Noah Smith, Columnist

Bolivia's Problem Is Macroeconomics, Not Socialism

Countries that rely on commodities, external financing and currency pegs are always vulnerable to turns in markets.

February 22, 2019 at 1:00 PM UTC

Noah Smith is a former Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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Bolivia might be the world’s most successful country that calls itself “socialist” (the Nordic countries generally eschew the label). When Evo Morales was elected president in 2006, he explicitly repudiated capitalism and aligned Bolivia with Hugo Chavez’s Venezuela and Fidel Castro’s Cuba. Since then, Morales has redistributed income through various government programs, raised minimum wages substantially, and nationalized industries such as telecommunications, oil and electricity.

Much to the chagrin of socialism’s detractors, the strategy worked. Even as Venezuela fell into economic ruin, Bolivia entered an unprecedented period of sustained rapid growth: