From: harelb@math.cornell.edu (Harel Barzilai)
Subject: Nicaragua Myths:  "Sandinista Economic Mismanagement" (1)
Followup-To: alt.activism.d
Originator: daemon@pencil.cs.missouri.edu
Organization: ?
Date: Tue, 18 Aug 1992 22:29:45 GMT


[From _The Victors, Part II_ by Noam Chomsky, Z magazine, Jan 91]
[See bottom for more info]
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[quoting article:]
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The fashion at home, as noted, is to attribute the problems of
Eastern Europe to the "sick system" (quite accurately), while
ignoring the catastrophes of capitalism or, on the rare occasions
when some problem is noticed, attributing it to any cause
@u<other> than the system that consistently brings it about. 
Latin American economists who have attributed the problems of the
region to the "development model" are generally ignored, but some
of them have been useful for ideological warfare and therefore
have attained respectability in the U.S. political culture.  One
example is Francisco Mayorga, a Yale Phd in economics, who became
one of the most respected commentators on the economic affairs of
Nicaragua in the 1980s because he could be quoted on the economic
debacle caused by the Sandinistas.  He remained a U.S. favorite
as he became the economic Czar after the victory for the U.S.
candidate in the February 1990 election, though he disappeared
>from view when he was removed after the failure of his
highly-touted recovery policies (which failed, in large part,
because of U.S. foot-dragging, the UNO government being nowhere
near harsh and brutal enough for Washington's tastes).

But Mayorga was never quoted on what he actually wrote about the
Nicaraguan economy, which is not without interest.  His 1986 Yale
doctoral dissertation is a study of the consequences for
Nicaragua of the development model of the U.S.-backed Somoza
regime, and of the likely consequences of alternative policy
choices for the 1980s.  He concludes that "by 1978 the economy
was on the verge of collapse" because of the "@u<exhaustion> of
the agroindustrial model" and the "monetarist paradigm" that the
U.S. favored.  This model had led to huge debt and insolvency,
and "the drastic downturn of the terms of trade that was around
the corner was clearly going to deal a crucial blow to the
agroindustrial model developed in the previous three decades,"
leading "inexorably" to an "economic slump in the 1980s." The
immense costs of the U.S.-backed Somoza repression of 1978-9 and
the contra war made the "inexorable" even more destructive. 
Mayorga estimates capital flight from 1977 to 1979 at $.5
billion, and calculates the "direct economic burden" of war from
1978 to 1984 at more than $3.3 billion.  That figure, he points
out, is one and a half times the "record GDP level of the country
in 1977," a year of "exceptional affluence" because of the
destruction of the Brazilian coffee crop, hence regularly used by
U.S. propagandists (including some who masquerade as scholars) as
a base line to prove Sandinista failures.  The course of the
economy from 1980, Mayorga concludes, was the result of the
collapse of the agroindustrial export model, the severe downturn
in the terms of trade, and the unbearable burden of the 1978-9
war and then the contra war (his study ends before the U.S.
embargo exacerbated the crisis further).  Sandinista policies, he
concludes, were ineffective in dealing with the "inexorable"
collapse: they "had a favorable impact on output and a negative
effect on rural wages and farming profits," favoring industrial
profits and redistributing income "from the rural to the urban
sector." Had there been "no war and no change in economic
regime," his studies show, "the Nicaraguan economy would have
entered a sharp slump."@note{Mayorga, @u<The Nicaraguan Economic
Experience, 1950-1984: Development and exhaustion of an
agroindustrial model>, Yale University Phd thesis, 1986.  See
@u<Barricada Internacional>, April 29, 1990, for relevant
discussion.}

These conclusions being useless or worse, Mayorga's actual work
on the Nicaraguan economy passes into the same oblivion as all
other inquiries into the catastrophes of capitalism.  The example
is noteworthy because of Mayorga's prominence, at the very same
time, insofar as he could serve a propaganda function for the
media.

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