Wednesday, May 18, 2011

O'Grady's back -- and still not right

Multiple people sent me copies this week of an editorial in the Wall Street Journal by Mary Anastasia O'Grady, titled El Salvador Quits the Market Model, and asked me for my thoughts. O'Grady's viewpoints can be summed up by this opening quote:

Mauricio Funes of the FMLN party, has been a disaster for the once-thriving Salvadoran economy.
This week's editorial is just part of a string of right-wing diatribes against El Salvador which O'Grady has published over the years.

But when you take a closer look at the article, you'll see that O'Grady is simply dishonest with her use of statistics. The first statistic she cites is from a recent United Nations' Economic Commission on Latin America and the Caribbean report which states that foreign direct investment increased 40% in the region in 2010 over 2009, but in El Salvador it fell 79%. The report does say that, but there is also an important footnote which notes that El Salvador reclassified how it calculates foreign direct investment at the end of 2009, so the 2009 and 2010 numbers are not directly comparable. I have studied the report and looked for other sources to explain what the real comparison between 2009 and 2010 is, bur I have not found it.

Another "statistic" O'Grady cites is that El Salvador fell 17 points on the 2010 World Index of Economic Freedom published by the conservative Heritage Foundation and the WSJ. Leaving aside whether this index is actually worth anything, O'Grady conveniently fails to mention that El Salvador is still rated higher on this index than every country in Latin America other than Chile.

O'Grady claims that El Salvador was a great economic engine between 1989 through 2008, but has fallen down with Mauricio Funes. Again, she fails to point out that until 1992, El Salvador was in the midst of a civil war. The economy took off in 1992 and later because there was a peace dividend, not because of a specific set of ARENA economic policies. O'Grady also points to the reduction in poverty during that same time period. It's true that poverty declined, but that decline was largely due to family remittances from Salvadorans abroad and not because El Salvador's economy was being so well guided by the policies of ARENA governments.

O'Grady wants to criticize Funes for economic performance since he took office, but disregards the fact that Funes took office during the midst of a huge global economic downturn which inevitably affected El Salvador like everyone else. She also criticizes Funes for spending more on social programs than the anemic spending of his predecessors.

And of course, O'Grady cannot help but mention yet again her view that the Pacific Rim gold mining company is being treated unfairly.

This is not to say that El Salvador's economy is doing well -- it's not.   The cost of living is increasing, unemployment remains intractably high, crime discourages investment and other economic activity, and remittances fell off substantially as the US economy went into recession.   My point is simply that O'Grady helps no one in understanding the issues facing El Salvador when she continues to distort her information. O'Grady is a right-wing ideologue with an agenda, plain and simple.

But at least she regularly gives me something to write about.

1 comment:

debobadams said...

Not being familiar with Ms. O'Grady, I thought maybe she was an employee of Pacific Rim. Although her article is labeled opinion, she presents a lot of "facts" which are, as you point out, of questionable accuracy.