Darkest Before the Dawn

The news couldn't be worse. Three years of recession or anemic economic growth, a megalomaniac attempting to build socialism in Venezuela, Argentina's debt default and collapse and--more recently--Bolivia's president run out of office by indigenous people fed up with his pro-business, pro-Washington agenda. More generally, Latin America's political mood has swung sharply leftward after citizens in several countries revolted against market-reform initiatives. Taken together, these trials have seemingly erased the promise of prosperity that wafted across the region a decade ago. Now there's the specter of a return to the dark days of the 1970s and '80s when economic and political chaos were the norm. No wonder Joao Pedro Stedile, the leader of Brazil's Landless People's Movement, recently described Latin America as a "volcano."

That doesn't seem like an exaggeration. Social eruptions have prompted a wide-ranging and contentious reappraisal of the economic orthodoxy--the neoliberal model--that has shaped policy in Latin America for the past 15 years. Market-oriented structural reforms have succeeded in a few crucial ways: they ended the ruinous era of hyperinflation, and inculcated a sense of fiscal responsibility among profligate governments. As Richard Feinberg, a professor at the University of California, San ... // 89% Remaining