Sunday, December 28, 2014

2014: The year a lot of things changed

It is time for everyone for making balances.So it does happens with the economy, politics and other fields .We are less than a week away from begining 2015. What can be considered to be the outcome of 2014,wether positive or negative , depends on the side each one is on: either Optimistic or pesimistics.- From the optimistics side, things do not look as it was expected.Thus, the pesimistic ones are those who have the last word. However,2014, was a year of mixed outcomes.Let take a look at it: a.- From the global economy side, there was important progress in the USA economy as it moved along to a sustainable recovery.Whereas ,The European Union is still struggling to get into reliable economic growth path,increasingly difficult as the geopolitics take its stake on it. China is also in its way to find the proper economic growth path, taking with it the prices of commodities. b.- Latin america economies did not make it better.Most of these economies grew below the expected.Unemployment had a good perfomance, which is expected to reach near 6%, below 6,2% of 2013.- c.- Oil prices went down more then previously thought, and the trend is to continue that path because there is no evidence to have reached a bottom level.Less so, while there is no reduction in production level. The effect of this new prices are still to premature to say anything,except that those countries which depend upon oil prices have problems.- What to expect for 2015? It is not hard to say, that it will not be an easy year either.Global economy will face the situation of normalization in monetary policy in the USA while still struggling to get away from deflation, weak economic growth and geopolitics risks.- It will probably be a year for politics and diplomacy.-

Sunday, December 14, 2014

Are free markets ideas strong enough in Latin America?

Economic backgrounds in the last century in Latin America economies, was built mainly based on the notion that the state has a key role in the economy.Throughout years, the markets approach was in a secondary place.The import substitutions strategy followed in the second half of last century,the Dependence Theory, and the North -South focus of world order ,were all based on the supremacy of the State . However,after the external debt crisis, (the lost decade of the eighties) ,such models collapsed. The Washington Consensus of the nineties , was an attemp to get a better framework for free markets policies.However, actually there is no elected government in key latin america countries,(aside from Colombia), which could be considered to be center right oriented.Most of those candidates with such profile ,were defeated in recent elections.(Brazil,Uruguay).- Are free market policies a weak approach to improve the quality of economic performance?.Is there some structural weakness in the leadership of free markets policies?. The first question speak by itself.Most of the richest economies in the world, have followed free markets policies with the state as a reliable complement.The worst of poverty ,is not in those economies based on markets mixed with the State as partner .In Latin America those economies which are doing better, are the ones which support markets as the driver for economic growth.- What about a structural weakness in the leadership of free markets ideas?.Perhaps this would give some explanation. There are no many Latin America intelectuals to be considered a fan of the market outcome, as there are those who can be considered to be fan of the state inspiration .This does not mean that someone is correct, while other is wrong, but the fact is that most of the intelectuals in latin america, are less prone to individuals , than what they are to the State, as the main brain of society.Thus, those who believe in freedom and individuals as the brain of society , become shy about it because it seems that there is no strong intelectual room for it.Besides there is also the permanent risk of dogmatism,as current leaders feel there is no easy way to build bridges between different positions.The outcome is that average voters, feel unconfortable with the prospect of getting rid of anything(policies,programs), which can offer them protection. So, it follows that the strenght of free markest ideas,even with no strong intelectual support, goes on the line of pragmatism.This means , markets alone are not enough.Markets and the State complementary role do matter, because they are a necessary condition for economic development.-