Latin America's Pragmatic Turn

Latin America's Pragmatic Turn
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Latin America's decade of easy economic growth is over and citizens are getting restless. The region is on the downside of a commodities boom, with contracting markets and stagnating economies. Voters are reacting. Recent elections in Argentina and now Venezuela have contributed to an emerging regional narrative: the left is a spent force, and neoliberalism is back.

Not so fast. It is certainly true that Latin America enters 2016 a work in progress. That was bound to happen, given the unsustainability of populist economic governance and the unrealistic expectations it engendered for limitless quality of life improvements. Times were good while they lasted. Economies grew, jobs were created, middle classes expanded, poverty shrank, and the region found its voice internationally. China provided new, untapped markets, while the United States was preoccupied with domestic economic turbulence and international retrenchment.

Today, Latin America looks nothing like it did before the commodities boom, and in many ways that is a good thing. But growth has slowed and in some countries reversed. Inflation has returned. Unemployment is rising and fear of economic slippage is now a part of the political discourse.

As election results show, voters are looking for big changes after years of populism, political division, and corruption. This does not necessarily signal a general shift to the right; voters want to protect and expand economic and social gains, not restrict or overturn them. They are not looking for alternatives to populist governance due to a sudden conversion to Friedrich Hayek. To the contrary, they are looking for change because they increasingly question whether populist models are able to deliver the vision of prosperity they have been promised or whether populist governance is itself responsible for the economic contraction threatening their wellbeing. They understand that merely redistributing existing resources in a shrinking economy means only the well-connected flourish, hence the full-throated outcry in addition against corruption as a matter of basic fairness and opportunity.

It's not about ideology, it's about competence. Opposition candidates have recently gone to great lengths to convince voters they will respect social safety nets and protections that governments have established. They seek not to overturn progress but to strengthen it. First, however, they must restore economic growth.

That does not necessarily translate into an ascendency of right wing ideology, and it's risky to draw trend lines about Western Hemisphere governance based primarily on elections in Argentina and Venezuela. Take Brazil, for example. Having just been elected for a second term in October 2014, Brazil's leftish president won her mandate based on her ability to convince voters she would deliver continued economic and social progress, as well as her success in tagging her opponent as a neoliberal who might literally remove food from the mouths of the poor. In the year since, attitudes have changed and Brazil's president is under severe political duress, including impeachment, but not because voters have shifted right. They remain focused on economic and social progress and continue to see a leading role for the state; they just want their government to be more effective in promoting it. This includes an assault on corruption which unfairly enriches the well-connected at others' expense.

Economic growth and competence has also been at the heart of recent elections in Mexico. The economy is growing in large measure due to recovery in the United States. In June, the Mexican people voted in mid-term elections to maintain the political status quo rather than move to the right (or, for that matter, to the left). That's not because everything is perfect in Mexico--it isn't--but rather because Mexican citizens are voting their pocketbooks, their government has prioritized economic reform and development not populist governance, and Mexico is not dependent on slackening commodities markets or on China in the same manner as South American nations.

Voters in commodities producing nations across the hemisphere are anxious about their personal economic and financial circumstances in a slow growth environment. They are asking their leaders to produce economic results. Populism has become stale, and electorates are seeking a new direction. But they are not necessarily looking to make a right turn; rather, they are looking to reverse the excesses of populism and to restore growth while protecting and expanding social gains. Leaders who can do this from either the right or the left will ultimately be the ones whom voters reward.

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