November 1st, 2010· The New School, New York

The Observatory on Latin America (OLA) invited Dr. Alicia Bárcena, Executive Director of the United Nations’ Economy Commission for Latin America and the Caribbean (ECLAC), to present the conclusions drawn from the recent ECLAC report, Time for Equality: Closing gaps, opening trail, followed by high profile economists and media commentators.

Executive Secretary of the United Nations Economic Commission on Latin America (ECLAC) Alicia Bárcena presented a lecture on how Latin America has improved growth and inequality over the past decade, especially during the economic recession when Europe and North American countries suffered from economic stagnation and increased unemployment. ECLAC published a report titled “Time for Equality: Closing gaps, opening trails” which served as the basis of the lecture. Bárcena was introduced by President Elect David Van Zandt who underscored the similarities between the New School and the work done at ECLAC in their heterodox approaches to economics and social policy. He described Bárcena as “epitomiz[ing] the multidisciplinary perspective, environmental leader, senior member of the UN Secretariat” and the report as “set[ting] out intellectual and political challenges to the Latin American region and to the world at large”.

The lecture was opened by Michael Cohen, Director of the Observatory on Latin America and Chair of the Graduate Program in International Affairs, who asked for a moment of silence in memory of the passing of former president of Argentina, Néstor Kirchner. Cohen framed the lecture by asking a number of important questions regarding the implications of Latin America?s policies which have led to remarkable economic and social results all the while Europe and North America struggle with poor growth and deteriorating social indicators.

Bárcena’s lecture was rich with detailed information on the performance and challenges of Latin American countries. She explained that the characteristics of policies implemented from 2003 to 2008, which distinguished the Latin American approach to this economic recession versus in crises past, include: reduction in public debt due to sound fiscal policies, flexible exchange rates, and building a large economic surplus. Social indicators show that not only did Latin America improve poverty rates, but also improved income distribution. Safety nets, such as cash transfer programs to the elderly and the unemployed and programs encouraging early childhood programs as well as secondary education, set up by progressive governments in Latin America enabled decreasing poverty rates. Latin American countries will be challenged to continue and expand these programs. She quoted the statistic that the tax burden in OECD countries is 35% whereas in Latin America it is only 18%. She felt that a progressive income tax is necessary, but that it should not be a substitute for social policies.

The Role of Government

The role of government in increasing productivity was a key theme. Bárcena insisted that Latin America needs a technology policy that prioritizes funding for science and technology. The region also requires an “explicit” industrial policy, she said, and gave the example of the national bank in Brazil which has funded many of its own development projects. Since 80% of Latin Americans are employed by small businesses and microenterprises, royalties, subsidies and regulation have to be central in the discussion of a proactive industrial policy. Furthermore, countries such as Chile and Peru have very rich natural resources, and thus the protection of these resources must also occupy an important space. Moreover, territorial cohesion, or the lack thereof, has been affecting institutions and social development. The issue of drug trafficking in Mexico is intimately tied to territoriality since drug lords have appropriated lands while central governments have been unable to collect taxes from and govern these regions.

She took a critical perspective on the growth of Latin American stating that “although we have some recovery, we, in ECLAC, believe that it will return to a slow recovery because the developed world is not growing nor consuming”. She said that the “most problematic” issue is jobless recovery, that is, Latin America is growing with very little creation of jobs. She explained that disaggregated data shows that some households are more vulnerable to shocks than others, that women are much better prepared than men in primary and secondary education but, often, do not have the opportunity to find work in the labor market. She critiqued the existing labor institutions which are “perpetuating exclusionary markets”. Bárcena emphasized the point that equality has to accompany growth. Speaking of the bottom line, she said, “Growth needs equality, equality needs growth, and the state needs to play a role”.

Commentary was provided by Professor of the University of Florence Dr. Giovanni Andrea Cornia and Economics lead writer and editorial staff Dr. Martin Sandbu. While lauding the report, Cornia exposed the lack of discussion on politics which he felt are integral to poverty and inequality. He also asked ECLAC to critique the Welfare State model in Europe to expose the “costs” of such a model, and he suggested that care should be taken in drawing similarities between Europe and Latin America since the historical development of institutions in each region have been distinct. Historically, “no countries have leap frogged through development,” Cornia said. Latin America can support and encourage primary commodities trade while “constructing policies to mediate them”. Sandbu agreed and emphasized that lessons should not be learned from Europe but, rather, the inventiveness that emerges from the Latin America region itself. In Norway, where Sandbu is originally from, there exist egalitarian distributions before any fiscal mechanisms are used. He gave examples of inventive tax policies and ways of achieving equality such as Progresa in Mexico and Bolsa Familia in Brazil. Sandbu stated that there have been “very inventive ways of achieving equality” and that Latin American countries could “learn from each other”.

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