TCS Daily

Dictators or Democracy?

By Carlos Ball - December 15, 2003 12:00 AM

Most Latin Americans of my generation were born under non-democratic regimes, usually military dictatorships where the government was controlled by a handful of powerful figures and the members of the legislature's duty was to raise their hands in approval of whatever the president required. Some were enlightened despots with a sense of patriotism, who wanted to modernize their country and improve the people's lot. Other heads of government just wanted to enrich themselves, their family and friends, while the people suffered from lack of opportunities and stagnant living conditions.

As long as they made some anti-Communists noises, Washington and the State Department were happy to leave them alone, and if big concessions were made to favored U.S. corporations, then the despot received special treatment and a medal or two.

In the '60s and '70s, new democratic regimes surged all over the continent. The leftist intellectuals that had filled most university, arts, entertainment, and media positions busied themselves helping to write new constitutions where every possible dream became a citizen's right and thus the full enforcement of the new constitutions could only mean instant national bankruptcy. Since different groups would fight to include their pet projects in those new constitutions (Venezuela is now under constitution number 26), these documents became incredibly long lists of giveaways impossible to finance. And since no administration could live up to such constitutional obligations, the party in power would enforce those aspects that particularly pleased the political elite and the voting sector that would assure their re-election.

The apogee of utopian foolishness is probably held by the 1991 Colombian constitution, Article 52 of which "recognizes the right of every person to recreation, to practice sports, and to take advantage of free time. The State will promote such activities and will inspect, watch over and control sport and recreational organizations, the structures and ownership of which must be democratic."

The real outcome of the democratic wave in Latin America was that the people had the chance to elect virtual dictators to rule for periods of four, five or six years. In Venezuela, during the last four decades of the 20th Century, we had the Social Democrats and the Christian Socialists alternating in the presidential palace. There was no marked difference in their socialist policies, and their worst Treasury and Commerce ministers usually were top executives from large Venezuelan business groups that used those government positions to obtain special privileges for their companies.

At different times, I was chairman of the Venezuelan Federation of Auto and Machinery Dealers, member of the board of the Venezuelan Federation of Chambers and Associations of Commerce, and vice-chairman of the Caracas Chamber of Commerce. With few exceptions, the top executives from the largest corporations that I dealt with showed absolutely no interest in defending capitalism, free competition and private property. Their aim was to get special breaks from government officials, and anything that was controversial or went against the wishes of a minister or the political party in power, they tried to veto. The real capitalists were found in the smaller firms; those were not seeking higher tariffs or government loans, just reliable rules and fewer regulations, which automatically meant less corruption.

The nationalism behind import substitutions and the government takeover of foreign companies had made Latin America considerably poorer, and in the '90s the political and business elites got together in an effort to end government waste by privatizing state corporations. Many of those government monopolies in mining, telecommunications, utilities, airlines for example, simply became private monopolies, and its immediate consequence was that the people had to pay steeper prices for their goods and services. The "neoliberal," crony capitalism of the '90s paved the way for today's renewed statism.

Strangely enough, the dictators of the past, despite their usual personal corruption, in many cases showed far more respect for the rule of law and sound currencies than their successors, the democratically elected presidents. The newer constitutions, instead of being documents to protect the natural rights of citizens against official intemperance, have given bureaucrats a free license to violate property rights for "the common good."

Under the rule of the majority, individual rights have no meaning. Article 99 of the "democratic" 1961 Venezuelan constitution reads: "In virtue of the social function, property will be subject to... what the laws stipulate for public use or the common good." In other words, the government in representation of the majority will decide if your house, your business or your money belongs to you or not.

Latin politicians soon learned that the easiest way to steal is by inflating the currency, and the poor suffered the most since what little they have is in cash or savings accounts, not in real estate or Swiss bank accounts. The value of the Venezuelan bolívar was set in 1879 at one gram of gold, and kept its value until 1961, when the first devaluation took place under democratically-elected President Rómulo Betancourt. Since then, the bolívar has lost over 53,000% of its value in dollar terms. Thus, Venezuelans today are nearly as poor as Cubans.

Another "democratic" catastrophe has been personal security, which has become the worst nightmare for the inhabitants of Latin America's largest cities, such as Buenos Aires, Sao Paulo, Mexico City, Bogotá, and Lima. During Hugo Chávez's presidency, since 1999, 43,000 violent deaths have taken place in Venezuela, and Caracas is far more dangerous than Baghdad, something you won't be told by CNN.

On December 3, 2001, the Argentine "democratic" government of President Fernando de la Rua, with the full support of the International Monetary Fund, confiscated the bank accounts of all the Argentines, some 40 billion dollars, perhaps the largest bureaucratic robbery in modern times. Under the "corralito" law people were allowed to withdraw only 250 pesos per week from their accounts, and their dollar deposits were converted into devalued pesos.

No military dictator of the '30s, '40s or '50s managed to do so much harm to so many of their own people with one stroke of the pen. Perhaps, they just couldn't do it because they did not have the protection of a "democratic" mantle.

John Locke believed that "government has no other end than the preservation of property," but to most Latin American politicians the main role of government is redistribution of wealth. Redistribution means rapid impoverishment since investments and hard work fade away, exactly what has been happening throughout most of the hemisphere in the new century. Current populist presidents such as Chávez, Lula, Kirchner, Gutiérrez, Toledo, etc. have absolutely no respect for the rights of minorities, much less for individual rights, and they are fully supported by constitutions filled with entitlements, open-ended positive rights, virtually without limits or personal responsibility.

Rousseau and Marx rather than Locke, Hume, and Adam Smith are the idols of Latin America's public schools teachers and university professors. Latin democracies without rule of law and no respect for individual rights or individual freedom of choice have sadly turned out to be much worse than the old dictatorships.

Mr. Ball is editor of AIPE, a Spanish-language news organization based in Florida, and an adjunct scholar with the Cato Institute. He is a frequent TCS contributor.


TCS Daily Archives