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Populism Undermines Free Market Think Tanks

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BY CHRONICLE STAFF

The populist governments in Latin America are not only affecting private investment, but also undermining free market think tanks, experts say.

"Given that in most of Latin America the law is an instrument used against political opponents, in countries where radical populism is stronger, think tanks who champion the rule of law and the principles of the free society are suffering greatly," says Alex Chafuen, .  "Local donors are afraid to donate as they will suffer blackmail and persecution from the government.  Foreign foundations are also averse to risk, and in some cases, like in Venezuela, leading US private donors are also abandoning the friends of liberty."

However, despite such challenges, think tanks who work in countries with radical populist leaders are able to attract more readers to some of their products, especially in web publications and blogs, which are less prone to be censored by government operators, he adds.  

"On the other hand, in countries where populism has yet to show its most ugly face, some think tanks are able to mobilize and attract more supporters willing to help avoid falling into these new kinds of “democratic” dictatorships," he says. 

 - How do free market think tanks in Latin America compare with Asia, Africa and other parts of the world in terms of importance?

The strongest think tanks in Latin America are in Chile, which is the only country in the region which gets decent grades in transparency and rule of law.  They compare favorably not only with think tanks in Asia, but also with think tanks in the United States.  Mexico and Brazil, the largest economies, have few strong think tanks.  Major economic groups, especially in Mexico, have superb internal think tanks, but their research is mostly used to gain market share or government privileges.  I believe that in average, think tanks in Latin America are similar in importance and more independent than those in Asia.  Except for isolated cases like Ghana, South Africa, and perhaps Kenya, they are much more important than most in Africa.

 

Ms. Yiqiao Xu, Program Manager - Atlas Economic Research Foundation

Ethics & values:

  Foro de Estudios Sobre la Adminstración de Justicia in Buenos Aires

The Templeton Freedom Prizes for Excellence in Promoting Liberty recognize excellent work by institutes and scholars who address important subjects related to advancing the understanding of freedom. Atlas created the category of Ethics and Values to recognize outstanding research and innovative projects concerning the relationship between free enterprise and the ethics, values, and character that sustain it. Foro de Estudios Sobre la Adminstración de Justicia (FORES) has done an outstanding work with its “Premio a la Excelencia Judicial,” or Prize for Judicial Excellence (PJE) in 2002 to encourage and reward ethical, upstanding, non-biased judges, and the efficient courts they oversee. This is an initiative that involves civil society by creating incentives for effective judicial administration and serves as a means of improving the justice system’s damaged public image. For this reason, Atlas awarded FORES the 2007 Templeton Freedom Prize for Excellence in Promoting Liberty in the category of Ethics and Values which comes with USD 10,000. 

It is commonly understood that investors do not and will not invest in regions where property and contract rights are not uniformly supported or objectively enforced.  Judicial inefficiency, corruption, and political maneuvering prevent the standardized, effective enforcement of the law.  FORES hopes that this program builds investor confidence by alleviating concerns that contracts will not be enforced. One judge finds great potential for the PJE having a positive impact.  He comments, “It is only a matter of time before property and contract rights will be ‘assumed’ on the ground by small investors.  And that is the key to economic prosperity. . . . One could only wish that similar programs would appear in the most depressed economic regions of the world.”

Besides serving as an incentive system, the PJE also works to improve public confidence in the judiciary. In 2004, 2005, and 2006, the PJE appeared on the front page of Argentina’s leading newspaper, La Nación. In 2005, 28 articles were written about the PJE and in 2006, 20. So another reason that FORES's PJE was voted to be the winner is as commented by another judge:

"The Premio a la Excelencia Judicial (Prize for Judicial Excellence) is well thought through and fills an extremely important role in strengthening the ethical base of a market economy. In order for market transactions to occur both parties must have faith that contracts will be enforced. This means the justice system must treat all parties fairly and must not be corrupt. However, in many countries judicial corruption is very common and there is little attempt to address the problem. The PJE provides an important check on the judiciary. By rewarding courts that are productive and ethical, information becomes much more widely available to business people and to the general population. The level of publicity is also quite amazing. The Prize has received considerable media attention and is having a significant impact on the general understanding of the importance of judicial integrity."

Templeton grants:

a.. Centro de Investigaciones Economicas Nacionales (Guatemala)

a.. Foro de Estudios Sobre la Adminstración de Justicia (Argentina)

a.. Fundación Libertad y Democracia (Bolivia)

a.. Instituto de Estudos Empresariais (Brazil)

a.. Instituto de Libre Empresa (Peru)

Atlas awarded a 2007 Templeton Freedom Award Grants (TFA Grants) to these think tanks because they proved to be extremely promising and operating in difficult environments.  The TFA Grants are based on standards designed to evaluate the past achievement and future potential of think tanks.

The ten 2007 TFA Grant winners, including these five institutes, all share common credit for being committed to the Atlas vision of a free society, for showing a clear potential for growth, and for operating in a difficult region of the world.

The Instituto de Estudos Empresariais (IEE) won a 2007 TFA Grant for its effectiveness in outreaching to the youth and for its outstanding management and promotion of its annual Liberty Forum that has been organized successfully in Brazil since 1988. IEE's innovative management techniques enabled its Liberty Forum to attract 6,000 people, 300 press representatives, and prominent speakers to this large event of two days of debate.

Centro de Investigaciones Economicas Nacionales (CIEN) won a 2007 TFA Grant for being the well-established institute in Guatemala that has been operating since 1982. CIEN has gained its reputation in Guatemala as the main institution for public advocacy and national reference.

The other three winners, each have at least one successful role model product and a clear way to measure its level of success. For example, Instituto de Libre Empresa's most successful product line are its visiting lectures to poor regions with political proposal. Loreto is a poor region where ILE is advocating for a new political proposal (The Way Out) to promote regional autonomy and free market. The level of success of this initiative is measured with surveys and the number of volunteers who want to learn more about this proposal.

Different from the TFA Prizes that are a measurement of the success of a specific project, the TFA Grants are intended to inspire institutes to adopt the best operating practices, more concentrated efforts toward effective public relations, and other efforts reflective of greater effectiveness among think tanks. Atlas's analysis tools have as their goal to create benchmarks against which think tanks can measure their own performance.

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