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The Progressive Economics Forum

Uruguay’s Encouraging Economic & Social Progress

My good friend and CAW brother Paul Pugh (President of CAW Local 1075 in Thunder Bay) has brought to my attention recent economic and political developments in Uruguay, the little nation of 4 million people squashed between Argentina and Brazil.  Paul has family connections to Uruguay and follows developments there closely.  While not as well-covered in the media as developments elsewhere in Latin America (like Brazil or Venezuela), what’s been happening in Uruguay is important – and highly encouraging.

In March a new President was sworn in, following elections at the end of 2009.  The President is Jose Mujica, who was a leader of the guerilla movement that opposed Uruguay’s military dictatorship during the 1970s and 1980s.  He spent 15 years in jail, and yet now is the country’s new President – talk about poetic justice!  Mujica was the candidate of the Frente Amplio (or “Broad Front”), a very diverse coalition of left and centre parties (everything from Communists to Christian Democrats).  The FA was formed in 1971, maintained its cohesiveness through the dictatorship, and won the national election in 2004 (including the presidency and majorities in both houses of parliament).  The first FA President was Tabara Vasquez.  Mujica has pledged to maintain the same incrementalist approach as Vasquez, but he is widely seen as being somewhat more to the left.  The 2009 results (in which the FA once again won the presidency and a majority of both houses) was a clear popular endorsement of the direction the government has followed – although conservative forces continue to energetically oppose the government.

Like many of the new left governments in Latin America, Uruguay’s needs to negotiate many internal tensions regarding how quickly to “push the envelope.”  The FA government has clearly made substantial progress in enhancing social security and improving the living conditions of the majority of the people (through job-creation and industrial policy initiatives combined with major expansion in education and social programs – all financed with higher taxes).  But it has also worked to stimulate private sector investment.  Its approach has been compared to Lula’s in neighbouring Brazil, although my review suggests the Uruguayans have perhaps been more ambitious in their social initiatives.

Many progressive forces want to see the government move faster, including unions which have organized strikes and other protests.  In general I think this tension is healthy.  The government will do better if it is constructively pushed from the left.  That’s certainly better than sitting back and waiting for an elected government to “deliver the goods,” and then complaining bitterly when they “sell out.”  We’ve learned the hard way, over and over again, that “winning” an election is only the opening shot in a much larger and harder political struggle over the direction of society.  At the same time, all sides have to be respectful of the fragility of the coalition, and realize that if it falls apart then the hope for progress is lost – and hence those internal tensions need to be handled maturely and carefully.

On the hole, the proof is in the pudding: Uruguay’s economy has done well (like some others in South America, GDP growth continued, albeit more slowly, in 2009 despite the global crisis), and social conditions have improved.  Poverty rates have declined markedly.  In the 2009 election campaign, Mujica campaigned explicitly on the importance of social consumption (rather than private consumerism).  He travelled to his campaign events on Uruguay’s refurbished public transit system.

One indicator of Uruguay’s success: Uruguay now ranks 50th in the world on the UNDP’s Human Development Index, even though it has only the 70th highest GDP.  That gap between the GDP ranking and the HDI ranking is one of the largest in the world – and is evidence that the country is doing a good job (through these interventionist measures) at translating economic growth into genuine human progress.

The following are some of the achievements of the first (2004 – 2009) FA government in Uruguay.  It’s very encouraging to see what even a small country can do to improve the human condition, when the people are ambitious and organized enough to demand progressive change.  Paul has also suggested the following web site (in Spanish) as a useful reference on developments in Uruguay:

http://www.taringa.net/posts/info/2379342/Logros-del-Frente-Amplio!.html

  • re-opening of several industries that had been closed down under the former neoliberal government, including meatpackers, glass manufacturing, tire manufacture, aluminumextrusions, and value-added forest products (not just paper)
  • 25% increase in social spending
  • opening of a new eye hospital (with Cuban assistance), free surgeries
  • unemployment rate declines from 14% to 7.5% (lowest since the country began measuring)
  • over one million inscribed in government pension system, replacing private pensions
  • 25% increase in real wages, 23% increase in pensions
  • freeing up of collective bargaining
  • growth in union coverage, including police, agricultural workers, domestics, soldiers
  • the highest ever affiliation to PIT-CNT (central labour body)
  • 4.5% of GDP devoted to education
  • free student transit within 60 km radius of home
  • free mandatory education from age 4
  • tax reform, including income tax for higher incomes and reduction of value added tax
  • elimination of IMF debt, no more need to adhere to “conditions”
  • 350,000 children enrolled in government health care
  • a laptop for every primary school student (not including private schools – about 10%)
  • in 2004, when FA took office, 50% of families in poverty, and 15% in extreme poverty; by the middle of 2009, 21.7% were in poverty, and 1.7% in extreme poverty
  • 8 hr workday for agricultural workers
Enjoy and share:

Comments

Comment from Andrew Jackson
Time: May 25, 2010, 2:46 pm

Interesting post. Methinks much could be learned from our Latin American progressive trade union colleagues on how to creatively manage some of the tensions between coalition politics and pursuing a reform agenda.

Comment from Paul Tulloch
Time: May 25, 2010, 9:17 pm

I can say that given the violence and murders against trade unionists and activists in some other countries such as Colombia, El Salvador and some others, this is definitely in start contrast.

Somehow in my extended labour economists duties I have been researching these violent economies, drugs, organized violence and corruption, sweat shops and under developed agriculture leaves some of these economies in a perpetual state of nothingness. I think one of the bigger signs of lost hope, ironically, is the Hope II treaty being considered by the USA with Haiti. Or what about free trade with Colombia. How does trade rewards these countries? If anything, given the human rights abuses, murders and death and what have you, it basically allows companies here to exploit the use of these workers who cannot organize to take on these foreign powers. Or as in the case of some of our Canadian mining companies, go in and make use of the paramilitaries to quell the locals. Pacific Rim is pathetic and needs to be examined. A friend of mine has a new documentary called ‘Return to El Salvador’ that goes through the history of this small violent plagued country, civil war, drugs, paramilitaries and now finally a left leaning government. But the murders and death threats have not stopped. So how can a progressive response come together within a space of such brutality. It is such difficult work to even research. A film maker documenting the violence and the economy was killed last fall.

Hopefully with enough external pressure these countries can be coaxed. I do believe El Salvador with a new government does stand a chance of maybe achieving what you mention here Jim, however, it starts with an end to the violence. And this our Tory friends with the Colombian Free Trade Agreement do not understand. Without an end to the abuses, there is no gains internally to more open trade, except for the current regimes of wealth within these countries. El Salvador has basically 12 very wealthy families and they are fighting back against this new left leaning government.

Weird space for economic development for central America. The elbow of the drug trade from Colombia into the USA and Export processing Zones that house low cost garments making use of low wage garment workers in these countries bound for the USA.

So if you are a woman, you work in the sweat shops- if you are lucky, and if you are a man, you work in the paramilitaries in the drug trade, (pay is good but the death benefits not so good, 80 people a month being killed in the drug trade in El Salvador) Or lastly you can stay in the rural areas in farm, that is if a mining company does not take your land or pollute your water, and somehow you can sell your crops under a free trade regime that has destroyed the local agriculture.

Hmmmm, quite a contrast huh.

Comment from Paul Pugh
Time: May 26, 2010, 6:57 pm

One of the topics worth examining is how the strengthening on regional solidarity is impacting the economies and politics of S. America. The ALBA trade project is one example. Less known (and less clear in its objectives) is Mercosur – yet, it has been a factor in enabling Uruguay (pop c. 3.5 million) to develop an auto assembly and auto parts sector, as its products meet regional content requirements of Mercosur (comprised of Brazil, Argentina, Paraguay and Uruguay – with Venezuela’ entry approved by Brazil, Argentina and Uruguay – Paraguay’s right-wing parliamentary majority is holding up the process).

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