With Lula’s Win in Brazil, the Left Dominates Latin America

“With Luiz Inacio “Lula” da Silva’s narrow victory over president Jair Bolsonaro in Brazil—the two-time former president defeated the incumbent by a 1.8 percent margin (50.9 to 49.1)—the Latin American left has completed its strategic dominance over the region’s seven largest countries.
In the 2000s, much was made of Latin America’s so-called “Pink Tide,” which began with Hugo Chávez’s first electoral victory in Venezuela (1998) and da Silva’s first term in Brazil (2002–2006). There followed an unprecedented rise of left-wing governments across the region. However, there were still important holdouts at the time; Mexico and Colombia didn’t veer left at all; Chile maintained its post-Pinochet social democracy; Peru’s original “Pink Tider,” Ollanta Humala, initially scared the markets in 2011 but proved to be mostly moderate in power.

By late 2022, however, hard leftists—often in cahoots with local communist parties—had handily won the last elections in each of these countries and in Argentina, which returned to Peronist Kirchnerism in 2019. Bolsonaro was the last right-winger standing”

When Karl Marx Made the Case for Capitalism

“According to Marx, history unfolded in a grand series of stages, each defined by its dominant mode of economic production and each specifically arising to replace the one that preceded it. “In broad outlines,” he wrote in the preface to A Contribution to the Critique of Political Economy, “ancient, feudal, and modern bourgeois modes of production can be designated as progressive epochs in the economic formation of society.” Capitalism, in other words, was a historically necessary step in human progress.
The great revolutionary forces unleashed by capitalism, Marx thought, would in turn form and shape a self-aware proletariat class that would ultimately lead humanity into a glorious communist future. But that would happen only after capitalism had worked its magic. “No social order ever perishes,” Marx maintained, “before all the productive forces for which there is room in it have developed.””

“Marx not only welcomed capitalism’s creative destruction of feudalism and slavery; he recognized and even championed capitalism’s essential role in human advancement. With free labor on the march, Marx argued in his 1861 essay “The North American Civil War,” the peculiar institution faced ultimate extinction “according to economic law.””

Declining Faith in Both Capitalism and Socialism Leaves … What?

“”I know that some people in the U.S. associate the Nordic model with some sort of socialism. Therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy,” then-Danish Prime Minister Lars Lokke Rasmussen commented in 2015. “The Nordic model is an expanded welfare state which provides a high level of security for its citizens, but it is also a successful market economy with much freedom to pursue your dreams and live your life as you wish.”

“So, what is the catch you might ask. The most obvious one, of course, is the high taxes. The top income tax in Denmark is almost 60 percent. We have a 25 percent sales tax and on cars the incise duties are up to 180 percent. In total, Danish taxes come to almost half of our national income compared to around 25 percent in the U.S.””

Chile’s Proposed Left-Wing Constitution Could Spell Chaos

“Chile’s draft constitution is even longer than Venezuela’s, which was redrafted by Hugo Chávez’ administration during his first year in office and set the stage for the country’s socialist revolution, descent into dictatorship, and ensuing economic collapse.

Venezuela has had 26 constitutions in a little over two centuries. In general, the practice of scrapping and rewriting constitutions helps to explain Latin America’s relentless political turmoil.

A constitution provides legal stability and predictability—like a computer operating system. Tampering with any foundational code creates security holes that are easily exploited by political opportunists looking to amplify their own power and overturn the established order.

Even if Chileans reject the new constitution—and, thankfully, polls indicate that they probably will—Boric can choose to start the process again with the election of yet another constitutional assembly to draft yet another version.

That could bring years of chaos, economic stagnation, and legal uncertainty. Now that Latin America’s free market experiment and “economic miracle” may be coming to an end, hopefully, the rest of the world can learn from the experience of Chile once again: Beware leftist pipe dreams.”

How Mass Immigration Stopped American Socialism

“Friedrich Engels wrote that immigrants in the United States “are divided into different nationalities and understand neither one another nor, for the most part, the language of the country.” Furthermore, the American “bourgeoisie knows…how to play off one nationality against the other: Jews, Italians, Bohemians, etc., against Germans and Irish, and each one against the other.” He argued that open immigration would delay the socialist revolution for a long time as the American bourgeoisie understood that “‘there will be plenty more, and more than we want, of these damned Dutchmen, Irishmen, Italians, Jews and Hungarians’; and, to cap it all, John Chinaman stands in the background.”

Indeed, American meatpackers and steelmakers in the late 19th and early 20th centuries intentionally hired workers from diverse national, ethnic, and racial backgrounds to inhibit their ability to form labor unions: More diverse backgrounds increased transaction costs among organizing workers. Meanwhile, union members in the United States generally opposed immigration and took nearly every opportunity to argue for closed borders.”

“Although immigration increased the number of socialists in the United States, it also increased the perception that socialism was an alien and foreign ideology that was distinctly un-American.”

“There are several potential explanations for why immigrants did not grow government expenditures in the United States. The likeliest theory is that the high levels of American ethnic, racial, religious, and linguistic diversity caused by immigration hobbled the rise of an American labor movement and reduced overall voter demand for bigger government. This is the essence of the complaint voiced by Marx, who warned that immigrant-induced ethnic and racial differences reduced worker solidarity, slowing his efforts to stoke a revolution in the United States and elsewhere.”

“All in all, immigration did more to slow the growth of government in the 19th and early 20th centuries and to frustrate the goals of left-wing reformers than it did to overturn the fundamental economic and political institutions of the American founding. With few exceptions, immigrants helped preserve, protect, defend, and expand American free markets.”

Will Peru Become the Next Venezuela?

“Pedro Castillo, a self-described Marxist-Leninist heading the Peru Libre (“Free Peru”) ticket, has secured a spot in the country’s June 6 presidential runoff election. The only person standing between him and power is Keiko Fujimori, the daughter of a former president who assumed dictatorial control in the 1990s and the leader of Fuerza Popular (“Popular Force”), a right-wing populist political party. If Castillo wins, he threatens to impose the same sort of ruinous policies that have decimated Venezuela.

Peru Libre’s platform calls for an economic transformation that would include nationalization of the mining, gas, oil, hydro-energy, and communications industries; agrarian reform which will include land expropriation and might involve land redistribution; elimination of private pensions; voiding contracts with the companies that are currently in charge of managing airports, railways, ports, and highways, and transferring these functions to regional governments and municipalities; and reviewing all trade agreements with an eye toward abrogating at least some of them.”

“Chavez nationalized Venezuela’s oil industry in 2005. Not only did state mismanagement prove fatal, but the lack of private investment also contributed to the demise of the once-mighty Venezuelan industry. Castillo’s plans to nationalize Peru’s powerhouse copper industry will lead to similarly tragic results. If Castillo wins, expect both government mismanagement and an output collapse that will cripple the nation’s copper production.”

How Socialism Wiped Out Venezuela’s Spectacular Oil Wealth

“Venezuela has the world’s largest proven oil reserves and yet the country has run out of gasoline. The socialist government has lost the capacity to extract oil from the ground or refine it into a usable form. The industry’s gradual deterioration was 18 years in the making, tracing back to then-President Hugo Chávez’s 2003 decision to fire the oil industry’s most experienced engineers in an act of petty political retribution.

The near-total collapse in the nation’s oil output in the ensuing years is a stark reminder that the most valuable commodity isn’t a natural resource, but the human expertise to put it to productive use.”

“Chávez sought control of the nation’s oil wealth to fund his political ambitions, but first, he had to dismantle the mechanisms that were put in place to protect PDVSA’s autonomy.

In a move intended to begin that erosion, Chávez began appointing military leaders to PDVSA’s board. The conflict between PDVSA’s top management and Chávez culminated in a national strike, which took place from December 2002 to February 2003. Chávez proceeded to fire 18,000 state oil workers, including 80 percent of its top engineers, handing control of the industry to the military.

The workers who were fired had “an average of 15 years of experience,” Toro says. “In a sense, he threw away 300 thousand years of experience.”

“Now, instead of producing five to six million barrels of oil [a day], which is the amount we should be producing, last month’s report from OPEC showed that our production, based on external sources, was 339 thousand barrels per day. After once having been a major player in the oil industry, we’ve become nothing. An insignificant exporter of oil,” he says.”