20090420

Brazil is better off for the change... ..

The truth is often shocking, and when Brazilian President Luiz Inácio Lula Da Silva told a shocked British Prime Minister Gordon Brown—and the world press—that the financial crisis had been created by "white-skinned people with blue eyes," he spoke the truth. Actually, it's even worse than what Lula said. "White-skinned people with blue eyes" aren't just responsible for the current crisis; the blue-eyed palefaces are responsible for saddling the world with a financial system that has a built-in tendency to crash. The modern financial system grows out of a series of innovations in 17th-century Netherlands, and the Dutch were, on the whole, as Lula describes them. From the Netherlands, what the English called "Dutch finance" traveled over the English Channel, as the English borrowed Dutch ideas to build a stock market, promote global trade and establish the Bank of England, going on to build a maritime empire of commerce and sea power that dominated the world until World War II. Dutch finance became "Anglo-Saxon capitalism," but otherwise went on as before. When the British system fell apart, the center of world finance crossed the water again, and New York and Washington replaced London and Amsterdam as centers of global politics and finance.

Today's is one of the worst; millions of people are losing their jobs, and millions of families once on the edge of prosperity are falling back into poverty—not just in America and Europe but in China, India, Africa and, as Lula knows all too well, Brazil.


Lula himself is an example of something else. He's a man of the left with deep concern for the poor, but he also understands that for all its shortcomings, the market isn't the enemy of the poor. Brazil's task, Lula believes, isn't to make war on the market, à la Venezuela's Hugo Chávez, but to harness its vast potential for the sake of the poor. This is new. Thirty years ago, Brazil, like most of Latin America, was polarized between a radical, antiliberal left and a radical, antiliberal right. Today Brazilian politics are different; both the left and the right are more committed to free politics and free markets than they used to be.


Brazil is better off for the change. Although the current crisis is beginning to bite, Brazil has overcome the stagnation and corruption that halted growth after the first oil shocks and the Third World debt crisis, and is now one of a handful of countries with the power to shape the new century. And this hasn't just been the story in Brazil; more and more "developing" countries are turning into the pacesetters of liberal global capitalism. So Lula is right: the global crisis emerged from a system built, with all its many flaws, by blue-eyed palefaces. But if countries like Brazil can stick with their own versions of Dutch finance, the future of the system will increasingly be shaped by people who look more like Lula—and the palefaces are going to have to run hard to keep up.
Text and Source: By Walter Russell Mead / CFR. By Ton.

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