Two models of a Latin American left and future

>>> from new york, i'm chris hayes with greg grandin, victoria murillo. we were talking about the remarkable transformation that's happened in latin america in the last 10 to 15 years. there's this thesis about sort of dividing the kind of left movements that have happened in latin america . roughly into the kind of chavez camp and the lula camp. and, you know, it's an oversimplification but there are some lines like nationalization and price controls which you saw in chavez 's venezuela , you've seen a little in arrange tina under the kirchn. r, especially recently versus private markets and high levels of taxation redistribution that you've seen in lula's brazil . and the brazil model has been very successful. extremely successful. again, that's partly because of commodity prices have gone up. they export a lot of ethanol, they export a lot of soy. but i wonder what your sense is of that as a way of thinking about the -- about what's happened in latin america ?

>> well, i think, you know, there is less of a lula model than a brazil or a -- you know, certain countries that have more restrictions. lula decided -- if you remember when he elected there was panic so he had to sign that he would be moderate so that brazil would not suffer economically. brazil had a lot of foreign investment . still continues to have. but countries like chile that used to become left wing , that's not any more, probably would have again, uruguay and brazil are countries where there's moderation in discourse. tremendous distribution is really associated to the fact they have a political system where they have opposition from the right where voters cannot be moved in the same way as in the other countries. and there has been no kind of collapse of the party systems the other more radical countries --

>> what's interesting to me, redistribution as one learns from watching american politics is hard, right? it's rolling a rock up a hill. because the people who make a lot of money don't want to be taxed. you know, rationally.

>> if you have a commodity, it's very easy not to tax -- if you tax soy in the port f you tax oil that your own company produces, this is not income tax we're talking about. all this redistribution is coming from commodity taxes.

>> that's right.

>> going back to the distinction between lula and chavez , they both came out of very different contexts, right? chavez came out of a context of complete collapse and he basically was presiding over the reformation. lula was elected in a very complex, established political system . that to a large degree, the left, the ptl built after the --

>> the workers party .

>> y yes. after the dictatorership. so there was much -- in chavez was in brazil , would he be lula? that's the question. to the degree they tried to divide them, this is something being peddled by washington and washington think tanks . just read lula's op-ed the other day in the "new york times" where he makes it clear that he called him a cherished partner. he understood they is had the same goals and worked to build this alternative political structure .

>> i suspect you do see a distinction between them?

>> talking about washington think tanks .

>> right.

>> no, i mean, i think lula's article didn't surprise me. clearly there's great solidarity solidarity, affinity, all of that expected. if you look at brazil and venezuela , they're two very different models. there's a give and take. take one country, peru . peru is a country that hasn't had a leftist government at all. if you look at gdp, poverty gone down. big commodity producers.

>> colombia as well.

>> under santos, not a man of the left.

>> no.

>> and the current president of peru backed -- was identified with chavez in 2006 , lost. then he came back in 2011 had advisers from lula, who were helping him change to a much more moderate, pragmatic position, won the election of 2011 and his economic policies is like the envy of milton friedman today. he's very, very orthodox, conventional, fiscal discipline and the like. so, there are some stories out there that i think are very instructive about what's an appealing model more broadly.

>> but that's -- this point is very interesting, right? if inequality is going down in countries both with left and right governments, that's a fascinating thing, right? that doesn't happen very often. i mean, what is the story -- i guess my question is, is that just -- i guess we're talking around the same thing. natural resources , is that really the story here? i look at politics and i find the politics of lula's brazil , which are complicated and there's corruption scandals and a million things. but they're encouraging in the sense of, you know, there's this model in which a left party runs expless italy on egalitarian agenda. they get elected into office and they make the country more equal. in a country right now that has huge levels of high and accelerating inequality, that has elected a left of center party in barack obama but has seen inequality continue to rise, in some ways get worse after the recession, my question is, what can we learn, what is the takeaway? maybe the answer is, it's just too --

>> the lessons are not so easy because inequality to begin with in all of latin american countries is much higher than the u.s. inequality post-taxes was also much higher than the u.s. because income taxes do not work very well in much of the region.

>> very undercollected.

>> so, you see governments right and left dependent on the commodity going to reduce inequality. what's the long-term sustainability if something happens to china and india where the new actors --

>> the ones buying the commodities.

>> the ones buying commodities. south america is looking at asia, not at the u.s., but is really dependent on these -- for these policies both left and right.

>> do you think there are lessons?

>> for the u.s.?

>> yeah.

>> i think there -- i think --

>> for egalitarian politics in the u.s. ?

>> yeah. the basic lesson just in moral terms that a government should serve to make the country more humane and the country's resources should be put to that. there's different ways of doing it, different context. peru and brazil and venezuela , they rempresent different experiences. they operate in this framework that has emerged out of the ruins of washington consensus that also being able to control your taxes, control your commodities so it isn't all geared toward keeping the bond markets happy in washington or having the u.s. --

>> although --

>> -- single market , single source of credit. there's been a diversification. there hasn't been a break with the model but a diversification of credit and capital and brazil and venezuela have led.

>> lula came in, appointed an orthodox economic team and they imposed austerity. first thing they did. in the wake of the argentine currency crisis, there was fear, you know, the bond yields blew out in brazil . there was fear brazil would be the next domino to fall. de austerity medicine. de the milton friedman thing, tight monetary policy , cut their budgets. he imposed austerity right after getting elected as this left workers party person and it was -- and it worked in the sense that it broke the fever of of, you know, the international capital flowing out.

>> i want to make the point that i think without chavez lula would have been seen as being on the far left .

>> another good point.

>> and the fact that chavez was there with his provocative statements, the united states and eu let's collaborate with lula. we have someone who's a moderate who would not have --

>> can chavez was the blocking in terms of lula, the running back, in terms of this relationship.

>> one thing washington could learn is to apply the washington consensus . fiscal discipline , fiscal responsibility --

>> sthaelts exactly what --

>> the hallmark -- pardon?

>> that's what steroid destroyed --

>> no, there are parts but not fiscal discipline and -- united states , enormous deficits and debts. these countries are very well managed.

>> this is a through the looking glass boom rang advice from michael shifter. now being imposed in latin america by left wing governments and we should learn the lessons.

>> that's right. they've been utterly responsible. we've been irresponsible in this country for a long time. look at the problems we're having.

>> greg grandin, sujatha, and michael shifter, think tank , thank you for joining us this morning.

>>> if american -- american politics , elections are only half the battle. the other half, the one you haven't heard about, is right after this. [