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Andres Velasco

Andres Velasco

Papá orgulloso de Rosa, Ema y Gaspar y feliz marido de @consuelosaav. Embajador @Hay_Mujeres

Articles by Andres Velasco

To Protect Democracy, Reform It

February 26, 2020

We vote every four or so years for candidates about whom we know little, in a process mediated by political parties, which are often less than fully democratic themselves. No wonder, then, that more than half of respondents in 27 countries say they are dissatisfied with democracy.

LONDON – Democracy may be “the worst form of Government except for all those other forms that have been tried from time to time,” as Winston Churchill famously said, but that does not mean democracy is good enough. Voters know it, and they are as mad as hell about it.
When China Sneezes

Xinhua/Zhang Ailin via Getty Images

The White Swans of

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In Defense of Cosmopolitanism

January 31, 2020

Nowadays, the word "cosmopolitan" conjures an image of jet-setting, latte-sipping elitists with little or no regard for their fellow citizens. In fact, cosmopolitans are idealists for whom love of country begins with a fundamental commitment to the equal dignity of all human beings.

LONDON – Cosmopolitanism gets plenty of bad press nowadays. “Cosmopolitan” is often paired with “elites,” as in the cosmopolitan elites who sip cappuccino in the morning and pinot noir at night, jet around to places like Davos, and enjoy big gains from the digital revolution.
What if Bernie Wins?

PS OnPoint

Ralph Freso/Getty Images

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PS Say More: Andrés Velasco

January 13, 2020

This week, Project Syndicate catches up with Andrés Velasco, a former finance minister of Chile who is now Dean of the School of Public Policy at the London School of Economics and Political Science.

Project Syndicate: As Chile’s former finance minister, what do you think of the government’s economic-recovery strategy, which includes plans to issue up to $8.7 billion of bonds next year – $3.3 billion in foreign currencies – to fund higher government spending? Are there lessons that other emerging economies can learn from the fact that Chile is able to pursue such a strategy at a time of social upheaval?Andrés Velasco: Since 2000, Chile has maintained rigorous fiscal discipline. By saving in good times, the government has made it

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Was Marx Right?

December 26, 2019

Karl Marx and Friedrich Engels did not claim only that capitalist development engenders its own contradictions, but also that those contradictions could be overcome only through the “forcible overthrow of all existing social conditions.” It is up to governments to carry out – and soon – the reforms needed to prove Marx and Engels wrong.

SANTIAGO – In Santiago, Chile, a massive graffito by the exit ramp of a brand-new, privately-built urban freeway reads: “Marx was right!” Indeed, capitalist development begets its own contradictions, as the scribbling itself attests.
How Truth Survived 2019

Isaac Lawrence/AFP via Getty Images

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Bipolar Economics

November 28, 2019

Randomized controlled trials are the flavor of the month in development economics, with their keenest advocates having just been awarded the Nobel Prize. But can this experimental approach really be counted on to produce better economic policies?

LONDON – How can we know if an economic policy is achieving its stated objective? Well, we can create two similar groups, randomly allocate the “treatment” to only one of them and measure the results. By comparing the groups, we will obtain a reliable estimate of how effective the policy is.
The Patriot versus the President

Chip Somodevilla/Alex Wong/Getty Images

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Santiago Under Siege

October 28, 2019

SANTIAGO – At least 19 dead and untold wounded. A half-dozen subway stations attacked with firebombs. Hundreds of supermarkets vandalized and looted. The downtown headquarters of the country’s largest power distributor in flames. A city of nearly seven million people paralyzed. After a state of emergency is declared, army units patrol the streets and enforce a curfew.
The Silence of the Republican Lambs

Alex Wong/Getty Images

No Art to the US-China Trade Deal

Getty Images

Why Rich Cities Rebel

Pablo Rojas Madariaga/NurPhoto via Getty Images

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Argentina’s Recurring Nightmare

September 27, 2019

Argentine President Mauricio Macri seems almost certain to lose his country’s presidential election next month, after committing the same kinds of economic-policy mistakes that so many of his Peronist predecessors made. It is a tragic and catastrophically disappointing denouement.

LONDON – Argentina has done it again: inflation is up, growth is down, and the peso has lost two-thirds of its value. Depositors have been rushing to withdraw their money from local banks, and a debt default looms. While Argentines suffer the consequences, the world emits a collective sigh of disbelief: wasn’t this time supposed to be different?
The Constitution Won’t Save American Democracy

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Saving Venezuela

August 27, 2019

Venezuela was once the pride and democratic example of Latin America. It can be that once again: a free, stable, and productive country, where citizens live in safety and peace – but only if the international community provides support in at least three key areas.

SANTIAGO – Venezuela remains in free fall. Home to the world’s largest proven oil reserves and once Latin America’s wealthiest country, it is now ravaged and suffering complete economic collapse. GDP has fallen 54% from its 2013 peak, the second largest drop recorded in modern history, according to the Institute for International Finance.
The Unsustainability of Inequality

PS OnPoint

Richard

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Will Facebook’s Libra Turn into a Cancer?

July 16, 2019

Facebook’s planned cyber currency, Libra, is little more than a glorified currency board – the failed arrangement that in 2001 caused the largest sovereign default the world had ever seen. A major risk is devaluation – and the problems don’t stop there.

LONDON – When it announced its plans to launch a cyber currency, Facebook emphasized that its Libra will benefit “people with less money [who] pay more for financial services,” especially in developing countries. But when one compares Facebook’s current blueprint to those same countries’ experience, Libra starts to look like a hazard.
Philanthropy vs. Democracy

PS OnPoint

Michael Orso/Getty Images

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The Experts We Need

June 19, 2019

Policy gurus spend too much time with others like them – top civil servants, high-flying journalists, successful businesspeople – and too little time with ordinary voters. If they could become “humble, competent people on a level with dentists,” as John Maynard Keynes once suggested, voters might identify with them and find them trustworthy.

LONDON – In the midst of the debate on the most crucial decision the United Kingdom has faced in a generation, then-Minister of Justice Michael Gove exclaimed, “I think the people in this country have had enough of experts.” That statement received almost as much media attention as Gove’s recent admission that he has used cocaine.
Why

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The Experts We Need

June 19, 2019

Policy gurus spend too much time with others like them – top civil servants, high-flying journalists, successful businesspeople – and too little time with ordinary voters. If they could become “humble, competent people on a level with dentists,” as John Maynard Keynes once suggested, voters might identify with them and find them trustworthy.

LONDON – In the midst of the debate on the most crucial decision the United Kingdom has faced in a generation, then-Minister of Justice Michael Gove exclaimed, “I think the people in this country have had enough of experts.” That statement received almost as much media attention as Gove’s recent admission that he has used cocaine.

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Dirty Floating in Emerging Markets

May 13, 2019

Central banks are supposed to use the interest rate to achieve an inflation target and let the exchange rate float freely. So why do they often intervene in currency markets by buying and selling international reserves, and use a host of other measures to limit their currencies’ volatility?

LONDON – Say one thing and then do something else. That pretty much sums up current orthodoxy in emerging economies regarding exchange-rate management. Countries are supposed to use the interest rate to achieve an inflation target and let the exchange rate float freely. In practice, Asian and Latin American central banks often intervene in currency markets by buying and selling international reserves, and

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Brexit Identities

April 10, 2019

Bad politics is more the rule than the exception around the world, so it should come as no surprise that the United Kingdom, where parliamentary democracy was born, is not immune. What is surprising is that the UK’s withdrawal from the European Union should be the reef on which its political elite is crashing.

LONDON – Having just moved to London from Latin America, I recently told British dinner companions that the local politics – with its grandstanding politicians, overheated rhetoric, rampant populism, and leaders who put party over country – makes me feel right at home. Their obvious discomfort suggested that I should not repeat the joke. 
Trump’s Most Worrisome Legacy

Win McNamee/Getty Images

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The Challenge of Monetary Independence

March 11, 2019

By shadowing the US Federal Reserve so closely, Latin American countries are foregoing the policy flexibility that their floating exchange-rate regimes are intended to allow. They also risk relying too heavily on possible US interest-rate cuts to boost their economies, and not enough on deeper, long-term reforms.

LONDON – The United States Federal Reserve has done it again. In 2018, the prospect of higher US interest rates sent emerging markets into a tailspin. But so far this year, indications of a more relaxed Fed stance have boosted emerging-market currencies and stock markets, despite concerns about a possible US-China trade war, economic slowdowns in most major economies, and rampant populism.

Jose

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Venezuela Shatters the Myth of Non-Intervention

February 4, 2019

Mexico and Uruguay have adopted the two arguments most often repeated by backers of the Venezuelan dictatorship. They sound reasonable at first, yet, after a moment’s reflection, both arguments turn out to be cynical, nonsensical, or both.

LONDON – Nicolás Maduro’s term as president of Venezuela ended on January 10. Following the Venezuelan constitution, Juan Guaidó, head of the democratically elected National Assembly, declared himself interim president. The United States, Canada, and much of South America immediately recognized him as the legitimate leader of Venezuela. Several European Union countries have already done the same.

Fred Dufour – Pool/Getty Images

Chip Somodevilla/Getty Images

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Pass on the Gas Tax

January 3, 2019

Rising fuel prices, whether from reduced subsidies or higher taxes, are tricky to offset, which is why they have spurred social unrest far and wide. What looks new in recent episodes is the sense of political illegitimacy: while paying more is painful enough, not trusting leaders to put the money to good use adds insult to injury.

SANTIAGO – French President Emmanuel Macron is not the first politician to run into trouble over gas taxes. Early last year, striking truckers brought Brazil to a standstill and helped elect uber-rightist Jair Bolsonaro to the presidency. The “Dump the Pump” movement in 2000 looked like it might keep Tony Blair from winning a second term. In the US, the issue is so politically toxic that inflation has

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Populism Is Rooted in Politics, not Economics

November 30, 2018

Some one billion people around the world are now being ruled by populists of one sort or another. That number will continue to grow if we continue to view populism as the result of economic rather than political dysfunction.

LONDON – Nearly 330 million Americans are governed by Donald Trump. Brazil, with 210 million people, has a newly-elected populist government. Nearly 170 million Europeans live under governments with at least one populist in the cabinet. Add the Philippines, with more than 100 million people, and Turkey, with nearly 80 million. All told, at least one billion people are now being ruled by populists of one sort or another.

JIM WATSON/AFP/Getty Images

Andy Katz/Pacific Press/LightRocket

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Taming Capital Flow Volatility

October 22, 2018

The global financial safety net has grown since the financial crisis of a decade ago, thanks to regional financial arrangements and bilateral swap agreements. But regional arrangements are not found everywhere, while only a limited number of central banks have access to swap agreements.

BALI – “Today it is a sin to run a current-account deficit, and that is crazy,” lamented Singapore Deputy Prime Minister Tharman Shanmugaratnam at the annual gathering of the International Monetary Fund (IMF) and the World Bank in Bali this month. Ministers who could boasted of their balanced current accounts, while officials from deficit countries were treated like reprobates. Yet, as Tharman reminded the crowd, countries like South Korea and Singapore

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Planning for Post-Maduro Venezuela

October 3, 2018

No one in Venezuela or abroad can be sure how President Nicolás Maduro’s regime will go, but it seems increasingly clear that it will. When it does, Venezuela’s transition to democracy and a market economy will be filled with perils and pitfalls, and much sacrifice will be required.

LONDON – In Ernest Hemingway’s 1926 novel The Sun Also Rises, a character is asked how he went bankrupt. “Two ways,” he replies. “Gradually, and then suddenly.”

Spencer Platt/Getty Images

Bryan R. Smith/AFP/Getty Images

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That is a good description of the collapse of the Venezuelan economy. President Nicolás Maduro’s chavista regime spent vastly beyond its means, just as

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Decoding Currency Crises

September 3, 2018

Brazil invests little and is running a fiscal deficit of 9% of GDP, whereas Argentina invests more and is gradually consolidating its public finances. So why is Argentina the one that’s in trouble with the currency markets?

SANTIAGO – Imagine two countries. Country A has a fiscal deficit of slightly over 5% of GDP, while country B shows a gaping hole of nearly 9%. Moreover, until recently A’s public debt barely exceeded 50% of GDP, while B’s public debt has been shooting up and will soon reach 90% of domestic output.

Spencer Platt/Getty Images

Nicolas Asfouri/AFP/Getty Images

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Of the two, B is more likely to suffer a currency crisis, right?
Not

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The Promise of Liberal Identity Politics

August 3, 2018

Open societies educate or attract people with varied and valuable kinds of knowhow, and they prosper that way. It is high time that more leaders began highlighting that fact and taking electoral advantage of it.

SANTIAGO – Utter the words “identity politics” nowadays and you risk igniting a row. On the American left, almost all politics is identity politics. That drives the American right crazy. And not only the right: liberal intellectuals like Mark Lilla of Columbia University are making the increasingly persuasive case that identity politics is bad electoral politics. A weak Democratic Party that is little more than an amalgam of myriad identity-based groups, they argue, may well be to blame for the election of Donald

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AMLO and Mexican Democracy

June 27, 2018

Mexico is already a deeply polarized country, so the last thing it needs is a president who practices a politics of division, however fiscally prudent he may be. But that is almost certainly what it will get when, as seems likely, voters elect Andrés Manuel López Obrador on July 1.

SANTIAGO – With the outcome of Mexico’s presidential election on July 1 virtually assured, financial market analysts are now asking how bad Andrés Manuel López Obrador (popularly known as AMLO) will be for the economy. The honest answer is that it’s anybody’s guess.

Barcroft Media

Thomas Lohnes/Getty Images

Project Syndicate

Previous
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But markets

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The Way Out of Argentina’s New Crisis

May 28, 2018

Recently, Argentina suffered another textbook attack on its currency and was forced to seek help from the IMF. With markets calm for a fortnight, now is the time to assess what went wrong, and what the country can – and must – do to prevent instability from returning.

SANTIAGO – The late MIT economist Rüdiger Dornbusch used to tell his students in the 1980s that there are four kinds of countries: rich, poor, Japan, and Argentina. No one frets anymore about Japan buying its way to world domination. But the world is worrying again about Argentina.

EITAN ABRAMOVICH/AFP/Getty Images

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The country has just suffered another textbook attack on its

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Hope Locally, Hate Globally

April 27, 2018

In survey after survey, in rich and poor countries alike, people report feeling satisfied with their family lives, happy with the neighborhoods they live in, optimistic about their personal futures – and downright gloomy about their countries and the world. Why?
SANTIAGO – In Lake Wobegon, Garrison Keillor’s fictional American town, all the children are above average. And life imitates art, not only in America – and not only for the young. In survey after survey, in rich and poor countries alike, people report feeling satisfied with their family lives, happy with the neighborhoods they live in, and optimistic about their personal futures. The same people tell pollsters that their countries and the world are going to hell in a handbasket.

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Is Populism Returning to Latin America?

March 30, 2018

This is a crucial year for politics in Latin America: the region’s three most populous countries are holding presidential elections. And in Brazil, Colombia, and Mexico, polarization is the name of the game, with populists of the right and the left the front-runners.
SANTIAGO – Until recently, it seemed that Latin America had eluded the great white shark of populism, just as North America and Europe swam toward it with eyes wide shut. Yes, Nicolás Maduro’s chavista regime continues to imprison citizens and wreck Venezuela’s economy. Evo Morales in Bolivia and Daniel Ortega in Nicaragua keep changing the rules of the game so that they can be reelected indefinitely. But the electoral defeat of the kirchnerista variety of Peronism seemed to mark a turning point in Argentina.

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Rational Irrational Exuberance?

February 28, 2018

We tend to be uncomfortable with the notion that an economy’s fundamentals do not determine its asset prices, so we look for causal links between the two. But needing or wanting those links does not make them valid or true.
SANTIAGO – The timing was exquisitely ironic: equity markets peaked – and a week later began crashing – just as pundits left this year’s World Economic Forum meeting in Davos, where they concluded that the global economy was on a steady upswing. In the weeks since, experts have divided into two camps.

The Year Ahead 2018

The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

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Why Economic Recovery Won’t Defeat Populism

January 25, 2018

During the last few years, a lively debate has taken place between advocates of economic and political/social explanations of populism. The issue is far from settled, but even if the economic explanation is right, it does not follow that the current global recovery will make much of a political difference.
SANTIAGO – Markets, like the pundits meeting in Davos this week, are hopeful: the world economy is well on its way toward a balanced and perhaps sustained recovery. With the economy on the mend, will politics follow suit?

The Year Ahead 2018

The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

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Why Has Latin America Turned Away from the Left?

December 27, 2017

In Argentina and Brazil, one cannot understand recent political changes without reference to the corrupt antics of populist and semi-populist operatives. But that simple explanation does not fit Chile, where outgoing President Michelle Bachelet misdiagnosed the public mood.
SANTIAGO – In Chile’s November election, anti-establishment voting was the name of the game. A new populist left coalition, modeled after Spain’s Podemos, received one-fifth of the vote. Many long-established figures, including the president of the Senate, lost their seats in Congress. Pundits were quick to describe a sharp turn to the left.

The Year Ahead 2018

The world’s leading thinkers and policymakers examine what’s come apart in the

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The Sandinista Shell Game

August 1, 2017

SANTIAGO – On every other block in downtown Managua, massive billboards proclaim that, owing to God’s grace, “Years of Victory” are here. Aside from the Almighty, the purveyors of such victories are the larger-than-life President Daniel Ortega and his wife, Vice President Rosario Murillo, both duly portrayed with gaze fixed heavenward. Their creed, one reads, is “Christianity, Socialism, and Solidarity.”

That a socialist revolutionary – who first came to power after violently ousting the dictator Anastasio Somoza – should seek legitimacy in a Christian god is odd. Even odder is the relationship Ortega has forged with the local business community. Influential tycoons proudly report that the government consults with them on all economic legislation. Critics accuse business

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Consolidating Latin America’s Gains

July 3, 2017

SANTIAGO – At the time of last year’s failed coup in Turkey, I emailed a Turkish friend expressing concern. His answer left me thinking. After a somber review of events in his country, he concluded: “You are very lucky to be in Latin America, even though it may not seem that way sometimes.”

We Latin Americans are complainers. We shudder to think that other people’s lot could be worse than ours. But if a Latin American views today’s world objectively, it’s easy to understand why many would consider us fortunate.

Terrorism is on the rise in Europe, just as Colombia’s civil war, the region’s last, is ending. Argentines, Brazilians, and Chileans of my generation grew up with heavily armed soldiers patrolling airports, train stations, and other public places. Today we see

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