When you talk to people on the streets of Latin America and ask them the cause of the relative backwardness of our economies – relative, because our countries have per capita incomes six times those of Africa, but a tenth that of Luxembourg's – the answer is always "corruption."
Hmmm. Corruption. When asked to define it, they point out that State officers constantly pocket money that would otherwise be used to enhance their own welfare.
Is that the only – or even the main – form of corruption that a libertarian is able to identify? Certainly not. Through a slow but constant process that started in the first decades of the 20th century, socialists have managed to erode the classical values under which our grandparents lived. Our grandparents never thought of the State – bureaucrats and cops, in sum – as something that should be in charge of educating their children, curing them, saving for their retirement, lecturing them on what they should or should not eat, drink, smoke, or think, and a very long et cetera. Except for thieves and crooks, people, then, didn't entertain the idea of living at the expense of others, via taxes or inflation, for example. As the result of that view held by our grandparents, our countries were freer and relatively more prosperous than now, though they lacked some of the institutions that we now identify with a Western mentality. Countries such as Argentina, Uruguay, Chile, and Costa Rica, with more developed institutions were comparable or even more dynamic than a large portion of Europe at times.
(It is largely unknown that Argentina had wages higher than Switzerland, Germany, Italy and Spain in the 1910's20's. And the submarine was invented in Ecuador, at the same time it was invented in Europe. Of course, Ecuador did not have a pool of funds – previously provided by massive savings – to further develop the submarine, and other inventions.)
But when the State instituted mass education systems, including universities, and increased its influence in the media, to the point of noticeable intervention, a dramatic shift in people's political philosophy occurred. If our grandparents were instinctively libertarian (conservative in all other issues) regarding their political ethos, our parents were massively seduced by the State into the social-democratic, mixed economy ideal.
As were the U.S. and Europe; except those regions had already tried – almost – full-fledged Capitalism, properly described as the social system resulting from a combination of a libertarian ethos and a high regard for science and/or secularism. The result was a very distinctive cultural capital (and material wealth, of course), which enabled rich countries like Germany, Italy and France (the US has unique advantages acquired unfairly through central world banking and conquest) to use the mixed economies ideal. Though this ideal is driving away business that prefers the relatively lower taxes of Hungary, Estonia or Ireland, it is still in use, and providing a very high standard of living.
But this shift in political values in Latin America did not tend to lead to erosion, in the way it has in Europe. It has led to large segments of the population sensibly feeling a drop in their quality of life, and pursuing, in radical-leftist policies, a way out. The regimes of Hugo Chávez, Evo Morales and Nestor Kirchnet, are nothing more than the result of the mixed economies that preceded them. Venezuela, Bolivia and Argentina are countries in which the State not only managed to corrupt businesses, judicial systems, and community life in general, but also taught people how to evaluate their situation in favor of the State, and against Capitalism. These "leaders" blame their countries' evils on "neo-liberalism," namely, the IMF, Word Bank, and internal tecnnocratic management of their mixed economies. But when blaming "neoliberalism," they are actually blaming Capitalism! What a joke! Our countries have never fully experienced a system of massive and unrestricted private property, and its cultural and material results: Capitalism.
So, when people answer "corruption" when asked to name the cause of Latin American follies, the libertarian can only agree. But to us, corruption implies a definition that is broader than that of the previous generation: the State stealing what would otherwise be transformed into welfare. Corruption begins in our values, including our political values. Corruption means not respecting other people's property (mostly via the State, nowadays), which leads to nothing but de-civilization.
Although the State creates a class of people working as bureaucrats, contractors and court intellectuals (and journalists,) it does far greater damage by shifting and corrupting our values through mass education and the media. When the State teaches us how to interpret reality, it corrupts the youth with socialist ideas and weakens our societal bonds, creating unnecessary violence, poverty, and backwardness.
Which is why libertarians must agree with the people's instincts in Latin America: it's the corruption, stupid!