We all know what conventional economists say about the future of Latin America: Venezuela, Argentina, Bolivia and other countries that pursue populist policies will go downhill, whereas Chile, Peru, Colombia and others that pursue "responsible" economic policies will do great.
So when I interviewed the most unconventional among the best-known U.S. economists -- Nobel Prize winner Paul Krugman -- last week, I was eager to know whether he agrees with the conventional wisdom on Latin America.
Krugman, who has just published a book titled 'End This Depression Now!' -- where he argues that the United States and Europe should increase their economic stimulus packages to jumpstart the world economy, rather than continuing to cut public spending -- is often cited by Latin América's populist governments as a supporter of their big spending policies.
Earlier this year, Argentina's President Cristina Fernández de Kirchner enthusiastically cited in a speech one of Krugman's 'Conscience of a Liberal' blogs in The New York Times, in which he stated that Argentina's economy is getting unfair treatment from the media.
Asked whether he agrees with mainstream U.S. economists that Latin América's "populist" governments will end up destroying their economies, while "responsible" governments will do much better, Krugman surprised me for being much closer to the mainstream -- at least on this issue -- than one might have suspected.
"The little bit that we know is that the old rules still apply: If you print money to cover your bills even when the economy is not in a recession, you will get high inflation. If you follow irresponsible populist policies, it will hurt growth. So I don't think that Venezuela is any kind of role model," he said.
"On the other hand, the hard-line free market stuff has not worked the way it was supposed to," he added. "We had heard promises of great growth in México for decades now, and México is not terrible now, but it certainly has not had the kind of takeoff. The economies that seem to do the best are the ones that seem to have somewhat middle-of- the road policies, that are basically free market, responsible fiscal policies, but also make some serious efforts at poverty reduction, Brazil being the obvious case."
Asked about Argentina, he said that "it's not a good story either, although it's not in the Venezuelan league."
On whether he is more optimistic about Brazil or México, he said that "while I am not a dire pessimist about México," Brazil right now looks more promising. "I don't think there is an easy policy explanation about why Brazil has done better. It just seems that there seems to be more of an entrepreneurial drive," he said.
Asked what would be his advice for México's virtual president-elect Enrique Peña Nieto, Krugman said that México has been pursuing sound economic policies, but that now "it needs to work on all the boring but necessary stuff: education, infrastructure and rule of law, which is a big issue for México."
"The best thing you could do for the Mexican economy would be to control the drug trade and the crime wave, and hope that the re-shoring of production from China (to México) finally generates the economic miracle we keep waiting for," he added.
Andrés Oppenheimer is a Latin America correspondent for the Miami Herald, 1 Herald Plaza, Miami, Fla. 33132. Send e-mail to: email@example.com.