After years of spreading the gospel that the revival of economic growth would
be a cure-all for the region’s ills, the World Bank and the Inter-American
Development Bank (IDB) have begun to change their tune. These multilater-
al development banks, which used to plow most of their money into the con-
struction of bridges and dams, nowadays espouse the need to improve the welfare of
ordinary citizens. Their publications are full of buzzwords such as “equity,” “capacity-
building,” “decentralization” and “efficiency.” As this NACLA report details, however,
the reality behind the rhetoric is less heartening.
After more than a decade of trade liberalization, state cutbacks, and deregulation, 200 million Latin
Americans-nearly half the region’s population-live in poverty, with monthly incomes of $60 or less. It
is estimated that by the year 2000, seven out of ten Latin Americans will not be able to meet their basic
daily nutritional needs. The World Bank and the IDB fear that this widespread misery side-by-side with the
conspicuous consumption of a small elite is a dynamite stick waiting for a match. A social explosion would
be bad for U.S. investors in the region, and could spell disaster for the whole neoliberal economic program
that these organizations have worked so assiduously to cultivate. Far from having an epiphany about the
need to pursue alternative paths to social development, the multilateral lending institutions have developed
a coherent set of social policies with the explicit purpose of shoring up free-market economics in Latin
America.
The World Bank recipe for social policy is essentially two-fold: targeted anti-poverty programs and pri-
vatization of the social-security network. Poverty-alleviation programs–especially in their incarnation as
centrally controlled social-investment funds-have been strong on propaganda, but weak on results. Not
only are these programs the equivalent of putting a band-aid on a hemorrhaging wound, but the cause of
the bleeding-the neoliberal economic system-is never called into question. Efforts to privatize the edu-
cation, health-care and pension systems represent an incursion of a market ethos into the social sphere.
Privatization has led to a massive transfer of resources from the public to private sector, and sharpened the
inequities between rich and poor. In the process, the whole notion of universal access to basic social ser-
vices is being gutted in favor of a model based on the individual’s ability to pay.
Both anti-poverty programs and privatization have a strong component of decentralization. Few on the
left or right oppose decentralization in principle, but the way the process is being carried out by neoliber-
als in Latin America is cause for concern. In the neoliberal playbook, decentralization often means turning
over tasks-but not decision-making or funds-to the local level. The state is handed an excuse to dump
its basic civic responsibilities onto the laps of cash-starved, overextended local governments and grassroots
organizations.
This brand of social reform may sound familiar to U.S. citizens. The U.S. health-care system is increasing-
ly organized according to market criteria, while decentralization and business-state partnerships are the rage
in U.S. education policy. Meanwhile, government-run entitlement programs such as Medicare, Medicaid and
welfare have come under unprecedented attack. While in the United States the conservative razor blade has
left the public social-security net tattered, in Latin America that net has all but disappeared for most people.
In the final analysis, social policy cannot be divorced from the dominant economic development model.
The possibilities and limits of World Bank and IDB social policy are defined by the neoliberal economic
agenda in which it is rooted. As the case of Chile demonstrates, the new social policy allows governments
to abdicate one of their principal social functions: promoting a genuine redistribution of income.
