Fixing a hole.

Liberty for Latin America By Alvaro Vargas Llosa Farrar, Straus and Giroux US$25

The Peruvian journalist and writer Alvaro Vargas Llosa argues that Latin America has suffered five centuries of oppression. This history of oppression, he writes, is imposed via five principles: corporate power; state mercantilism; privileges granted to certain groups; the transfer of wealth within a closed environment; and the laws governing politics. In this, his newest book, the writer tries to find an explanation for these evils and, at the same time, determine what reforms are needed to put the continent on the path to prosperity at last.

Vargas Llosa does analyze with precision the many errors committed by Latin American societies, mistakes that have hindered their advance toward industrial development. He points to the lack of effective investment of private capital, including the savings of the poor, and the lack of a solid system of property rights, which in practice are reserved only for the highest strata of society.

In his analysis of the continent's ills, Vargas Llosa emphasizes the absence of a solid middle class; the tendency of rapacious states to nationalize successful private companies; and the proliferation of illegal businesses and a huge underground economy The spread of illicit economic activity, the author writes, generates low real growth rates, widens the gap between rich and poor and, consequently, aggravates social resentment. Intelligently, he observes that the idea looms large within Latin America's consciousness that certain institutions don't work because of the character of the people that run them, when, in reality, what's needed is to reform or replace those institutions.

Vargas Llosa suggests that lasting change will come through permanent revolution based on free-market principles. Which is to say, two decades after the majority of Latin American countries adopted the recommendations of the Washington Consensus--a free-market therapy long propounded by the United States--this book recommends that the continent give neoliberal policies a fresh chance, apparently forgetting that the most demanding promoter of free markets, the United States itself, hasn't removed the barriers protecting its own farmers and industries from foreign competition.

Nevertheless, the remedies that Vargas Llosa proposes to jump-start Latin America's economic engine form part of the same old neoliberal recipe, standbys such as reducing the state's role in production. He also reiterates some other well-known concepts from the same school of thought: That the state doesn't have to offer education and health services; that taxes constitute a kind of expropriation, and so on. The book will be music to the ears of those who have already bet firmly on a free-market system with no restrictions.

Twenty years of failures in the application of this model, of corrupt privatizations and the scandalous emergence of ill-gotten fortunes, don't pass unnoticed by the author. Together with his neoliberal prescription, Vargas Llosa suggests the need to create societies based on the rule of law.

Private hands. He sets out four high-priority tasks to advance his vision of development for Latin America: Reform of the political system, eradication of poverty, elimination of corruption in the judicial system and guarantees of better access to education and medical services, which, in an ideal world, would be in private hands.

His analysis is careful and yet passionate. The problems of the continent are summarized with acuity and learning and presented in an academic style. Nevertheless, the book fails to offer realistic solutions for lasting reform, while the continent, at least in the immediate future, is advancing along a different path entirely. Given the recent electoral turn to the left South America has taken, with Lula in Brazil, Hugo Chavez in Venezuela and Nestor Kirchner in Argentina, the pendulum appears to be swinging in the opposite direction.

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