How the Ecuadorian Economy Grew in a Global Recession

How the Ecuadorian Economy Grew in a Global Recession

Economist Bill Black discusses how the investment in education, healthcare, and infrastructure fueled Ecuador's economic "miracle" -   March 24, 2014
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William K. Black, author of The Best Way to Rob a Bank is to Own One, teaches economics and law at the University of Missouri Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. He has taught previously at the LBJ School of Public Affairs at the University of Texas at Austin and at Santa Clara University, where he was also the distinguished scholar in residence for insurance law and a visiting scholar at the Markkula Center for Applied Ethics.

Black was litigation director of the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel, Office of Thrift Supervision. He was deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement.

Black developed the concept of "control fraud" frauds in which the CEO or head of state uses the entity as a "weapon." Control frauds cause greater financial losses than all other forms of property crime combined. He recently helped the World Bank develop anti-corruption initiatives and served as an expert for OFHEO in its enforcement action against Fannie Mae's former senior management.


How the Ecuadorian Economy Grew in a Global RecessionJESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore. And welcome to this edition of The Bill Black Report.

Now joining us is the man behind the report, Bill Black. Bill Black is the author of the book The Best Way to Rob a Bank Is to Own One. And he also teaches economics and law at the University of Missouri-Kansas City.

Thanks for joining us, Bill.


DESVARIEUX: So, Bill, I know that you recently returned from Ecuador. Can you just paint a picture for us of what the economic situation is like there down in Quito?

BLACK: Yeah, I just got back on the red-eye about two hours ago. So if I fall asleep during the interview, I hope people will understand.

I gave a talk, primarily, at one of their major universities in Quito, called FLACSO, and it was very well attended. They filled not only the assembly area but the entire overflow area, where they had to pipe in the address.

The talk I gave was about the Ecuadorian economic miracle. And the super-short version of it is that I went back to what American conservative scholars were writing just before President Correa was elected in 2006, and they were emphasizing what a disaster Ecuador was and what a disaster it was almost certainly going to continue to be, that it had no stable government, that its elites--remember, this is an American conservative writing this--that its business elites had no real attachment to democracy, that they worked with the military behind the scenes to remove, unconstitutionally, elected governments, that the debt of Ecuador was crushing, and that there--really, everything that one could predict was that it was likely to get worse, not better.

Well, flash forward. What actually happened when President Correa was elected in 2006 and begins taking office in 2007, well, it gets worse in many ways. Ecuador's leading trading partner is the United States. We, of course, were slipping into the Great Recession. Oil prices do surge, which is very good for Ecuador because it's a major oil producer, but then they collapse in the latter half of 2008 as well.

And despite all these things, Correa produces and Ecuador produces, I emphasize, the trifecta of results: unemployment is down very substantially from when he took office, poverty is down very substantially, and income inequality, which is surging in most of the world, has fallen sharply in Ecuador as well.

And then I simply went through how he did it, and pointed out that part of what he did was completely consistent with an aspect of the Washington consensus, because the Washington consensus says the quintessential appropriate thing for a government to do is spend heavily on education, health, and infrastructure, 'cause those things not only improve the quality of life; they serve as investments in human and physical capital that allow growth and produce greater stability.

So President Correa is the only president who was able to serve out his term out of something like the last eight presidents of Ecuador. He's been reelected again.

And I ended by saying, while I'm sure that President Correa and his ruling party were not too happy about this, they'd also met the real test of democracy. And the real test of democracy is: can the opposition win? And they have, in a series of important municipal elections in Ecuador. And when they win, do they win? In other words, are they actually able to take office through a peaceful transition of power? And the answer is yes in both of those things.

So the proof is in the pudding. This economic miracle in Ecuador is made possible also by a social and political coming together of Ecuador that bodes well for the future as well, and that the folks of Ecuador should really be proud of what they've accomplished and look forward to the future with some idea that they could actually control their own fates to a greater extent, instead of having to depend on whatever happens in America.

DESVARIEUX: Alright. Bill Black, thank you so much for joining us.

BLACK: Thank you.

DESVARIEUX: And thank you for joining us on The Real News Network.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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