"Neo-Liberalism" (power point)

                                             notes from the power point I had in class, look for your class notes & readings to fill in details. 

I am posting this outline on "neo-liberalism" as I promised.  As you think about this theme, keep in mind that it relates to a number of broader issues (some of which are included in your questions on the final exam.).
After this lecture and discussion, for example, you should be able to answer a question that relates to the issue of anti-U.S. sentiment in Latin America: Why do Latin American governments and the U.S. government tend to view the role of the state in the economy very differently?  
Similarly, there is a question on Bolivia on our final... and it's no accident that I focused on the Bolivian case in class; I thought it would be useful for you to understand more of Bolivia's development leading up to Evo Morales.

Part 1: General rule- LA governments have less faith in pure capitalism.

   Tend to give a larger role to state in economy.
       Dependency theory plays a role (after 1940s)
       Nationalism plays a role (even earlier)
            Case of oil: until 1950s 7 companies controlled global industry (5 are from US).
            Contracts tended to favor companies.

In Bolivia:

1937 confiscates standard oil Company of Bolivia (actually of New Jersey) after it illegally sold oil during Chaco war.

1952 MNR nationalizes largest 3 tin mines (Bolivian owned -72% of production).

Tin provides 80% of Bolivia’s foreign earnings then.

1969 under military government oil was nationalized. (Govt. was out of power by 1971).

Part 2: Economic crisis of 1980s (THE LOST DECADE)

   OIL: leads to economic crisis
      1973-4 oil prices quadruple (then continue to rise through decade).
       Commercial banks give large loans to LA – where oil is contributing to:
         *inflationary pressures
         *deficit spending
            Debt grows from 29 billion (all of LA) in 1970 to 159 billion in 1978.
               1982 Mexico can’t service debt to commercial banks...
              Other countries rescheduling debts
                    Suddenly commercial banks are not lending
*Gives NEW POWER TO THE IMF (International Monetary Fund).
NEO-LIBERALISM 
     IMF requires Open markets, allow capital to leave, balance budgets, privatize...
           Questions: How are businesses privatized? Which ones? When?
                           Where should budget cuts be made?
                          IMF solutions tend to drive unemployment UP & social services DOWN
                            Good effects  inflation brought slowly under control
                           Other effects  adds to growth of protests/”people” in politics
                           Privatization has good and bad effects (but unemployment...)

In Bolivia:

GONI – FIRST TERM (1993-97) Privatizes airline, railroad, electric power plants, telecommunications.

ALSO opens Bolivia to foreign investors for gas/oil/mining with 1996 new hydrocarbon law (passed ’97).

“capitalized or partially privatized” New private companies pay State 18% (in natural gas sector). Hugo BANZER (President after Goni’s first term).

ZERO COCA 1997 (not the same as ZERO COCAINE).

Water Privatization 1999-2000 = straw that breaks the camel’s back in Bolivia (blog post for more info).

GONI (second term)

income tax increases + ANNOUNCES export of natural gas through a Chilean port.

EVO MORALES

2006 “nationalization” after referendum.

Still foreign participation, but the State receives a higher percentage...