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Old-style leftist politics is making a huge comeback in Latin America, but hardly anyone seems concerned about it. In Brazil, for example, an avowed socialist and anti-capitalist has taken power in a landslide vote. Luiz Lula da Silva's first day as president ended with a dinner with Cuba's Fidel Castro.

Also joining him was Venezuela president Hugo Chavez, who survived an attempted coup last Spring. For his part, Chavez is pursuing a leftist agenda and promising a full crackdown on “terrorists” and “traitors” who oppose him. Violence is breaking out in the streets, with Chavez supporters and opponents clashing. A recent street fight left two dead and dozens wounded, and the political gridlock has seriously harmed the oil sector, dominated by a state oil company that Chavez plans to break up for political reasons.

In Ecuador, new president Lucio Gutierrez, a retired army colonel, holds similar political sympathies, promising to empower the poor through state means. And though he appears more compromising on economic questions, political grave uncertainty hangs over the country and the future of its oil industry. Crime is on the rise in this usually-peaceful country which is still reeling from its 1998 banking collapse.

All this activity has emboldened the Latin American left. Close observers (like editorialist Carlos Ball) have noted that posters and billboards for leftist causes are appearing all over the region. The inspirational peasant-to-power story of Lula is becoming as powerful an allegory for the triumph of the proletariat as Castro's story was in the 60s and 70s. And as with the 1980s, there is a religious component at work here too: a twisting of the Gospel call to assist the poor in their plight into a redistributionist political agenda that threatens violence and uses anti-American sentiment to secure political power.

With economies in turmoil, in the midst of a stubbornly recessionary environment, resentment against “globalism,” American influence, and property owners and producers is high. Continued economic stability can only end up helping the leftist parties. The perception that “neo-liberal” economics has been tried and failed can only lead to more political momentum shifting toward socialist experimentation and folk-hero autocrats on the model of Chavez and Lula, who thrive on denouncing the wealthy as the cause of economic instability and widening poverty.

All of this recalls the heady days of the 1980s when Liberation Theology was at its height in Latin America politics. Lead by theologian-intellectuals, a religious movement allied itself with Soviet-backed political interests to call for revolution against the capitalist classes, and the expropriation of the expropriators in the name of Jesus. Pope John Paul II eventually led a campaign against the theological deviation and boldly stood up to would-be dictators in the region who used religion as a way of justifying their personal power.

There are many differences this time. Redistribution, not revolution, is the watchword this time. Resentment is directed against globalization, not the commercial classes as such. The theology backing the new Latin leftism is more populist and nationalist than communistic. It focuses on popular control of industry and welfare measures rather than wholesale looting. And, most importantly, because the new political trends do not play into an overarching global-political drama, hardly anyone is paying close attention.

In some sense, however, this increases the danger of these trends, if not for global political reasons but for the plight of all people in Latin America. The simple truth is that redistribution, centralization of power, expropriation of wealth and the like, will not raise the standards of living. Only market economics, more secure property rights, freer trade, and sounder currencies, can do that. What's more, measures like disempowering owners of factories and farms, erecting protectionism in the name of combating globalism, and handing out more subsidies to people who vote in a leftist direction, none of this creates wealth. Quite the opposite. It increases dependency and poverty. No economy has ever grown through statism.

As for the particularities of the Latin American situation, these economies have nowhere near capital accumulation to absorb the blows of economic manipulations. Small changes can have huge impacts on a range of fiscal and monetary affairs, driving whole economies to the point of economic despair, as we have seen in Argentina in the last few years. This generates political and social instability and rather than bolstering the case of economic liberalism, the opposite comes about: autocracy, collectivism, and centralization, which only adds fuel to the fire.

Now, it is possible that Lula, Chavez, and the others will be driven to a sensible position solely because they are more attentive to market signaling than the extremist predecessors in the mid 1980s. They watch the stock market and the value of their countries' currencies on international exchange. They may also be restrained because of economic realities as well as IMF demands and insistence on moderation by US creditor institutions. Even in the upper reaches of the Bush administration, there is a sense that all the cavorting with Castro and left-wing sloganeering is just for show.

Yet Washington needs to realize that the movements --intellectual and political—behind the new liberationist tendencies are wide spread, stretching from the poorest of the poor to the middle class and higher. The intellectual germ behind the statist impulse, whether it stems from a geopolitical struggle or represents a domestic turn toward economic fallacy, is the same, and the results can be very dangerous.

The best prescription is not intervention but the fostering of free trade and openness, rather than conflict. But the first step is to understand the pending dangers that the new Latin leftism poses for securing the gains for democracy and freedom in Central and South America over the last decade, and not letting them slip away.