National Public Radio may win the prize as the national media outlet that’s most enthusiastic about a collapse of high finance on Wall Street. On Tuesday night, NPR’s evening newscast All Things Considered publicized the delighted reaction of Venezuelan socialist strongman Hugo Chavez, as reporter Tom Gjelten explained that "free-market fundamentalism" was falling out of favor, and the crisis may mean the "end of Reagan-Thatcherism." It may lead to less "economic preaching" about a "free-market gospel" from Washington. All the story’s experts were critical of "free-market ideologues," with no room for a debate.
Gjelten is married to ABC reporter Martha Raddatz, who also used to work at NPR.
MELISSA BLOCK, host: This is All Things Considered from NPR News. I'm Melissa Block. At least one world leader is taking some pleasure in the turmoil on Wall Street. Venezuelan President Hugo Chavez said today that this week's meltdown shows the free-market approach long promoted by the United States has, in his words, "collapsed." Chavez may be overstating the case, but as NPR's Tom Gjelten reports, the current financial crisis is causing some rethinking of the free-market gospel, especially in Latin America.
TOM GJELTEN: In Venezuela, Hugo Chavez has nationalized oil, telephone and electric companies. In Bolivia, President Evo Morales took control of the natural gas reserves. And in Ecuador, President Rafael Correa just won a referendum that will give him more control over his country's economy. David Rothkopf, who headed the International Trade Administration under President Clinton, says all three presidents can now cite U.S. government intervention in the economy to justify their policies.
Mr. DAVID ROTHKOPF (Former Head, International Trade Administration): And you know, in the past, the United States has been able to say, well you know, 'Don't do that, look at how prosperous we are, and we would never do that.' But in the wake of the effective nationalization of Fannie Mae, Freddie Mac, AIG, we have now intervened more in our financial markets than a lot of those countries have.
What? Now the experts on NPR are suggesting that the American economy is more socialist and more nationalizing than the Marxist ruler of Venezuela? That’s distressing to conservatives. But Gjelten suggests taking steps away from capitalism is working:
GJELTEN: The policies pursued by Hugo Chavez in Venezuela have discouraged private investment and may yet prove disastrous. But other Latin governments that have taken more moderate steps away from free-market orthodoxy are doing relatively well. Brazil, Chile and Ecuador experienced sharp financial crises in the 1980s and '90s, and in response, they implemented policies to bring more stability to their economies. Some free-market ideologues criticized them. But Nancy Birdsall, president of the Center for Global Development, says those governments were acting wisely.
Ms. NANCY BIRDSALL (President, Center for Global Development): They did stick with more emphasis on regulation as a result of being burned during the crises of the '80s and the '90s. So they learned the lesson that both the markets and the regulatory authorities in the U.S. had not learned in the past 30, 40, 50 years.
GJELTEN: The lesson being that markets left entirely on their own don't always work in a country's best interests. For years, mainstream economists have argued that governments in developing countries should respect markets, avoid overspending and follow prudent monetary policies. It was called the 'Washington consensus,' because it reflected the advice of the International Monetary Fund. Speaking in Brazil today, Venezuela's Hugo Chavez says the United States' new willingness to abandon free-market principles shows the 'Washington consensus' has collapsed. But the man who came up with that term, John Williamson, says what's been discredited is the extreme version of that ideology - he calls it 'market fundamentalism.'
Mr. JOHN WILLIAMSON (Economist; Senior Fellow, Peterson Institute for International Economics): I wasn't talking about market fundamentalism when I coined the phrase 'Washington consensus.' I was talking about something much more general.
GJELTEN: Perhaps the best example of a Latin American country departing from free-market fundamentalism is Chile, which in the late 1990s instituted a requirement that foreigners investing in the country had to leave their money there for at least a year. But the United States made Chile drop that requirement as part of a free-trade pact, and Chile agreed. John Williamson, now at the Institute for International Economics, says the United States should not pressure countries in that way.
Mr. WILLIAMSON: That seems to me most undesirable. I thought that the sort of capital control one had in Chile in the 1990s was just right.
GJELTEN: Nancy Birdsall of the Center for Global Development says the current crisis in global financial markets shows the Chileans were onto something in the 1990s with their efforts to control capital movements in and out of their country.
Ms. BIRDSALL: To the extent the Chileans weren't already vindicated, they certainly are now.
GJELTEN: David Rothkopf, author of "Superclass: The Global Power Elite and the World They Are Making," says the global financial crisis may mark a 'watershed' in economic philosophy: the end of 25 years of 'Reagan-Thatcherism' - the idea that governments should just stay out of economic affairs.
Mr. ROTHKOPF: I think it's quite possible that over the next 25 years, the prescriptions for reform you see are going to have a bigger government component, perhaps a bigger regulatory component on the global stage, as opposed to the national stage.
GJELTEN: That could also mean less economic preaching from the United States in Latin America and elsewhere, and maybe more attention to other governments' ideas. Tom Gjelten, NPR News, Washington.
The listener would not be mistaken to hear a tone of relief that the Third World won't be burdened with some right-wing "Washington consensus" any more.