Latin America and the ‘end of capitalism’

Andres Oppenheimer: Latin America and the 'end of capitalism'
BY ANDRES OPPENHEIMER AOPPENHEIMER@MIAMIHERALD.COM
02/25/2015 7:00 AM 02/25/2015 9:33 PM

The saddest thing about outgoing Uruguayan President José Mujica's
statement this week suggesting that capitalism is agonizing is not that
he said it as the New York stock market was reaching its all-time high,
but the fact that it's an idea that is being happily repeated by many
Latin American presidents as if it were an indisputable truth.

Hardly a day goes by in which Venezuelan President Nicolás Maduro and
his counterparts in Argentina, Ecuador, Bolivia, Nicaragua, and several
other countries do not proclaim — some more explicitly than others — the
"end of capitalism." Former Cuba ruler Fidel Castro has been proclaiming
"the inexorable demise of capitalism" since the early 1960s.

Mujica, who ends his term on Sunday, was quoted by Cuba's official
Prensa Latina news agency as telling the Mexican daily La Jornada this
week that "capitalism is exhausted." His exact quote in La Jornada's
Feb. 22 interview was that capitalism "seems to have already given
everything it had," and that it is likely to be replaced by "democratic
socialism."

Trouble is, while U.S.-styled capitalism could and should be perfected,
many Latin American presidents are sitting idly by waiting for its
death. Meantime, China, India, Vietnam, and virtually all Asian
countries are growing and reducing poverty at record rates, and they
have been doing so precisely since they started embracing capitalism in
the 1980s.

Perhaps somebody should present Latin American leaders who keep talking
about the end of capitalism with a framed copy of a recent news story
about Apple's market value. They should hang it on their office walls to
remind themselves constantly of what's going on in the world.

According to a Feb. 11 news story, Apple reached a record market value
of $710 billion that day. To put that in perspective, that's more than
the entire GDP of Argentina ($610 billion), Venezuela ($483 billion),
Colombia ($378 billion), Chile ($277 billion), or Peru ($203 billion),
according to World Bank figures.

The presidents of Ecuador, Uruguay, and Bolivia should be the first to
hang that framed news story on their walls. Apple alone is worth seven
times more than Ecuador's GDP ($94 billion), 12 times more than
Uruguay's ($55 billion), and 23 times more than Bolivia's ($30 billion.)
And that's just one capitalist company.

If that's not enough to convince them that we are living in a different
world — in which technological advances are becoming increasingly
lucrative, while Latin America's raw materials or basic manufacturing
goods are becoming increasingly cheaper — there are plenty of other
examples to learn from.

Uber, the 4-year-old company that created a smartphone application for
taxi services, has reached a market value of $41.2 billion. This amounts
to more than Mexico's total annual oil exports.

WhatsApp, the instant-messaging application for smartphones started by
two 20-somethings, was sold last year for $19 billion. That's almost 20
times the total value of Chile's wine exports.

Unfortunately, while they keep waiting for capitalism's definitive
demise, many Latin American countries keep relying on their commodity
and basic-manufacturing exports and are failing to invest in innovation,
research, and development.

Latin American countries invest only 0.8 percent of their GDP in
research and development of new products, compared with the world
average of 2.1 percent, according to World Bank figures. Not
surprisingly, Latin America has become increasingly dependent on raw
materials in recent years, and its high-tech exports have fallen as a
percentage of its total exports.

According to figures cited by the U.N. Economic Commission for Latin
America and the Caribbean (ECLAC) head Alicia Bárcena at a Feb. 13
speech, Latin America's exports of high-tech products has fallen from
nearly 20 percent of the region's total exports in 2000 to about 10
percent of its total exports today.

My opinion: Capitalism has many faults that should be corrected, but
Latin American presidents should stop with this nonsense about its
imminent death and get to work — like Asian countries have been doing in
recent years — to become more competitive in the world economy.

Instead of talking rubbish about the "agony of capitalism," Latin
American presidents — especially now that their commodities' export
prices have plummeted — should be talking about improving education,
innovation, and science and technology to export increasingly more
sophisticated goods to world markets.

Their current ruminations about the collapse of capitalism are only
helping breed complacency, inaction, slower economic growth, and more
poverty.

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