Regulation critical, says former Colombian president

Regulation works — and because of strict regulation, Colombia and other Latin American countries have been less affected by the current financial crisis, according to former Colombian President Cesar Gaviria.

More than 400 people gathered Thursday at the University of Utah's Student Union Center to hear from Gaviria as part of the university's "World Leaders Lecture Forum."

"The crisis is getting to Colombia slowly, because our financial system is still in control," Gaviria said. "We have a lot of regulation, and regulation works."

Gaviria said Colombia and other Latin American countries lived through so many financial crises over the past few decades that they were forced to learn from them.

"This crisis that the U.S. is living (through now), we have lived through four times," Gaviria said. "We lived through the crisis so many times that we learned."

One thing Latin American countries have in common with the U.S., said Gaviria, is a lack of savings. He said it's a very serious problem that the U.S. shares with them.

"It's something this country needs to correct," he said. "In the long run, the U.S. cannot lead having negative rates of savings. That's too risky for this economy."

While past crises strengthened the financial systems of many Latin American countries, their state institutions did not fare so well, said Gaviria. People lost faith in state institutions as they were weakened by fiscal problems.

"That is one of the main challenges we have (in Latin America) today — how to make state institutions and public institutions that work, that deliver," he said.

Gaviria said that this is a challenge for the U.S., as well. In the midst of the current economic crisis, the U.S. government must maintain state and public institutions that deliver, or there will be no more solutions of any kind, he said.

Those solutions cannot focus solely on the economy, either, he said. Political change must address the problems of inequality and poverty.

"We cannot think that the world will prosper only on economics and good economic policy," Gaviria said. "Solving social problems is as important as good economic policy."

E-mail: kkuhn@desnews.com