Washington Contentious: Economic Policies for Social Equity in Latin America

The Findings of the Commission on Economic Reform in Unequal Latin American Societies, by Nancy Birdsall, Augusto de la Torre, and Rachel Menezes, sponsored by the Carnegie Endowment for International Peace and the Inter-American Dialogue

FOREWORD

At the end of the 1990s the future of Latin America seemed grim in the face of four devastating problems—slow and unsteady economic growth, persistent poverty, social injustice, and personal insecurity. For 10 years Latin America had pursued—with considerable vigor—the 10 economic policies that make up the Washington Consensus, the growth formula promoted by the U.S. Treasury and the international financial institutions. But performance fell far short of expectations, and a new approach was needed.

We created a task force to identify more effective economic and social policies for Latin America. The independence of our two institutions—the Carnegie Endowment for International Peace and the Inter-American Dialogue—allows us to raise issues that are difficult to raise in polite, official discourse: capital controls as a solution to currency crises, the need for more taxation in most of Latin America, the myth of race-blind societies in the region, corruption in labor unions. We can also talk about the mistakes of specific countries and their leaders, and we do not have to hedge our recommendations.

The task force operated under the outstanding leadership of co-chairs Nancy Birdsall of the Carnegie Endowment and Augusto de la Torre, Ecuador's former central bank governor and member of the Carnegie Economic Reform Network. After considerable debate the task force settled on a theme: now that nearly every Latin American government has voiced a commitment to the goals of poverty reduction and greater equity, what steps do they have to take to turn that commitment into action?

The final report provides a rich new agenda of economic policies directed at reducing poverty and increasing equity—without sacrificing growth. It deserves wide readership and should exert substantial influence on policy.