Neo-Liberals’ Dismissal of Latin Americans as “Idiots”

By William K. Black
(Cross posted at

Alvaro Vargas Llosa (AVL) co-authored the Guide to the Perfect Latin American Idiot with two other journalistsHe revisited the subject with an article in 2007 entitled “The Return of the Idiot.”

“The ‘Idiot’ species, we suggested, bore responsibility for Latin America’s underdevelopment. Its beliefs — revolution, economic nationalism, hatred of the United States, faith in the government as an agent of social justice, a passion for strongman rule over the rule of law — derived, in our opinion, from an inferiority complex. In the late 1990s, it seemed as if the Idiot were finally retreating. But the retreat was short lived. Today, the species is back in force in the form of populist heads of state who are reenacting the failed policies of the past, opinion leaders from around the world who are lending new credence to them, and supporters who are giving new life to ideas that seemed extinct.”

The American writer P.J. O’Rourke recently echoed those themes.

“Redistributionist political ideologies, in decline since the fall of the Soviet bloc, are on the rise again. Will you [President Obama] help the neo-Marxists of Latin America redistribute stupidity to their continent?”

AVL derides young Latin Americans as idiots, claiming that “they suppress the notion that predation and vindictiveness are wrong.”  That claim fails because stopping “predation and vindictiveness” is what drives young Latin American progressives.  The authors insult young Latin Americans as “idiots” who embrace “stupidity” because of their “deficient egos.”  Unsurprisingly, the Vargas-Llosa clan’s journalists choose to live outside Latin America where they can avoid the Latin Americans they loathe.  They prefer to come only at the invitation of the oligarchs.  The remarkable fact is that they consider Latin Americans’ overwhelming rejection of their embrace of the predatory oligarchs to be proof that their contempt for the peoples of Latin America is warranted.

AVL dismisses any consideration of the interests of the indigenous peoples of Latin America.  Any American or European who disagrees with AVL’s claim that Latin Americans are “idiots” is guilty of “intellectual treason.”

AVL claims that populism inevitably fails and explains Latin America’s economic failures.

“The legacy of these policies is clear: Nearly half the population of Latin America is poor, with more than 1 in 5 living on $2 or less per day. And 1 to 2 million migrants flock to the United States and Europe every year in search of a better life.”

AVL has given us the ruler by which he says we must judge the success of leaders.  Changes in poverty and emigration rates are the standard.

AVL divides Latin American leaders and citizens who he opposes (the majority of Latin Americans) into “vegetarians” (Brazil, Uruguay, and Costa Rica) and “carnivores.”  His hate and contempt for those he labels carnivores consumes him.

“By contrast, the ‘carnivorous’ left is represented by Fidel Castro, Hugo Chávez, Evo Morales, and Ecuador’s President Rafael Correa. They cling to a Marxist view of society and a Cold War mentality that separates North from South, and they seek to exploit ethnic tensions, particularly in the Andean region.”

AVL claims that the idiocy of most Latin Americans creates a “tension” that blocks the adoption of neo-liberal economic ideologies that are transforming the world.  Recall that he was writing in mid-April 2007 – when many of the economies he was praising were already catastrophic failures – but were clueless that they were already doomed.

“Despite some progress in recent years, this tension is holding back Latin America’s development in comparison to other regions of the world — such as East Asia, the Iberian Peninsula, or Central Europe — that not long ago were examples of backwardness. Latin America’s annual GDP growth has averaged 2.8 percent in the past three decades — against Southeast Asia’s 5.5 percent, or the world average of 3.6 percent.”

What European countries did the neo-liberals single out for special praise?  The Cato Institute, as late as 2007, was singing the praises of Iceland and Ireland.  They had both switched from having heavy government involvement in the economy to extreme neo-liberal policies.

In August 2007, a Cato publication claimed:

“Iceland’s economic renaissance is an impressive story. Supply-side reforms’—ie tax cuts—‘along with policies, such as privatisation and deregulation, have yielded predictable results; Incomes are rising, unemployment is almost non-existent, and the government is collecting more revenue from a larger tax base.

On March 16, 2007 – a year after the Irish property bubbles collapsed – the neo-liberal experts cited Ireland as the example of the success of their policies.

“Ireland […] boasts the fourth highest gross domestic product per capita in the world. In the mid-1980s, Ireland was a backwater with an average income level 30% below that of the European Union. Today, Irish incomes are 40% above the EU average. Was this dramatic change the luck of the Irish? Not at all. It resulted from a series of hard-headed decisions that shifted Ireland from big government stagnation to free market growth.”

The Icleandic and Irish economic “miracles” of the last decade proved to be the product of large scale “accounting control frauds” that hyper-inflated bubbles and produced catastrophic crises and deep recessions despite international aid.

AVL gave special praise to the nations of central Europe and the Iberian Peninsula.  What did the move of these nations to the far more extreme neo-liberal economic policies championed by AVL and his father in the last decade produce?  Recall that AVL and his father should be more familiar with the Iberian economies than any other in the world.

Unemployment in Spain is 25%, with youth/young adult unemployment at 55.9%.

Portugal’s unemployment rate is 15.8%, and the unemployment rate for youth/young adult is 39.1%.  Portuguese and Spanish unemployment are at record highs and have been increasing rapidly.

Spain, Portugal, and Ireland are triple-victims of neo-liberal economic dogmas.  Their crises were caused by neo-liberal financial policies and then greatly compounded by the neo-liberal dogma of inflicting austerity on nations in recession and the inept neo-liberal design of the euro.  Austerity in response to a recession is the economic analog to the once common medical malpractice of bleeding a patient.

Overall, Latin America’s economic performance has become far superior to the Eurozone.

“Latin America’s economies are growing at a rate of more than 3 per cent, while those of Spain and Portugal are expected to shrink by 1.5 and 3 per cent, respectively, this year.

Latin America’s unemployment rate is 6.5 per cent, while Spain’s and Portugal’s have soared to 25 and 16 per cent, respectively.”

Ecuador’s performance

I described Ecuador’s economic success under President Correa in several prior columns.

The most recent figure I found for Ecuadorian unemployment in 2012 was 4.6%.  The most recent figure for unemployment of those 15-24 years old is from 2009 when it was 14.1%.  In 2009, the overall unemployment rate was 7.3%, so it is likely that unemployment of those 15-24 years old has fallen materially.  These are remarkable results, but it is astounding that a nation that was synonymous with severe emigration attained a negative emigration balance no later than 2009 (I do not have data for when the rate first turned negative) and has maintained it for several years.  That means that more people move to Ecuador than leave it.  Ecuador now ranks a spectacular 137 compared to other nations in this category.  [My source for migration data is the CIA World Fact book – a delicious irony given the CIA’s dim view of Correa.]

Net migration rate:
-0.39 migrant(s)/1,000 population (2012 est.)country comparison to the world: 137

The article shows that Ireland and Italy now have very high emigration rates (respectively, the 43rd and 22nd worst in the world).  The CIA World Fact book shows that Spain and Portugal have, respectively, the 19th and 28th worst emigration rates in the world.


We have run what economists refer to as a “natural experiment.”  At the same time that Latin Americans were overwhelmingly rejecting key neo-liberal aspects of the Washington Consensus the Eurozone and the United States moved rapidly in the opposite direction by adopting ever more extreme neo-liberal dogmas.  These dogmas created what criminologists refer to as a criminogenic environment – an environment where the incentives are so perverse that they can produce epidemics of “control fraud.”  These fraud epidemics directly drove the financial crises in the United States, the United Kingdom, Ireland, and Iceland and indirectly triggered crises by causing global systemic shocks.  AVL does not wish to discuss the predation by the world’s most elite bankers.

The loss of the young (through emigration), employment, output, income, and wealth and the growth of poverty and inequality that resulted from the most extreme neo-liberal policies are staggering.  In the U.S., over 10 million Americans lost their jobs or could not obtain jobs that would have been produced by a healthy economy.  Spanish unemployment is nearly 5 million.  The crisis is so great that it is now common for Irish and Italian citizens to emigrate as soon as they earn their university degrees.  The Financial Crisis Inquiry Commission reported that the loss of U.S. wealth in the household sector alone was estimated at over $12 trillion – a trillion is a thousand billion.

More recent studies have demonstrated the scope of the losses.

“The average American family’s net worth dropped almost 40% between 2007 and 2010, according to a triennial study released Monday by the Federal Reserve.

The stunning drop in median net worth — from $126,400 in 2007 to $77,300 in 2010 — indicates that the recession wiped away 18 years of savings and investment by families.

Making matters worse, income levels also fell during the tumultuous three-year period, with median pre-tax income falling 7.7% as earnings from capital gains all but disappeared.”

In all of this, Ecuador under President Correa has been a beacon of hope and success.  Ecuadorians are “voting with their feet” to stay in or return to Ecuador.  The one thing that AVL and his famous father will never forgive Correa for is his success.  It is easy to dismiss those who disagree with you when they fail, but Correa has succeeded under the standards that AVL wrote in 2007 should be used to measure economic success.  It is the countries and neo-liberal policies that AVL and his father praised that blew up the world’s economy and harmed nations like Ecuador.  It is Colombia and Mexico, nations that AVL and his father praise as the models for Latin America, which are experiencing significant emigration.

AVL and his father could have responded to Ecuador’s gains in economics, political stability, and migration and the enormous support that polls find for Correa among Ecuadorians by praising Correa for his achievements in the factors that AVL said should be used to judge the success of Latin American leaders.  Instead, they sought to do everything they could to defeat Correa.  Failing that, they denounce Latin Americans as “idiots” because they support Correa’s successful policies and reject the failed neo-liberal dogmas that blew up the global economy.  It is unclear to me why Ecuadorians’ support for successful policies and rejection of disastrous policies constitutes “idiocy” or “stupidity.”

AVL’s and his father’s support for the predatory oligarchs of Latin America and their increasing willingness to ignore their murderous assaults on the people of Latin America during the dirty wars demonstrates that they have become what they denounce.  They are the European intellectuals who now whitewash inconvenient facts about the oligarchs out of their polemics in order to blame the “idiocy” of the peoples of Latin America for all the ills of Latin America.  Latin Americans, however, are demonstrating their wisdom by rejecting the failed dogmas of those who loathe them and their democratically elected leaders.


Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.

Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.

Follow him on Twitter: @williamkblack


11 responses to “Neo-Liberals’ Dismissal of Latin Americans as “Idiots”

  1. Meanwhile back in the USA, the actual unemployment rate is 18.8%

    From the US government Bureau of Labor Statistics.

    Number of people employed December 2012 =143.06 million

    Official unemployment rate 7.7% (The BLS no longer considers as “unemployed” those workers without jobs who have not looked for work in the past year, because they feel no jobs are available.)

    Analyzing the US government figures:

    Total US population = 315.11 million
    Number of Men over 16 yrs old employed = 75.686 million
    Number of Women over 16 years old employed = 67.373 million
    Total =143.06 million jobs

    Therefore number of stay at home women = 8.31 million

    Calculating size of potential workforce:

    33 million over age 65, but 21.5 % are still working = 25.9 million retired
    20 million under 5 years old
    75 million at school/college
    8.31 million stay at home wives/Moms
    8 million are on SSI disability

    Total 137.21 million not in the workforce

    (1.4 million are in the military and are technically employed, but not counted by BLS, but I will add them to the number of employed)

    Therefore potential workforce = 315.11 – 137.21 = 177.90 million

    Number of jobs = 143.06 + 1.4 military = 144.46 million

    Therefore number unemployed = 177.90 – 144.46 = 33.44 million

    % unemployed = 33.44 /177.90*100 = 18.77 %

    This also underestimates unemployment in that about 10 million people are involuntarily working part time

    Bureau of Labor Statistics:

  2. Evidently AVL did not read the neoliberal’s Bible. The old testament of this Bible represent book The blood bankers, by James S. Henry about which Amazon say: “Like tentacles on a vast octopus, the firsthand investigations in The Blood Bankers all lead to one core. A financial detective of sorts, investigative journalist J.S. Henry analyzes a range of scandals, including the looting of the Philippines by the Marcos family and the financial collapse of nations throughout the developing world. A rogues’ gallery of international criminals owes its existence to the dramatic growth of the underground global economy over the last two decades. Our world is being reshaped, often in sinister fashion, by wide open capital markets and an international banking network that exists to launder hundreds of billions of dollars in ill-gotten gains. Here is an inside look at globalization’s dark side—the new high growth global markets for influence-peddling, capital flight, money laundering, weapons, drugs, tax evasion, child labor, illegal immigration, and other forms of transnational crime.”
    The New Testament represents book: Confessions of an Economic Hit Man by John Perkins. Amazon:”…John Perkins goes behind the scenes of the current geopolitical crisis and offers bold solutions to our most pressing problems. Drawing on interviews with other EHMs, jackals, CIA operatives, reporters, businessmen, and activists, Perkins reveals the secret history of events that have created the current American Empire, including:

    ? How the ?defeats? in Vietnam and Iraq have benefited big business

    ? The role of Israel as ?Fortress America? in the Middle East

    ? Tragic repercussions of the IMF?s ?Asian Economic Collapse?

    ? The current Latin American revolution and its lessons for democracy

    ? U.S. blunders in Tibet, Congo, Lebanon, and Venezuela

    From the U.S. military in Iraq to infrastructure development in Indonesia, from Peace Corps volunteers in Africa to jackals in Venezuela, Perkins exposes a conspiracy of corruption that has fueled instability and anti-Americanism around the globe, with consequences reflected in our daily headlines. Having raised the alarm, Perkins passionately addresses how Americans can work to create a more peaceful and stable world for future generations.”
    @ Understanding Deep Politics – featuring Michael Parenti

    Parenti explains those -isms explanations. “They say…there is a guy who has ideas. And people follow his ideas…”
    “Most Americans have no idea that what we are fed by the news media is nothing more than a portrayal of what powerful corporations want us to believe, that what happens to pass as education is as often as not mere propaganda, that what we learn in church may have very little or nothing to do with the truth, that what our parents teach us may be nothing more than an accumulation of their own personal biases, no doubt a rather subtle modification of what they were taught by their parents. And through such a process, governments and nations around the world wield control as to what their citizens, believe, value, and do.”
    Doug Soderstrom

  3. Vargas Llosa essentially expresses the mentality and the modus operandi that has always obtained in Latin America. Underlying everything is racial identification coupled with thinly veiled disdain for the exploited and downtrodden indigenous–just watch the ads on Latin American media. It is an extension of the Conquista, and therefore of the mentality of “the white man’s burden,” or “la mission civilisatrice.” Only the modern European-American variety of civilization, industry, consumerism, and technology is worthy of the name–rather as if Plato, Aristotle, Christ, and the Buddha were “backward” individuals, but of course not some MBA in a jet plane with his laptop “twittering”. Such are the profound and enduring values of our fat and “pursy times. On the part of the typical specimen of the Latin American elite there is almost zero authentic concern for the country and its inhabitants, but only for elite privilege, crass materialism and will to power, obtained essentially–following land monopoly as inheritors of the Conquista–as rentier compradors joint venturing with American and European trade and industry backed, of course, by plenty of firepower given to them by the governments and their corporations they do business with–think Pinochet, Guatemala, Honduras, “the war on drugs,” etc., etc. It is a profoundly parasitical and merciless governing elite, which has in view only a “development” in which they can boast of skyscrapers and “progress” and a lush lifestyle, but governing countries with deplorable GINI indexes that tell the real story of monstrous concentration of land ownership and corporate wealth, power, and privilege. And no, I am most assuredly not a communist nor even a socialist; I just believe in justice.

  4. By the way, see these items concerning Ecuador at Real News.

    Man is well on the way towards self-destruction thanks to an accurate assessment of what is actually possible and corresponding values and initiatives.

  5. Recommend the videos “The War on Democracy” by Jonathan Pilger and
    “South of the Border” by Oliver Stone,
    if you have not seen them already.

  6. AVL’s hate filled rants against ‘Marxists, populists and the intellectually inferior’ masses are not without historical parallel. It’s an ugly reiteration of an ideology that was accurately characterised by Edward S Herman as ‘sub-fascism,’ that is a fascist commitment to arbitary violence and extra judicial murder without the corresponding social component found in the conventional variant. In other words neo-liberalism via the death squad. AVL belongs in the same ‘pantheon’ of crinimals as Pinochet, Trujillo, Duarte, et al.

  7. Left unsaid in all of this is the record of US economic, military and political intervention the region during the second half of the 20th century. In the 1980s, the southern cone and much of the continent were under the rule of brutal military dictatorships. As the cold war ebbed and with it the dipolar world order and as the US allowed itself to go broke fighting cold war Asian policy blowback, this depolarized the global south to seek its own path.

    Neoliberal economics is the last gasp effort of the global north finance elites to impose control over the global south. The closing of the economic gap between Latin America and the US as the US has fallen relative to Latin America which has improved relative to the US has weakened the hand of the US and global northern finance elites relative to that of what would have passed for Latin American leftists whose politics would have passed for those of the US liberal democrats between 1930 and 1970.

    • Spreading of the wealth via socialism is what the US elites seem to fear the most.

      Chavez of Venezuela is demonized by the US media, because he has used the country’s oil revenues to provide free healthcare and education to huge numbers of previously ignored citizens.

      Regarding Libya, throughout most of Gaddafi’s rule, Libyan citizens enjoyed free health care, free education and free electricity and water. Car purchases for every citizen were 50% subsidized by the government. Gas in Gaddafi’s Libya was $0.14 per liter. Under this ‘brutal dictator’, the mother of every newborn child received $5,000. All these, and many other social benefits under Gaddafi, make the supposedly socialist systems of France and other European nations look like predatory capitalist regimes. Today, with Gaddafi gone, Libya’s generous social benefits and the formerly high standard of living of its citizens are under serious threat from the new pro-Western puppet regime.

      This is in fact a war on democracy, waged in the name of freedom.

      • The contemporary Latin American electoral left is domesticated compared to the insurgencies of the cold war era.

  8. Here is John Pilger’s video -The War on Democracy.

  9. Tristan Lanfrey

    I generally agree with what you write, but as I already commented on your previous article about Ecuador, you are reporting Ecuador enjoying positive immigration, whereas your source data apparently states the opposite. In other words, I understand they say more people are leaving the country, while you turn it into more people are entering the country.

    On the CIA website, their definition is:

    Net migration rate
    This entry includes the figure for the difference between the number of persons entering and leaving a country during the year per 1,000 persons (based on midyear population). An excess of persons entering the country is referred to as net immigration (e.g., 3.56 migrants/1,000 population); an excess of persons leaving the country as net emigration (e.g., -9.26 migrants/1,000 population). The net migration rate indicates the contribution of migration to the overall level of population change. The net migration rate does not distinguish between economic migrants, refugees, and other types of migrants nor does it distinguish between lawful migrants and undocumented migrants.

    Note their example, a negative migration rate denotes “emigration” while a positive rate denotes “immigration”. Therefore Ecuador’s negative (-0.39) rate means it is losing people.

    This does not negate your more general point in your article, and according to what you describe, my guess is that the migration rate was much much further into negative in the past.