(By Milica Pandzic, SFL Ecuador) South America is a continent that has always faced the problems of poverty and inequality; and most of the Latin American countries, just with a few exceptions, haven’t found a solution yet. In the popular discourse we can find interesting reasons why is happening. Some argue that was colonization: The Spanish and the Portuguese came they just extracted everything they could from us, all of our wealth and now we are in this poverty trap because of that. Another argument, which is also really popular and very similar to the one before is that we are victims of the wealthiest countries, because they want us to push us to these evil thing that is the market and the free trade for what we are not prepared for. We are vulnerable for free trade; trade for us is a zero-sum game for us. We are not sufficiently strong developed for that.
So with these ideas is fully understandable why Latin American policies tend to be really protectionist: the state has an important role in the economy, there are lots of regulation, tons of trade barriers, high tariffs, high and somewhat arbitrary taxation, monopolies, etc. So with these policies we are just waiting to grow for ourselves and then when we are developed enough we can go out to the market and compete with other countries. That’s the general idea.
But of course something is missing. Something is not working because we are not even near a path towards development. And then we go and check history and see that all the countries started pretty much the same way. At the beginning we were all poor. For instance, England at the beginning of the 19century can be considered a poor country in today’s standards. And then, the Industrial Revolution came, based on trade, innovation and also based on secure property rights that are actually what gave the incentives for people to progress knowing that they will keep the fruits of their labor.
And then I look at Latin America and I don’t see any of that: nor innovation, nor progress, nor secure property rights. And I came to realize that the protectionist discourse that politicians are really fond about and keep on implementing is not going to achieve development; moreover, that is what is keeping us behind. It’s not a poverty trap we are in, it’s a government trap. We’ve been imposed this discourse on protectionism, of relying on the state because it’s going to do us all better and the truth is those are really extractive economic institutions that only benefit the few (especially the ones that are in power and the ones close to the one in power) in detriment of the whole society, prolonging poverty and worsening inequality; whereas in a free market where we can all participate and we can all progress. And that’s why it’s not a coincidence that Chile, which is one of the exceptions I mentioned earlier, is just to become the first develop country in Latin America meanwhile it is the 7th freest economy in the world. And when Chile started with this path towards economic freedom, that was 30 or 40 years ago; 45% of their population was poor, now it’s less that 12% is. Free economies are the ones that alleviate poverty and empower people to be independent.
But most important, there is this huge moral statement behind that is we have the right to choose, we have the right to participate in the market, to sell and buy and innovate and there is no reason why the state should interfere in my economic decisions as well as in any other decision in my life as long as I’m not hurting others. That’s why I’m committed to the cause of liberty.
In my case and in the case of many other fellow LC (Local Coordinator), it has not been easy. Today Latin America has some authoritarian and self-proclaimed socialist’s governments that are very keen on indoctrination, on spreading the idea that the market is harmful and that the state is the mechanism that will get us off of poverty. Besides, these governments are not tolerant to liberty ideas neither to anyone that disagree with them so it’s a little bit complicated to work in a hostile environment like that; but fortunately a lot of people, especially a lot of students have come to realize that this is not the way is supposed to be and they have been discovering the ideas of liberty, committing themselves to the cause of liberty which makes me hopeful because that means that we, the students, are building the future we want to live in one day, we are building the future we deserve.
So I encourage you all to join Students for Liberty, to join the movement that is going to change the world. (Milica Pandzic is a Local Coordinator for Students for Liberty in Ecuador, South America).