Some bestsellers are expected. Number one on
Amazon.com's list of the top-selling books in Latin America
is Harry Potter and the Order of the Phoenix. Some are more
of a surprise. At number five you'll find an anthology of dry
economic prose entitled After the Washington Consensus:
Restarting Growth and Reform in Latin America.
The book is a collection of policy prescriptions: it attempts to
map out a route by which per capita GDP in Latin America could grow
at 5% or so a year, rather than the present rate of roughly zero.
It is edited by former Peruvian finance minister Pedro-Pablo
Kuczynski and Institute of International Economics senior fellow
John Williamson, who were PhD students at Princeton together in the
early 1960s and have been preoccupied with the state of Latin
America's economies ever since.
Just don't mention
Washington
It is Williamson who is responsible for the dread slogan
"Washington Consensus". He coined it in the wake of the 1980s' debt
crises, and soon regretted it. His 10 points for looking forward to
economic growth rather than backwards at economic stagnation soon
became shorthand for neo-liberalism and IMF control of Latin
governments.
Williamson, then, is clear that his new agenda should not be
called "Washington Consensus II", although he hasn't come up with a
better idea yet.
The key points of the new agenda can't be listed quite as
cleanly as those of the old one, but some big themes do emerge. One
is an emphasis on crisis prevention, since most of Latin America's
problems are a direct result of economic crises. Another is a move
to anti-cyclical fiscal policies, requiring what Williamson calls a
"regional peer-monitoring system" to ensure that countries don't
spend too much in good years. And central to the whole project is
some way of increasing the savings rate in Latin America, so that
it's not as dependent on fickle international capital.
On the institutional side, the judicial system in nearly all of
Latin America needs a comprehensive overhaul. Williamson says that
"Latin America's judiciary is oblivious to the budget constraint:
judges around the region have no compunction whatsoever in making
decisions which cost countries many percentage points of GDP. Banks
and markets, too, need stronger supervision and more controls."
The authors are keen to include a social element to their
proposals. Latin America has the most unequal income distribution
in the world, says Williamson, and the poor need to be empowered by
giving them access to education, land, microcredit and property
titling.
The most difficult task of all will be getting these ideas out
of a small circle of policy wonks and into general circulation
among the electorates of Latin America. Most Latin Americans hate
what they think the Washington Consensus represents, and have
little if any appetite for further reforms. A high ranking on
Amazon.com is a good start, but it certainly isn't sufficient.