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January 24, 2007

Here We Go Again -- Now in Ecuador

By Carlos Alberto Montaner

The spanking-new president of Ecuador, Rafael Correa, has declared himself a disciple of Hugo Chávez and has signed up for ''21st century socialism.'' Without wasting a minute, Correa will summon a constituent assembly to scuttle the republican model and eliminate the traditional balance of powers.

He proposes to build a strongly centralist type of government dominated by the executive, an interventionist and protectionist state where the ''strategic'' enterprises will be part of the public sector.

In addition to describing himself as a socialist, Correa says he's a nationalist, an indigenist and a fervent Catholic. He definitely does not like free trade with the United States, plans to repudiate the foreign debt (something Argentina did recently, with impunity) and will try to link his country's economic fate to Mercosur.

Most of his compatriots will probably join him in the adventure. Ecuador is a country where a substantial part of the population is very poor. The promise to rapidly create a wealthy and egalitarian society usually is tremendously seductive in that type of environment.

The absence of a broad middle-income social sector inevitably leads to a diagnosis that is false but persuasive: The few who hoard the wealth are responsible for the general wretchedness of society. Suddenly, the poor change their name and begin to call themselves ''the dispossessed.'' Somebody took away what belonged to them. At that point, envy and anger entwine and become a forest of clenched fists that welcome the arrival of socialism.

Socialism always creates an illusion of swift prosperity and an end to injustice. The happy-go-lucky populist family thinks that it knows the formula of speedy development. It is an aspect of the fatal arrogance that economist Friedrich Hayek spoke about. In addition, Correa studied in Belgium, in Louvain, where he built up an enthusiasm for the formidable state machinery of neighboring France.

France has a sort of monstrous, mandarin-like bureaucracy that operates efficiently enough but at a very high cost. Nevertheless, the French appreciate its public systems of health and education and in general do not complain about the services provided by the state. Correa thinks that he can achieve similar results in Ecuador.

What's probable, however, is that this experiment, like almost all socialist machinations, will severely aggravate the problems besetting the country. The Ecuador he plans to build will not resemble opulent France but the disastrous Peru of Juan Velasco Alvarado, the Argentina ruined by Juan Domingo Perón or today's Venezuela, where the numbers of the poor (and the rate of crime) rise almost as steeply as the price of crude oil.

In a society scourged by corruption and the proverbial inefficiency of the state, it is counterproductive to deliver more resources to the bureaucracy so it can misspend or steal them. In a country that lacks capital and has an extremely weak entrepreneurial fabric, it is a huge blunder to frighten off national and foreign investment and dangerously increase fiscal pressures.

Why are Ecuadoreans -- or Venezuelans or Bolivians -- not capable of learning from experience? Why do they become enamored of Venezuela's authoritarian populism but not of the successful Chilean model? Moreover, if the Ecuadoreans know that 20th century socialism cost 100 million lives and set back (economically speaking) all the countries that adopted it, how dare they revive it in the 21st century?

The explanation for such irrationality may have to be sought in a psycho-physiological analogy. When teenagers take up smoking, the cigarette and the addiction to nicotine bring them some momentary pleasure. At that stage, it is useless for a doctor to explain to them that cigarettes lead to cancer or emphysema and that they will have respiratory difficulties that will turn their lives into an ordeal.

Those warnings are abstractions or very long-term threats that teenagers have heard a million times, while smoking the cigarette is a pleasant reality, here and now.

Something similar occurs with socialism: It is a pleasant and apparently innocuous drug to which you surrender easily. By the time you discover the truth, it's usually too late.

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