow, below 50 percent...putting him in illustrious company with...Barack Obama, who we all know is facing his imminent demise!

Maybe next time we hear from Jackson Peep, when he writes the following he'll be referring to maladjusted:

When I pointed out back in January that Chavez’s revolution was collapsing, a chorus of left-wing bloggers rose up in protest.

(image via who else, Borev)

At Long Last....

2010-05-25T11:39:00.003-04:00

...Chavez has his blog. This should make for some fun. I guess the tweeter just wasn't enough....no character constraints here:

And so every blogger's dream has come true...

Juan Forero Part II: Redemption

2010-05-24T17:47:00.004-04:00

All I've got to say to Forero is, "Just when I think you couldn't possibly be any dumber, you go and do something like this…and totally redeem yourself!"

Well maybe not totally, but it is definitely a start. From today's Post:

Now a former police major, Juan Carlos Meneses, has alleged that Uribe's younger brother, Santiago Uribe, led a fearsome paramilitary group in the 1990s in this northern town that killed petty thieves, guerrilla sympathizers and suspected subversives. In an interview with The Washington Post, Meneses said the group's hit men trained at La Carolina, where the Uribe family ran an agro-business in the early 1990s.

Go read the whole thing as it is well worth your time. You can also read the Q & A with Meneses here.

On a related note, this has got to make Santos cringe, as it is exactly the type of revelation maladjusted previously referred to that could swing the election in favor of Mockus. I think it is still highly unlikely either candidate gets 50% plus 1 in the first round, and maybe this blows over by the second, but it can't possibly help. Not surprising that the Colombian government was quick to call out the Post for running the story so close to the elections.

Weekend Update

2010-05-23T14:01:00.004-04:00

Because ya'll don't want to spend your Sunday on the google....

The US is looking more and more ridiculous on the Iran sanctions front. After the deal brokered by Brazil and Turkey was announced last week, the US seemed visibly shaken. Ray McGovern, with the quote of the week, "Tellingly, U.S. officials and their acolytes in the Fawning Corporate Media (FCM) could not bring themselves to believe that Brazil and Turkey would dare pursue an agreement with Iran after Clinton and President Barack Obama said not to." Perfect example being the "announcement" of a sanctions package with support from China and Russia (unsurprisingly written by cold warrior David Sanger at the Times), which turned out to be mostly bullshit. Then yesterday we get the news from Brazil that the deal "contains “to a great extent” details outlined in a letter Obama sent to Brazilian President Luiz Inacio Lula da Silva two weeks ago, a Lula spokesman said, declining to provide any further description," this according to the AFP. This was front page news in Brazil, but barely registered in the English language media, surprise, surprise. Get used to it US, this ain't your daddy's global order.
From Colombia, polling is now done, and Otto has the rundown on what the final polls have to tell us. Nice pretty charts, so go check it out. Also, Adriaan Alsema from Colombia Reports has a terrific piece on how the momentum has shifted back to Santos with just one week before the election. Alsema brings up some of the points we did last week, including the over the top criticism of the left from Mockus. Fearless forecast: Santos gets 39% to Mockus' 34%. It all comes down to the run-off, where Mockus and Petro make nice and take Santos down.
Abiding in Bolivia seems like they're back for real, giving a nice news round-up on what else, Bolivia. I'd add that earlier in the week Evo reached some agreements with Norway, including a pledge from Norway "to share its expertise in the managing its oil and gas resources, including reducing the environmental impact of hydrocarbon production," according to EFE. Refreshing to see LatAm turn to the Nordic countries for development advice rather than the US.
Plan Colombia and Beyond is no more, but Adam Isaacson is over at the Just the Facts blog, and has his own weekend update. Unfortunately he links to the Juan Forero Washington Post article, which maladjusted covered here.
Upside Down World has an article from Alex Main on the rise of UNASUR. Key take away: "Though the group remains unknown to most of the US public - and is rarely referred to by US policy makers - it has, in the space of a few years, emerged as one of the Western Hemisphere’s leading multilateral bodies and, in the process, is rapidly undermining the regional clout of the Washington-based Organization of American States (OAS)." Truth.
In Venezuela, Chavez is saying that the power-rationing that has been necessary for the last few months is coming to an end...but where is Setty to tell us what is really going on??
Joe Berlinger at the very least bought himself some time after a judge ruled there would be a hearing on June 8 on turning over the 600 hours of footage that Chevron is asking for. I'm no legal expert, but it seems like a documentary should be as protected as any other journalistic work. Thoughts?
Its bicentennial time in Argentina, for those in the DC area the Smithsonian Latino Center has an exhibit on Argentina (pdf) that I haven't checked out, but hope to.
Venezuela made some moves in the parallel currency market, media analysis of the Venezuelan economy is generally shit, but this quote from an economist in an AFP article might be right on: "The government is attacking the consequences and not the causes of the problem." Its time to get rid of the fixed exchange rate, period. But as an example of the idiocy of Venezuela "analysts", a few days before the gov announced that the trading band for the Bolivar would not exceed 4.3, Dow Jones wrote "Analysts say the trading band in the unregulated market might stretch between VEF5 and VEF7 for $1 whenever the band is created." So close, yet SO FAR.
Two Andean bears at the National Zoo (check out the picture, damn they're cute) were named this week. Venezuela and Peru submitted names that then went to a vote. The female is Chaska, the male is Bernardo....also the name of the Venezuelan ambassador to the US...jus' saying...
Justin Delacour is back....sort of...and his recent post on Phil Gunson and the Venezuela coup is good and worth a read. Money line: "Never does it seem to occur to Gunson that to speak of Carmona "as a conciliator, as a man of consensus" immediately after explaining that he had just dissolved the Congress and the Supreme Court is grossly contradictory." Also, if this is what he came across working on his dissertation, then sign me up as someone interested in reading it.
I agree with Boz (somewhat surprisingly) that it is a positive that Calderon directly involved himself in US policy while speaking before Congress this week. Boz writes, "The hemisphere needs to get over the "stop interfering in my politics" mentality as a way to dodge criticisms. Many of these "domestic" issues actually have transnational effects and even ones that don't are worth discussing." Certainly immigration, drug reform, and gun laws have DIRECT consequences for Mexico, but when the US threatens TPS status for immigrants to influence elections or cancels climate aid for governments they don't agree with, it most certainly deserves criticism. To be fair, although it is just rhetoric, Chavez's comments on the Colombian election should be criticized as well. Although similar to how US comments during Evo's election only strengthened Evo, Chavez comments probably only helped Santos. On the other hand, given Santos' role in invading a foreign territory he very well might be a threat to the region. Boz may completely agree with all that, but there is a clear difference between the two types of "involvement" that he doesn't address.
A bunch on Honduras from the two best sources, Honduras Culture and Politics and Quotha. Something positive from Pepe "reconciliation" lobo, as he acknowledges what happened last June was a coup, and also urged the Supreme Court NOT to fire judges who opposed the coup. Meanwhile, Quotha has the latest on Eduardo Stein's whitewash trip to Washington, and an action alert from Quixote Center on recent death threats to independent presidential candidate and anti-coup bad ass Carlos H. Reyes. If your
interested in Honduras and your language of choice is English, these blogs are your must reads.
Nothing to link to here, but a few weeks back a good friend who is in El Salvador ran into some private military contractors while out on the town in the capital. They are apparently training some elite anti-gang units. They wouldn't say what contractor they worked for. Anybody have more info on this? Want to help find out what is really going on? Let me know in comments or over e-mail.

Enjoy your Sunday.

The Count

2010-05-21T23:23:00.005-04:00

0...

...is the number of consistent and up to date estimates of social mobility for Latin America. That's right folks, there's a real poverty of information out there and although the Count is an expert counter, he's having a hard time on this one.

Why social mobility you might ask? Well, as I'm sure you all know, Latin America has the worst income distribution in the world and if there's anything liberals like to tout it's that inequality is acceptable so long as there's social mobility. That is, who cares if there are tremendous gaps between the rich and poor so long as people born at the bottom are able to move to the top? (well, I do, but that's a different story)

In any case, last week the Count told us about the state of "human opportunity" in Latin America, showing us that although the region has a long way to go, most countries have made significant progress in achieving universal coverage of the most basic services children need in order to have an opportunity for success. But how does having access to basic services associated with "opportunity" actually translate into upward social mobility? In other words, it is one thing to have access to schooling, clean drinking water, etc. but quite another to actually be born poor and climb up the income ladder.

So instead of measuring access to services that are expected to create equal opportunity and lead to social mobility, as the World Bank's human opportunity index does, why not measure social mobility directly?

Well, because it is extremely difficult to get the data and especially so in developing countries. And even when we have good data, there are several conceptual challenges involved: do we care about intra or inter-generational mobility? (that is, changes in income within one's lifetime or from one generation to the next) Should mobility be defined purely in income terms or should it be defined using softer and often subjective variables like empowerment or self-worth?

On the data front the difficulties are equally large. To measure social mobility you need very detailed data sets that follow individuals through large chunks of time. In other words, you need to survey someone in their youth and follow up on them during their adult life. Any other approach would be a statistical abstraction. Also, to allow international comparisons it would be preferable to have comparable methodologies, something that is rarely the case.

And yet in spite of these tremendous difficulties, there are some estimates out there. The graph below is from a paper published by the World Bank in 2001 by Lykke Andersen. It's one of the few cross-country studies on Latin America out there.
Chile, Argentina, Uruguay and Peru come out on top with the highest estimated social mobility, while Guatemala, Brazil, Bolivia and Ecuador are at the bottom. Of course, these numbers are based on urban surveys and as such don't capture the whole reality of the countries in question, but they're nevertheless useful for broad comparisons.

But how does Latin America stack up against developed countries and in particular the US? This second graph below combines more recent and country specific estimates from Chile, Brazil and Peru with estimates for some developed countries.
In this case Chile, the UK and the US exhibit comparable levels of social mobility, which is either very flattering for Chile or very, very unflattering for the US and UK, the supposed bastions of liberal democracy and economic opportunity. Of course, note how far off these countries are from the more civilized nordic countries or Canada for that matter.

But it is worth mentioning that these numbers aren't comparable at all to the social mobility index in the previous graph--pointing to the shortcomings of consistent estimates noted above. Also, as someone who's lived in Canada, the US and Chile, I find these results very hard to believe. While the gap between Canada and the US makes perfect sense, such a small gap between Chile and the US is rather hard to swallow given the intense social stratification and pervasive class mentality anyone who's spent any time in Chile could tell you about.

Now, I'm obviously not saying this to defend the US, which clearly has very serious social mobility issues, but if these numbers come close to reality then Chile has made some serious social progress.

News and Notes on the Colombia Election

2010-05-21T19:11:00.003-04:00

Always a lot of coverage of the Colombian presidential election, and today is no exception, so here are just a few links to some interesting bits and pieces:

Al Jazeera has a video report up where Teresa Bo looks at how the false positive scandal is hurting Santos' campaign. She speaks with family members of the victims, as well as presidential candidate Rafael Pardo and researchers who claim that the killings continue.
La Silla Vacia looks at the internet campaign of Santos. The dirty tricks continue. They also note that yet another American is in on the campaign, Ravi Singh, who was the internet guru of the Obama campaign. Read the whole thing, they're really going all out. (via Colombia Reports)
More beef between Polo and Mockus. Mockus had said that nominating Petro was "a clear departure from the FARC", a slap in the face to the rest of the party. For some good commentary on alliances between candidates, check out Otto's comment here.
Want to know what regions support Santos? Semana has the answer. For full coverage of the elections, check out Votebien 2010.
Finally, some more polling. Everything is pointing to the race tightening back up as we get closer and closer. Still doesn't seem like anyone has a chance in the first round, things should get real interesting in the second.

Juan Forero, Chief Propagator

2010-05-20T20:55:00.004-04:00

Juan Forero, the Washington Post's resident LatAm ignoramus, goes all in today with his article about Chavez and ties to terrorism. There is really nothing new here; magic laptops, former FARC rebels speaking anonymously, and of course "Colombian government documents". No surprise that the article got Ray Walser's panties in a bunch.

A couple points though; first and foremost, why the fuck would anybody trust anything from the Colombian government? On the same day as Forero's article, Latin America News Dispatch has a terrific rundown on Colombia during the Uribe years and specifically the intelligence agency, DAS. One of the many issues raised being that "documents surfaced indicating that the DAS coordinated “political warfare” against government critics, by disseminating false rumors accusing them of connections with leftist guerrillas." And it gets even better, the article quotes from some files that were released recently, outlining how DAS planned on linking a certain group they didn't like to rebels:

The mission’s objective was to “establish ties” between the collective and the Ejército de Liberación Nacional (ELN), a guerrilla group. “STRATEGIES: Sabotage. ACTION: Exchange message with ELN leader, which will be found during a search of the premises.”

So it is public knowledge that the DAS actually tries to plant evidence, and then find it during raids on the camps. Sound familiar? It should, since it's the basis for almost all the allegations against Venezuela and Chavez.

So there are also former FARC rebels who spoke anonymously to Forero. But if this is such conclusive evidence of anything then why hasn't Forero written about the former DAS member Rafael Garcia who outlined how DAS coordinated with the Venezuelan opposition and Colombian paramilitary forces to assassinate Chavez. Or the former Army major who said there were some 2000 Colombian paramilitaries in Venezuela trying to topple the government.

Now, I'm not saying all these allegations are true, but that's exactly the point. Former members of DAS, just like former members of the FARC have plenty of reasons to say plenty of different things. But you'd never see the MSM air these types of allegations against Colombia, only if they fit the narrative of evil, terrorist supporting Venezuela. But maladjusted is hardly the first to notice this, just the most recent to point it out. For a much deeper look at the hypocritical coverage of Colombia vs. Venezuela, check out this FAIR study, or Kevin Young's take for Media Accuracy on Latin America. Young looks at how MSM coverage fits the Edward Herman/Noam Chomsky propaganda model, put simply:

The model predicts that the news media will look favorably upon the Colombian government of Álvaro Uribe, a close U.S. ally, while consistently vilifying the Venezuelan government of Hugo Chávez, whom the U.S. government frequently identifies as an antagonist. If the model holds, U.S. media outlets will be found to portray the Uribe government as relatively democratic, progressive, and peaceful, while casting the Chávez government as authoritarian, regressive, and militaristic.

Well, the model holds, and Forero is the chief propagator.

Where is Lat/Am Daily?

2010-05-19T23:30:00.003-04:00

That's what maladjusted would like to know. After triumphantly announcing his return, Lat/Am Daily's Peter Krupa seems to have, errr, disappeared again.

ECLAC: new report calls for pro-equality agenda

2010-05-19T17:58:00.003-04:00

A lot of commentators have said that the global financial crisis marked the end of the neoliberal era and the beginning of a new economic order. But now roughly two years after the onset of the crisis following Lehman's collapse, have any international institutions really started to define what this post-neoliberal economic agenda will look like?

Well, one international institution now seems to be taking the lead.

Yes indeed, maladjusted just so happened to get a sneak peek at a new ECLAC report set to be published during it's 33rd general session at the end of the month. The report, entitled The Time for Equality, is an ambitious document proposing a new economic, social and political agenda to fill the gap left by the collapse of neoliberalism's ideological hegemony.

To paint broad strokes, the report calls for expanding the role and mandate of the State, a return to active industrial policies, increased redistributive social policies and more progressive taxation, among other things.

From the draft report:

"A pro-equality public agenda should not be limited to leveling out opportunities. Rather the role of the State should be broadened to obtain more equal results and levels of well-being. The State and public policies should, therefore, play a decisive role in neutralizing the inertial power of inequality within markets and families."

I can't tell you how refreshing it is to hear an international economic institution break with the liberal discourse of leveled playing fields and social mobility to explicitly address the need for equality--not to mention calling for a concerted and actually substantial regional development agenda.

Weekend Update

2010-05-17T18:53:00.004-04:00

A day late, hopefully not a dollar short…on with it!

Big news out of Tehran as Lula seems to have come out on top in his push for dialogue over sanctions. Judging by the reaction in the West though, this was never about a deal, they want blood. Best coverage, unsurprisingly goes to Al-Jazeera, who also has the actual text of the agreement. For some good commentary check out Robert Naiman at Huffington Post. Special award goes to Hillary Clinton who was surpremely pessimistic about the whole thing last Friday…maybe she’s upset that all that sucking up she did hasn’t paid off.
From the blogosphere, Otto gives the rundown on what’s been kicking…giving due props to maladjusted’s better half. I’ll second the call for checking out Abiding in Bolivia’s music recommendation…in fact I’m listening to it while I write this. Otto also highlights the recent polling for Brazilian elections….Rousseff now in the lead.
In Haiti, Monsatan is establishing a presence in the country by giving some $4 million in seeds to Haitian farmers. They aren’t GMO supposedly, so that’s a positive, but as the AP writes, “The company said the seeds produce larger yields than non-hybrid seeds, but that with such a variety new seeds have to be purchased and planted every year.” Grrrreat. Good news though is that at least some Haitian farmers have committed to burning the seeds…take that!
On the “hopey and changey” front; Obama nominated another cold-warrior to a post at USAID. Mark Feierstein, who makes the seamless transition from Vice President of the international polling firm Quinlan, Greenberg, Rosner to Assistant Administrator for Latin America and the Caribbean. His bio on GQR actually brags that "While at NDI, Feierstein worked with the democratic movements that defeated...the Sandinistas in Nicaragua." He’s worked with the opposition in Venezuela and Bolivia as well. And just because we’ve plugged it before, doesn’t mean we won’t again…so to see what GQR did in Bolivia, go watch “Our Brand is Crisis”….NOW! For a post from a few weeks back about the movie that really made me chuckle, check out Jonathan Schwarz at A Tiny Revolution.
More on nominations from Tim’s El Salvador Blog, who checks out the GOP blockade on Obama’s nomination for ambassador. Apparently being questioned in the 1990s about a relationship with a Cuban is enough to kill your career.
Dominique Strauss-Kahn is heading to Latin America at the end of the month, as he described the region as “brimming with energy and promise.” Also on the IMF front, RAJ at Honduras Culture and Politics has a nice article on an upcoming IMF mission to Honduras and the balance between money and human rights.
From Swan’s Commentary, we get a nice long article from Michael Barker on “Imperialism And The Washington Office On Latin America”. This stems from an issue that was raised by Adrienne Pine, who took on the human rights organization over their actions regarding Honduras.
Speaking of Pine, she notes on her Quotha blog the ongoing victimization of the Resistance in Honduras. Two members of the Frente were killed last week after having participated in protests the previous day. Check out Quotha for all your Honduran needs.
Quick news round-up: The Nation takes a look at the crackdown in Rio in preparation for the Olympics, Mexican’s aren’t down on cell-phone database, and the US drug war has been a total, abject, utter and complete failure. Speaking of which, WOLA (those imperialist enablers mentioned earlier) has a brief out on proposed drug reforms in Ecuador. They’ve got some seriously draconian drug laws now, why? Put simply by WOLA, “Countries that adopted the “war on drugs” were rewarded economically and politically; countries that wavered were threatened with cuts in U.S. assistance and trade.” Truth, just ask Bolivia. (h/t Hemispheric Brief)
Reader and devoted commenter Paul Escobar links to an interesting and informative article on Cuban doctors from FT. Check it out.
Influential Colombian magazine, Semana, reports that the results of DAS spying and wiretapping were reported directly Uribe’s personal secretary. Although Uribe denies it, revelations like these will NOT help Santos’ presidential bid. (via Colombia Reports)
On presidents being shady as hell, Bananama Republic continues its great coverage of the scandal that’s got Martinelli’s panties in a bunch. Read all about it here, here, and here.
Finally, for those with some time on their hands, check out this presentation by Brazilian economist Maria da Conceição Tavares from CEPAL. The press release reads, “Markets were organized in not a very "canonic" form of capitalism, in an unsustainable manner, tied to ghost loans and toxic derived instruments that affected international lending and caused strong restrictions to financing.” Sounds like the world was pretty structurally maladjusted.

The Count

2010-05-14T19:18:00.006-04:00

24...

...is the average number of years it'll take Latin American and Caribbean countries to achieve universal access to the most basic human services. Or at least according to the World Bank's 2010 Human Opportunity Index Report.

That's right, the new Human Opportunity Index report is out and it's pretty safe to say that it's a development-minded nerd's wet dream. The HOI is essentially a measure of access to basic services, including education, housing, water and electricity, taking into account how equitably or fairly these are distributed. Or, in the words of the World Bank's poverty reduction director, Marcelo Giugale:

"What we are measuring here is: are the doors of development open to all before the game starts?"

Countries get positive scores for higher coverage rates but get penalized for the inequality of coverage. If a country has a decent level of access to education but the bulk of those excluded belong to a particular marginalized social group, the country would earn a lower HOI score than a country with a similar level of access but more equitable distribution.

As can be seen below, the countries in the region with the top HOI are, in order, Chile (95), Uruguay (92), Mexico (90), Costa Rica (89) and Venezuela (89). Honduras is at the complete opposite end of the spectrum, scoring a depressing score of 51.

[2010 Human Opportunity Index]

What's more, most countries have seen their HOI score grow significantly. Chile, for instance, went from 83 in 1996 t0 a score of 95 this year. The country with the fastest growing HOI, quite surprisingly, was Mexico, going from a low 65 in 1996 to its impressive 90 this year, an annual rate of 1.74.

Now this takes us to this week's count, 24, at the top. The average annual HOI growth rate for all of Latin America and the Caribbean is .99. At this rate it would take the region 24 years to achieve universal coverage of all the basic necessities, or an HOI score of 100. Put this way, the region still has a long way to go, despite all it's great progress lately (of course, this is based on the rather simple assumption that coverage increases linearly--at a steady rate).

But there's more sobering news in the report. The gap between rural and urban areas remains very large. What's interesting though is that this gap is smaller in countries with higher national HOI scores, suggesting the existence of what one might call an "opportunity spillover." Another thing to keep in mind is that Latin America and the Caribbean are still far from HOI levels observed in developed countries (with the exception of access to uncrowded living conditions in a few cases).

Also, the report decomposes the changes in the national HOI score into "compositional" and "scale" effects--that is, into how much of the change is due to an overall increase in coverage or to a fairer distribution of coverage. To quote the report:

"For all their efforts, LAC governments have, in general, not made much progress improving equity. Only a tenth of the average improvement in HOI is attributable to a fairer allocation of services, that is, to better social targeting of public expenditures."

In other words, most of the improvement in the HOI score is due to increases in the number of people covered, not the fairness of coverage. Moreover, this type of change can be in large part attributed to migration from rural to urban centers.

No Green Polos in Colombia

2010-05-13T19:24:00.011-04:00

Back in early April (when Mockus was polling under 10%), maladjusted pointed out that a recent political alliance between two popular mayors might just shake up Colombia's presidential elections....well that certainly has happened, as Mockus and Santos seem to be just about neck and neck in every poll and Mockus is now the favorite in a possible second round. But another part of the equation was whether or not support from the left was forthcoming, and now we seem to have an answer. After Gustavo Petro of the left-leaning Polo Democratico hinted at a possible second round alliance, Mockus had the cold water ready:

Colombian Green Party presidential candidate Antanas Mockus ruled out any partnership with Polo Democratico leader Gustavo Petro on Monday, saying that the Green's only alliance would be with "the people."

Prompting a Petro response via twitter (god damn the tweeter), "Good bye Mockus, we'll go it alone."

Really, this was probably a bigger deal before Mockus took off in the polls, and he probably is confident that he can win without Polo's support, but recent polling shows that it wouldn't be insignificant. According to the most recent poll from Datexco, Petro is now in third place with 7.5% of the vote, moving ahead of conservative Noemi Sanin. Mockus is no lefty, and he's largely toed the line in terms of backing "democratic security" policies, so maybe the alliance with Petro was never destined to be. But if Mockus does win the election he's not going to find a lot of love in congress, where the Green Party is not well represented, and if your going to reach out to someone it best be Polo over PIN. Of course, regardless of political alliances, left-leaning voters will have to choose between Santos and Mockus in a potential second round...not exactly a hard choice for the left, even if your not a big Mockus fan.

In any case lets take a look in chart form at the most recent polling from Datexco, via the irreplaceable Colombia Reports:

Consequences of default: Baker 1, Reinhart 0

2010-05-13T00:34:00.005-04:00

During a question and answer series about the Greek crisis on the New York Times economix blog, economic historian Carmen Reinhart warned about the possible consequences of a Greek default by comparing the situation to Argentina's default back in 2001.

Carmen Reinhart:

"Argentina’s economy contracted 20 percent in 2001 after its default, as it was shut out of international markets for a time."

And now, with Otto's permission, I will cue owly.

But why the owl you might ask? Well, it turns out, courtesy of Dean Baker's Beat the Press, that Reinhart's account of Argentina's foreign debt default might've been slightly off...

Dean Baker:

"Actually, Argentina defaulted at the end of 2001. According to the IMF, it's economy then contracted 10.9 percent in 2002. It then turned around and grew at an average rate of almost 9.0 percent in the next five years. No one has such an optimistic set of projections for the Greek economy right now."

Ouch! That's gotta hurt.

For those of you who don't know Carmen "prodigious data sets" Reinhart, she's an economist from the University of Maryland who's recently become quite famous for her work with Kenneth "obtuse math" Rogoff documenting financial crises. These two literally wrote the book on financial and sovereign debt crises--in their 2009 bestseller, This Time is Different: Eight Centuries of Financial Folly, Reinhart and Rogoff put together a data set dissecting crises as old as 800 years ago.

In any case, one of their findings is that throughout history sovereign debt crises usually follow banking crises. And it is no coincidence that Reinhart and Rogoff have been going around warning us that we should all be really, really worried about rising public debts now that the global financial crisis has ended.

Whatever. The point is that I find it surprising and disappointing for such a big name and no doubt an authority on the subject matter to get Argentina's story so wrong; especially since her academic work is usually of such high caliber (Reinhart has also made important contributions to the capital controls literature).

Some Surpringly Rational Thoughts on Bolivia

2010-05-10T14:18:00.005-04:00

The sky must be falling...it is really the only explanation for what follows, from the BBC:

A senior European Union official has said Bolivia has the right to nationalise companies as long as they are offered "fair compensation".

Kenneth Bell, the head of the EU delegation to Bolivia, said nationalisation was a sovereign right of the Bolivian government.

Whadda ya think? Bell gets canned within a week? Month? In all seriousness though, this is a pretty surprising statement from Bell, not often do you get rational comments like this on Bolivia. While Bolivia has been criticized for years about the nationalization policy, the fact is the country had the best growth in South American this past year, and has been able to use their natural resource wealth to try and better the lives of the many Bolivians who have long been excluded. So props to Kenneth Bell, who also noticed a key fact that those who have been critical of Bolivia often don't mention:

He also said that despite the recent nationalisations, European firms such as Repsol, Total, and British Gas remained active in Bolivia.

That's right, Evo is not scaring off foreign investment, his policies are sound and rational, and the macroeconomic management of the country has been truly remarkable (even the IMF thinks so)....and oh yeah...he thinks the US is a terrorist state and that capitalism is the " worst enemy of humanity". Suck it haters.

(image from eabolivia.com)

Weekend Update

2010-05-09T19:29:00.001-04:00

Chop, chop:

My favorite story of the week, Kanellos the Greek protest dog. Check out the photos from The Guardian. This dog is straight bad ass.
Also on Greece, and this at least somewhat relates to Latin America, they are facing some harsh austerity measures courtesy of the IMF (and EU) and are enslaved by a fixed currency...remind you of anything? Well it reminded CFK of something, who warned Greece about the draconian measures, "The recipes that are being imposed on Greece are identical to those that were applied here in 2001,"..."Savage austerity measures are going to be resisted,” she warned. “They are going to end badly." It may not be identical, but she wouldn't be the first to make the comparison. Meanwhile, a majority of Greeks support continued protests...
For those of you who haven't seen "Crude", you definitely should check it out. Tells the story of the $27 billion dollar lawsuit indigenous groups in Ecuador are fighting against Chevron. Well, Chevron has used every dirty trick in the book and this is just the latest; Chevron requested all 600 hours of footage related to the movie that producer Joe Berlinger had. Somewhat surprisingly, some judge in New York even granted the request, meaning Berlinger is likely to have to hand over all of his outtake footage. Check out CPJ for a nice comment on the situation.
In Honduras, after announcing the whitewash commission last week, Lobo decided against attending (was uninvited) to the EU-LAC summit in Madrid. If you'll remember, the same day as announcing the whitewash commission, several South American leaders pledged to boycott the summit if Lobo was there.
On the decision to boycott, Mexfiles gets its snark on: "Bloggings by Boz writes, “UNASUR countries threatened to cancel their meeting with the EU if Honduras was invited,” which he claims was learned behavior from the United States. Apparently, without Big Brother to the North to teach us to act like dickheads, we are unable to do it on our own."
Reuters decides to split Latin American into "good left" and "bad left", which is in and of itself bullshit, but the worst part; they fail to categorize Bolivia. It is excluded from the debate until the very end, where it is described as defying "the trend or any simplistic tags", thanks Reuters. I guess its hard to get on Evo, what with the best growth in South America and all. Otto, I am humbly serving up a steaming cup of STFU to Reuters' Andrew Cawthorne.
The US has named a new ambassador to their favorite client state in the region. I thought I would be happier the day they got rid of Brownfield, the guy who said Colombia "has been the most successful nation building exercise that the U.S.A. has associated itself with perhaps over the last 25-30 years," although I guess that's not really saying that much anyway. In any case, I don't know much about the new guy...but his expertise seems to be on Venezuela...not Colombia.
More on pot-smoking presidential candidates in Colombia....from the folks at the bipolar rodent....
On a more serious note relating to presidential elections in Colombia...first signs of a slight drawback in support for Mockus? Smear campaign working? New polls show tightening race in the first round....but still a Mockus win in the second. I think its more likely just coming back to earth a bit. Bad news? Shifty at the Monologue makes sense, for once...sorta...saying a Mockus presidency would make an FTA more likely. Can't say I completely disagree. Trojan horse with an Amish beard? I'm still rooting for him, I'm a sucker for Amish beards.

I'm sure there is plenty more...let me know.

Media ownership concentration in Latin America

2010-05-09T18:05:00.006-04:00

The Inter Press Service has a nice interview with Martín Becerra, an Argentina media researcher and co-author of the new book "Master of the Word: Media Access, Structure and Concentration in Latin America in the 21st Century." In the interview Becerra makes some good points on the concentration of ownership in Latin American media, pointing out its right-wing agenda and origins in the region's dictatorial past.

From the interview:

"This has a lot to do with the unequal societies we have built in Latin America, the most inequitable region on the planet. I believe that if control of the media was not so highly concentrated, the situation of inequality in Latin America would be more actively challenged."

Well said.

In any case, maladjusted got a little curious about Becerra's past work and dug up an article of his published through the University of Lima back in January. In the article, Becerra and co-author Guillermo Mastrini offer a quantitative account of media ownership concentration in Latin America. The countries included in the study are Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.

The study uses the so-called "CR4" (four firm concentration ratio) methodology, a well established index used in competition theory. The index basically adds together the market shares of the top four firms in a given industry, producing a value between 0 and 100. A value of 0 would denote an industry with perfect competition or no ownership concentration while a value of 100 would mean an industry is oligopolistic or extremely concentrated.

[Market share of the top 4 firms by industry, 2000 and 2004]

As can be seen above, the results for Latin America in 2000 and 2004 aren't exactly flattering. As a regional average, virtually every media/communication industry exhibits very high levels of ownership concentration, levels high enough to be considered oligopolistic. What's most disturbing is the huge jump in concentration for the radio industry, increasing from 31% to 70% between 2000 and 2004.

It is somewhat reassuring to see concentration decline in broadcast and cable TV, from 96% to 92% and 96% to 80%, respectively (can't wait to see an updated version of this study to see if the trend continues). However, before we cry from joy we should keep in mind that these numbers are still quite bad.

Judiciary shadiness in Honduras

2010-05-08T11:40:00.003-04:00

The AP reports that the Honduran Supreme Court has just dismissed 4 judges and a public defender who were critical of the coup against Zelaya. That's right, this is the same Supreme Court that ruled that storming the presidential palace and kidnapping the president while still in his pajamas constituted a legal constitutional succession.

In any case, head on over to Honduras Culture and Politics for its usual great coverage and analysis of the situation. With no value-added to contribute, I urge you to click on the link.

The Count: friday FDI wonkiness

2010-05-07T17:25:00.009-04:00

40 to 50...

...is the percentage that foreign direct investment (FDI) to Latin America is expected to grow in 2010. After contracting sharply between 2008 and 2009 during the world financial crisis, FDI is expected to make a big comeback this year due largely to stronger than anticipated recovery across the region. Or at least according to Eclac's new annual report on FDI.

The climate of uncertainty, tight credit conditions, falling commodity prices and recessions across the world that followed Lehman's collapse caused FDI flows to Latin America to shrink a whopping 42% from 2008 to 2009. The biggest contractions, predictably, took place in countries that in the past have attracted the most FDI. For instance, flows to Brazil shrank $19 billion, a 42.4% decline. In Argentina, FDI flows contracted by $4.8 billion or by 49.6%.

But while in almost every country FDI, though slowing significantly, was still coming in, in Venezuela FDI just wanted to get the fuck out. In 2008 FDI inflows to Venezuela were just barely positive. And during 2009, Venezuela experienced net FDI outflows of $3.1 billion, a 990% decline! This was due mostly to the various nationalizations that took place in 2009.

But before we predict doom and gloom for the Venezuelan economy, we should remember that it's not exactly Greece, has plenty of oil cash lying around, and just signed a $20 billion deal with China to develop it's heavy crude refining capacity.

Whatever. In any case, the regional decline is indeed quite impressive. But why don't we put it in perspective? The graph below shows FDI flows to Latin America and the Caribbean between 1990 to 2009 in billions of dollars.

As can be seen, the lead up to the 2009 crisis was nothing short of an FDI bonanza. In fact, 2007 and 2008 were historical records for FDI. And even after its huge decline, FDI inflows in 2009 were still the 5th largest ever recorded. In other words, FDI flows to Latin America have wethered the crisis quite well, all things considered.

On a compositional note, the sharpest decline between 2008 to 2009 was in FDI flows to natural resource extraction. As can be seen below, this surged in 2008 coinciding with the large worldwide rise in commodity prices. The share of the service sector, the largest recipient of FDI, remained more or less at its 2008 level.But while FDI flows to the manufacturing sector retook the second place, its technological content remained weak. Moreover, Eclac notes that the technological content of FDI to Latin America has been low accross the board. This takes us to our final graph:
The graph above divides all announced FDI in Latin America into "low", "medium-low", "medium-high", and "high" technology content. As can be seen, low and medium-low dominate new FDI inflows.

This is a big problem because one of the biggest supposed benefits of FDI in textbook economic theory is that it transfers technology to developing countries, leading to positive "spillovers" into other industries and thus increasing overall productivity. Of course, no one seriously believes that FDI in and of itself leads to technology transfers and productivity growth. Smart developing countries, like China for instance, have always used industrial policy to harness FDI to suit their development strategies. It's a real shame that so many countries in Latin America have abandoned this type of thinking.

Smear Campaign in Colombia

2010-05-05T18:47:00.004-04:00

Man, Santos sure is getting desperate. Colombia Reports writes today about the increasing use of smear tactics in the Colombia presidential campaign, "As Green Party candidate Antanas Mockus' popularity increases, so too do the attempts to sully his name." Last week banners started appearing with slogans criticizing Mockus, trying to tie his campaign to Chavez. CR continues:

Votebien political analyist Rodrigo Lozada says that the tactics seen today in Colombia "were copied from the campaigns in the United States. The idea is find the opponents' weak points, exaggerate and distort them, to make them look bad before society."

Maybe not such a surprise, given James Carville's role in the campaign...a smear campaign in Bolivia led to the election of Goni...another one of Carville's campaigns. But there is another political consultant who showed up in Colombia in recent days that probably better explains the situation, CR has the dirt:

Santos has relaunched his campaign strategy with Venezuelan spin doctor J.J. Rendon at the helm. Rendon has been called an "expert in rumorology" and 'the king of 'black' propaganda." In 2007 the Venezuelan publicist was almost deported due to accusations that he had blackmailed Congressman Nicolas Uribe by threatening that he would publish photos of the politician cavorting with prostitutes if Uribe didn't fire a certain employee. Uribe resigned from the Partido de la U campaign in protest when Santos contracted Rendon.

Since Rendon's arrival on the scene, a pro-Santos website has been launched, which attempts to discredit Mockus. The same banners that appeared in Cali are published on the website, along with videos and a cartoon depicting Mockus as Chavez's buddy. Again the inference is that Mockus is pro-Chavez atheist, who plans to extradite President Uribe.

Ah yes, Rendon (the one between Lobo and Uribe in the pic above)...who you might remember led the voter fraud charge in Venezuela in the 2004 referendum. Rendon also ran the campaign of former Venezuela president Carlos Andres Perez (eventually arrested for stealing public money) back in the 1980s, as well as doing PR work for Venezuelan defense ministers....ya know the defense ministers who killed hundreds of civilians during the Caracazo. He is especially notorious in Mexico, where, as Al Giordano pointed out, he was implicated in eight different criminal cases in 2001 for "printing anonymous propaganda… in which the proposals of the PAN party candidate for the mayoralty of Puebla, Luis Paredes Moctezuma, were distorted." Recently, he was seen shaking hands and advising Pepe "reconciliation" Lobo in Honduras. Sure is some good company Santos is keeping these days. Already since he joined the campaign, three of Santos' closest assistants have left the campaign, probably not too excited about cavorting with someone with such a lovely past as Rendon.

I don't think this is going to cut it though. His presence has already gotten a ton of press in Colombia and throughout the region, and its not exactly a secret what a slime ball this guy is. If Mockus is popular because he represents a change from "politics as usual", then a "politics as usual" smear campaign is not going to do the trick. Nice try Santos.

The Whitewash Commission

2010-05-04T19:45:00.012-04:00

So today Pepe "reconciliation" Lobo and the rest of the golpistas unveiled their latest attempt to whitewash the coup. While the US, UN, and OAS were all holding hands and singing kumbaya, patting themselves on the back for a job well done...Honduran human rights organizations, and South American leaders were taking a stand. Bertha Oliva, head of the prominent rights organization COFADEH, wrote:

Now the Lobo government, in an effort to regain international legitimacy, is creating a Truth Commission, an initiative that is being applauded by the United States administration. Yet COFADEH and the other Honduran human rights defenders who have spent much of our lives calling for a truth commission to investigate past political violence are not applauding. We are protesting.
The fact is, Lobo's proposal in no way resembles our idea of a truth commission, or indeed any other truth commission that has played a role in healing the wounds provoked by repressive regimes, such as those of El Salvador, Argentina or South Africa. If we were not dealing with such a tragic situation, the Lobo proposal could be considered laughable.
To begin with, this so-called Truth Commission has been given no mandate to examine the human rights violations that have taken place since the coup. The presidential decree that establishes the commission does not even recognize that a coup took place on June 28th and makes no mention of the victims of the subsequent repression.

And that's certainly just the surface of it all. Honduras Culture and Politics notes that more so than truth, what it's really about is business; the coup cost Honduras a cool 6.6 percent of GDP. Not exactly disproving the theory, Rights Action reported a few days back that one of the members of the commission is a Canadian lawyer who also represents Canadian mining interests. If you remember, mining companies weren't exactly the biggest "Zelayistas".

Meanwhile, UNASUR was holding a meeting today, where among other things, several countries pledged not to attend the EU-Latin America & the Caribbean Summit in Madrid if Lobo is invited. A pretty clear stand against the US' position, also coming as the regional grouping picked their first Secretary General, Nestor Kirchner. In case you needed more evidence of the waning influence of the US in the region.

Oh and for good measure, the Committee to Protect Journalists issued a statement today about a string of death threats against Honduran journalists...who happened to be reporting on the killings of other journalists...ya know, since there has been at least six of 'em murdered since good ol' Lobo took office...how's that for "reconciliation"?

(photo of May Day celebration in Honduras, via Quotha, via Mario Ardón Mejía...check it out)

Investor-state lawsuits related to mining and hydrocarbons on the rise in Latin America

2010-05-03T16:57:00.008-04:00

The Institute for Policy Studies, a lefty think tank based in Washington, DC, has a new report on international arbitration related to mining and hydrocarbon investments. Mining for Profits in International Tribunals, authored by Rebecca Dreyfus, Sarah Anderson and Manuel Perez Rocha, details how Latin America has been hit the hardest by the rise of investor-state lawsuits.

As the Count told us back in march, international corporations have been increasingly using provisions contained in Bilateral Investments Treaties (BITs) and Free Trade Agreements (FTAs) that allows them to sue governments for policies that might impact their bottom line. In other words, corporations can seek compensation for policies that, say, seek to mitigate the environmental and social consequences of resource extraction. These investor-state provisions allow corporations to bypass domestic courts and sue governments in the secretive and notoriously scummy International Court for Settlement of Investment Disputes (ICSID), housed at (where else?) the World Bank.

Never mind the irony of housing a supposedly unbiased court of law in an institution known for prioritizing corporate interests.

One recent case at ICSID pits tobacco giant Phillip Morris International against the government of Uruguay for strengthening health warnings on cigarette packages. A few months ago Uruguay introduced a new law raising the portion of cigarette packs that had to feature health warnings. Phillip Morris considered this detrimental to its bottom line and took advantage of investor-state provisions in the BIT between Uruguay and Switzerland (where Phillip Morris International is based) to demand compensation for lost profits.

But suing for public health measures is only one example of how investor-state mechanisms are being used to fight public interest policies. According to the report, the last decade has seen an explosion in investor-state lawsuits related to natural resource extraction:

"At the most frequently used tribunal, the International Center for Settlement of Investment Disputes (ICSID), there are 128 pending cases. Thirty-two of these cases are related to oil, mining, or gas. By contrast, ten years ago, there were only three pending ICSID cases related to oil, mining, or gas. There were only 7 such cases filed during the entire decades of the 1980s and 1990s."

What's more, Latin American governments have been disproportionately targeted. The pie chart below shows all mining, oil or gas cases currently pending in ICSID by region. As can be seen, cases against Latin American governments overwhelmingly outweigh every other region of the world.

As the report notes:

"Latin American governments make up about 9 percent of the 155 ICSID member governments. And yet they are the targets of 70 (55 percent) of all ICSID cases and 21 (nearly two-thirds) of the 32 extractive industries cases."

But don't listen to me. Go read the report yourself and find out about loads of more interesting stuff on the subject, including the history of investor treatment in Latin America and a few good case studies worth checking out too.

Weekend Update

2010-05-02T20:52:00.004-04:00

It's late and I'm sunburned, so let's get to this:

First off, merry May Day to all. Workers in Venezuela were treated with a 15% increase in the minimum wage, while in the US it was certainly a big day after that racist, fascist bullshit Arizona law. But maybe not as big as in Honduras...read about it (and see the pics) from the irreplaceable Adrienne Pine at Quotha...more here.
For what's been going on in ye ol' blogosphere, check out Otto while he plays catch up...we missed you...
Does anyone else think this Chavez tweeter thing has been pretty boring?
While we're on the internet in Venezuela, Chavez continued his crack down on the web. He's gone so far that, as Reuters says, "Internet use has blossomed in Venezuela during his 11-year rule, especially among the poor." Wait, whaaaaat?
Remember how the US was all like "we support democracy in Honduras", well I guess enough time has passed now. Ambassador Llorens talks some trash about Zelaya...revealing what we already knew...the US didn't give a shit about "democracy" in Honduras, they just didn't want to look bad. Again, Quotha is on it.
In Ecuador, Correa is planning on tapping Central Bank funds for development projects...good for him. "Why does a central bank that doesn’t even have a national currency need $2 billion in capital," Correa said. What's with autonomous central banks? Autonomous from what? Democracy?
Evo nationalized some power companies....and the sky hasn't started falling yet, but don't expect "experts" to stop saying it will. Not like Bolivia had the best growth in South America last year or anything...
Colombia presidential candidate admits to poking smot in college....the surprising part, it wasn't this guy.
Setbacks for delayed justice...Brazil holds up amnesty law, Peru just goes ahead and lets murderers off the hook...
Finally for some entertainment....Like graffiti? Check this out. My favorite, what's yours?

In solidarity,

Structurally Maladjusted

Piñera's honeymoon coming to an end

2010-04-30T23:36:00.006-04:00

It seems Piñera's honeymoon is ending. Yesterday the polling company Adimark released it's monthly government approval poll, showing a small two point decline in Piñera's approval rating. Of course, this decrease is within the 3 point margin of error, but Piñera's rate of disapproval has shot up 13 points since last month, reaching 31 percent.

One odd result from last month's poll was that the overall government received a much higher approval rating than Piñera personally, 60 percent vs. 52 percent respectively. This result was in part attributed to public perceptions regarding his, at the time, unresolved conflict of interest due to the delayed sale of his LanChile shares. Well now, however, the approval rating for the government as a whole has dropped 9 points to 51 percent, more or less matching Piñera's own rating.

But what accounts for the precipitous drop? As can be seen below, much of it is explained by public perception of the government's handling of the earthquake. The left side shows approval to the government's help towards earthquake victims and the right shows approval of the reconstruction effort.

[Independently of your political orientation, do you approve or disapprove of the way Sebastian Piñera and his government are handing the following problems related to the earthquake?]

An interesting thing has also happened during the last month regarding the income demographics of his support: it has fallen among the wealthiest and registered a small increase among the poorest (though the latter is within the margin of error).

Now, all in all these results are still obviously quite good, reflecting the fact that so far Piñera has actually done a pretty decent job all things considered, contrary to the left's fears. Obviously, experiencing one of the largest earthquakes on record might change your political agenda slightly and prompt some to govern more pragmatically. But nevertheless, Piñera the consummate businessman deserves some credit. Who would've expected the business presidency to talk about increasing mining royalties, raise corporate taxes and raid the military's trust fund, even if it's to pay for the reconstruction?

The Count: Cuban edition

2010-04-30T15:55:00.006-04:00

[Editor's note: Wow, the Count has certainly been traveling a lot these past weeks! After going to China to investigate it's commercial ties with Latin America and flying to Europe to ask pissed off Greeks in the streets about their opinions of the IMF, the Count has finally come home to the Western Hemisphere. But without further ado, maladjusted brings you this week's Count.]

78.6...

...is the number of years the average Cuban is expected to live (unless they live in Miami, in which case all bets are off).

The current issue of the prestigious Science Magazine features an article (sorry, subscription-based) on the quality of health care in Cuba since Castro took power. We've all heard of Cuba's health care before, but now it turns out Michael Moore was right...according to scientists! In all seriousness though, Cuba has managed to achieve first world health levels on a third world budget and all while enduring the U.S. embargo, which restricted medicinal imports. From the article:

"Despite the embargo, Cuba has produced better health outcomes than most Latin American countries, and they are comparable to those of most developed countries. Cuba has the highest average life expectance (78.6 years) and density of physicians per capita (59 physicians per 10,000 people), and the lowest infant (5.0/1000 live births) and child (7.0/1000 live births) mortality rates among 33 Latin American and Caribbean countries."

Not bad. Not bad at all. The graph below shows average life expectancy in Cuba, Latin America, Canada and the U.S. Notice how fast average life expectancy increased and caught up to U.S. levels after the revolution. Since then, Cuban life expectancy has more or less been on par with that of the U.S. except for the period after the collapse of the Soviet Union, when aid to Cuba contracted sharply.
But how did Cuba achieve such good results in the face of the embargo while at the same time spending far less per person than the U.S. and most European countries? The article explains:

"Cuba has one of the most proactive primary health care systems in the world. By educating their population about disease prevention and health promotion, the Cubans rely less on medical supplies to maintain a healthy population. The converse is the United States, which relies heavily on medical supplies and technologies to maintain a healthy population, but at a very high cost."

Another side of the story, the article notes, is the government's emphasis on community access to health care and deliberate policies to tailor each local practice to the health profile of the community it serves. This, combined with universal coverage and free service, explains a lot of the outcome. To this I would add a more broader point: government priority. Specific strategies aside, what is most striking about Cuba's health outcomes is that no matter how many obstacles a country faces (such as, for instance, fending off the most powerful country in the world for five decades) it can provide free health care to all its citizens so long as it prioritizes their well being.

There's a lesson to be learned somewhere in there me thinks.

Paramilitary violence in Oaxaca

2010-04-30T14:59:00.003-04:00

So this news has slowly made its way into the press...and there is not a lot maladjusted has to add other than pointing those who want updates from the ground from someone much better informed than maladjusted, to Kristin Bricker at My Word is My Weapon.

Check it out.

Mockus good for business?

2010-04-29T22:24:00.002-04:00

So maladjusted hasn't done any scientific study on this, but the guess is that most casual observers would think the Colombian business community will support Santos in the upcoming election. It's not like Mockus' rise in the polls is rattling the markets or anything like that, but business generally likes continuity (and right wingers), not newcomers who dress up in super hero costumes and dispatch mimes to ridicule traffic violators. That said, one thing businesses like even more are profits. Currently, exports to Venezuela have collapsed (due to some testy relations, we'll say) and while the US has graciously stepped in (see the graphs below), the fact remains that Venezuela is right next door and even though they are pushing an FTA with the US, does Colombia really want to be EVEN MORE dependent on the US (just look at Mexico).

According to Reuters, "Colombia says the trade conflict could trim around one percent off its economic growth this year." That ain't no joke, especially not when your coming off this past year. The article also mentions that Colombia has relatively few exports to China compared to the rest of the region. So maybe to the extent that China takes the place of Venezuela that could be a good thing, but it seems the US is picking up most of the slack.

So this is where Mockus' statements about Venezuela come into play. During the presidential debate the other night Mockus stressed the need to separate relations with Venezuela from those with the US. This would be a serious break from the Uribe years in Colombia, where it seemed like their privileged relationship with the US was always put before everything else. Given that Colombia's neighbors aren't too thrilled with Santos, it seems pretty clear that Mockus would be the candidate most likely to repair relations with Venezuela and Ecuador. And who stands to benefit the most from that? Colombian exporters...

So maybe I'm over estimating the effect this is having, and how important this is for Colombian businesses (in which case let me know). Regardless, from everything I've read Mockus' economic policies would not differ much from Santos, and in any case it would be hard to argue that better regional relations would be a BAD thing for business.

(all images courtesy of Colombia's DANE)

How to buy access to the US congress, example # 23,113

2010-04-29T21:19:00.003-04:00

This is about as unsurprising as it gets in Washington, but never the less worth noting. (even though the story is a week old..must have never hit post...my bad) Congressional slime and right-wing zealot Ileana Ros-Lehtinen is facing some heat over possible ethics violations. Not sure what the fuss is about, I mean it's not like the top Republicant on the House Foreign Affairs Committee sent out an email with the subject line:

“Ros-Lehtinen invites YOU to join her Foreign Affairs Advisory Board.”

Wait, she did? Holy shit! And all it takes is the $2,500 cover to attend an “intimate dinner”? Not a bad deal really.

Unfortunately (since I was definitely going to try and infiltrate her advisory board), the whole thing prompted accusations that this somehow violated ethics rules…as if ethics rules actually existed in Washington…and she canceled the whole thing.

For those who don't know much about Ros-Lehtinen, she is the worst of the worst when to comes to US foreign policy in Latin America. For instance she has been the main protector of the terrorist Luis Posada Corriles, while at the same time trying to put Venezuela on the list of state sponsors of terrorism. Most recently she was an ardent supporter of the military coup in Honduras, even heading down there for some nice photo-ops with the golpistas (pictured above, taken from her website under the section "Dignitary Meetings - Western Hemisphere").

Noriega is "sick"

2010-04-29T17:41:00.003-04:00

According to a lawyer representing Noriega, the former dictator of Panama is not in the best physical health. As maladjusted's readers probably already know, Noriega was extradited to France a couple days ago after serving a 17 year sentence in Miami. He now faces money laundering charges for allegedly using drug money to buy luxury apartments in Paris (Noriega's defense is, quite plausibly, that he paid for those apartments with CIA cash instead).

Pardon my cynicism--yes, Noriega probably is an ailing old man--but it looks like his defense team is gonna try to pull a "Pinochet in London" and attempt to have him released on humanitarian grounds. As some of you may recall, Pinochet was arrested back in 1999 while he was in London getting medical treatment because of an extradition request from Spain. Long story short, after a protracted legal battle, it was determined that Chile's ex-dictator was unfit to stand trial due to his ailing health condition.

Well, just watch the video below to see how that one turned out. Upon returning to Chile, Pinochet--supposedly too sick to stand trial--surprised his welcoming crowd by immediately standing up from his wheelchair and proceeding to practically dance the damn cueca (Chile's national folk dance).

Ok, so maybe I exaggerated a bit on that last one. But the point is that the supposedly ailing dictator was certainly in far better health than it appeared. And, more importantly, putting on that little act allowed him to avoid prosecution for human rights abuses.

Now, this little blast from the past aside, if his defense succeeds in having his case thrown out in France, Noriega will probably face extradition back to Panama to serve more time there. But should we care where Noriega goes to jail next? Unlike in France, if extradited to Panama Noriega would have a chance of serving his sentence under house arrest. On the other hand, it seems more fitting for an ex-dictator to serve his sentence in his own country where he committed his crimes.

National security fantasies--Venezuela and Iran

2010-04-28T09:14:00.007-04:00

Last week the idiots over at the Center for Security Policy, a Washington, DC-based think tank, sponsored a briefing in the U.S. Congress on the growing threat to U.S. national security posed by Latin America and Venezuela in particular. The event featured a well-rounded panel of paranoid delusional right-wing douche bags, including the one and only Otto "ignoramus" Reich and the illustrious Republican Rep. Ileana "bat shit crazy" Ros-Lehtinen, the ranking member on the House Foreign Affairs Committee.

According to this panel of experts (i.e. dumbasses who told their unpaid interns to google the words "Iran" and "Venezuela"), "Chavez’s expanding ties with Iran and Hezbollah and other terrorist groups" represents a "growing threat" to U.S. national security. You see, these experts had "evidence" and they "cited" it. And by "cited" I mean they simply assured the audience of its existence.

Well, while we're on the topic of "evidence", General Douglas Fraser, the commander of the U.S. Southern Command, had this to say yesterday:

"We see a growing Iranian interest and engagement with Venezuela. ... It's a diplomatic, it's a commercial presence. I haven't seen evidence of a military presence."

Whatever. The briefing's write-up gives you a good sense of the level of paranoia in that room last thursday. One fella by the name of Norman Bailey, commenting on Iranian industrial investments in Venezuela, stated:

“The tractor factory doesn’t make tractors, and the cement factory doesn’t make cement. The tractor factory makes weapons, and the cement factory is used for the export of cocaine.”

This guy was also extremely concerned about non-stop, 24/7 flights between Tehran and Caracas, which apparently “are permanently full."(!) He also claimed that Iranian experts have installed mines in Venezuela's major ports and refineries in anticipation of a U.S. invasion.

And these were only some of the claims made during the briefing that made it into the Center for Security Policy's website. But fortunately, maladjusted just so happened to be on the scene and had the (dis)pleasure to witness the panel's other dumb claims:

Iranian missionaries are converting entire indigenous tribes in Venezuela to Islam (oh the horror!).
Iran's nuclear program=nukes in Venezuela.
Islamic/Bolivarian-Communist drug traffickers could (will?) blow up the Panama canal.

Yes, yes. This would all be absolutely hilarious if it wasn't also dangerous. Believe it or not, people actually listen to these idiots! What's more, they react aggressively when confronted about their so-called evidence. Reporters from Telesur were at the event and asked the panel if there was enough evidence to justify their militaristic tone--noting that it all sounded very much like during the buildup to the invasion of Iraq, when the case for war rested on made up evidence about WMDs.

Of course, Otto Reich considered this type of questioning "harassing" and threatened to have the reporters removed from the room after verbally attacking them. The other panelists were only marginally more gracious, some managing to mumble something about the Reyes laptops proving all their claims conclusively.

In any case, the point is that these people can't be reasoned with and their paranoid national security fantasies are dangerous. These people, no matter the claims to the contrary, have not shaken off the Cold War mentality. During the event Otto Reich warned, and I quote, of Venezuela's "military buildup financed by the Soviet Union--oops--I mean Russia."

I don't care what your opinion of Chávez is. You can hate him and think he's a populist-whatever for all I care. But influencing the foreign policy of the world's most powerful nation through fear mongering and imagined threats most certainly makes the world a worse place.

RANT. OVER.

Update:

I seem to have written virtually the same post as Setty's Notebook, although far less seriously than he did. Boz seems to have also chosen to write about this in a more serious tone than yours truly. I commend both of you for having the restraint to write about this bullshit without resorting to mockery and insults as I did.

Obama speaks with Pepe "national reconciliation" Lobo

2010-04-26T22:10:00.004-04:00

Why am I not surprised. Today Obama spoke for the first time with all around asshole Pepe "national reconciliation" Lobo. You see, although Obama is concerned about those recent "suspicious" murders of journalists (you know, the ones Lobo and his supporters couldn't possibly be involved with), he's nevertheless pleased with Lobo's great job promoting national reconciliation and all that democracy stuff. From the whitehouse press statement, via politico:

"The President commended President Lobo for his leadership in his first months in office in promoting national reconciliation and restoring democratic and constitutional order in Honduras. The President took particular note of the Truth Commission agreed to as part of the Tegucigalpa-San Jose Accord and championed by President Lobo that is set to begin its work in the coming days.

President Obama expressed his concern with the human rights situation in Honduras, particularly the recent suspicious killings of a number of journalists and civic activists. The President welcomed President Lobo’s plan to fully and transparently investigate these cases as well as his commitment to improve the overall human rights situation."

Paul Schäfer--nazi, pedophile, murderer--was buried today

2010-04-26T21:21:00.007-04:00

Chile's La Nación today reported on Paul Schäfer's humble funeral in Santiago's parque del recuerdo cemetary. For those of you who don't know about Schäfer's comic book villain level of evil and the dystopian nazi cult community he ruled with an iron fist in the south of Chile, Colonia Dignidad (dignity colony), I recommend this great article.

Schäfer's story is so over the top and bizarre it's hard to convey without sounding made up. Long story short, he founded the Colonia Dignidad in 1961 after he was forced to flee his native Germany due to child molestation charges against him. The colony became a utopian German enclave isolated from the rest of Chilean society. It's members, known as colonos, dressed in traditional bavarian peasant garbs (no joke) and were completely beholden to Schäfer's rule.

Rumors of strange happenings, including rampant child abuse, have been common throughout the colony's history but it became most infamous during the Pinochet dictatorship. Schäfer gave the DINA (Pinochet's secret police) access to the colony's facilities to torture and murder political dissidents. According to victims who claim to have been tortured in the colony, Schäfer himself sometimes participated in the torturing and even trained the DINA in interrogation techniques.

At the time of his death, last saturday, Schäfer was serving a 20-year sentence for child molestation. However, charges related to kidnappings, arms trafficking and human rights abuses were pending. To this president Sebastian Piñera commented:

"The death of Paul Schäfer prevents the continuation of penal prosecution, because there isn't penal persecution in this world for the dead. However, we all know that there's a justice that never ends, and that's divine justice."

Well put. And this is certainly one of those times when I wish I believed in divine justice.

Quote(s) of the Day

2010-04-26T17:46:00.003-04:00

First, from Miguel d'Escoto the former President of the UN General Assembly on the US' role in the region, via Democracy NOW!:

We need the United States as much as we need arsenic, and that is the fact. We don’t need it. We would need it, if they wanted to join the rest of humanity and together work for a better future for all of us, but they are not doing that. They are instilling, they have instilled, a culture of death, of greed, of selfishness. And this is killing the world.

Word. And secondly and more comical, from Colombia presidential candidate and former Defense Minister Juan Manual Santos, describing the differences between him and Antanas Mockus, via Colombia Reports:

"I am different from him in many ways. Firstly, I shaved off my beard. I believe in God. I believe in having an army."

My preference is for beards...and atheism and no army for that matter...

More IMF public support for capital controls

2010-04-25T18:54:00.003-04:00

Following up on maladjusted's weekend update, Nicolas Eyzaguirre, the IMF's top guy for the western hemisphere, said yesterday that the Fund supports the use of controls on capital inflows to prevent unwanted currency appreciation and potential overheating. Now, this isn't breaking news, but it's certainly nice to see someone high up reiterate this position, especially after the Global Financial Stability report released a couple weeks ago seemed to backtrack a bit.

In any case, Mr. Eyzaguirre had this to say:

In some cases, exchange rate flexibility, good fiscal discipline, and a prudent set of macro prudential policies, may not be enough to avoid an over-expansion or a potential bubble. Thus, we do not bar or disapprove the potential contribution of carefully designed taxes on capital inflows that may have a role in complementing the policy toolkit—although we should always bear in mind that these kinds of more orthodox responses do have their limitations.

And he should know too, having worked at Chile's Central Bank during the 1990s when the country implemented its own well known capital controls.

The IMF's new position on capital controls is by no means groundbreaking. It actually follows the consensus in the academic literature quite closely and can essentially be summed up with this nice flow chart (click to enlarge):

If you face a surge of capital inflows (as many developing countries are facing today due to low interest rates in the north) you should first consider if your currency has room to appreciate. If this isn't the case, then you should consider if reserve accumulation is desirable and if inflation is a problem, then you should attempt sterilization. But sterilization can prove too expensive, in which case capital controls become a useful policy option. Of course, if inflation isn't a problem you can just lower interest rates to discourage the inflows from coming at all.

This is all very right, but there are certainly a lot of caveats in the IMF's position--enough to make one wonder how often the Fund will actually recommend the use of capital controls during its consultations with its member countries. For instance, the Fund insists on overstating the problem of the evasion of controls by sophisticated financial actors and has also warned that controls cause distortions.

Now, of course any regulation is only as good as its regulators. But nevertheless, no matter the extent of sophistication of your financial sector, evading controls always entails a cost, which is exactly what controls are supposed to do. In fact, most empirical studies have found controls effective to the extent that they manage to "segment" the domestic financial market from the international market--meaning there's a wedge between domestic and international interest rates or between the price of stocks traded in both markets. And very frequently, this is the case even in countries where critics have claimed that controls were evaded.