Latin America in turmoil, an update

June 29, 2022

     By Duncan Green     

Throughout the 1980s and 90s I was a ‘Latin Americanist’, living and travelling in the region, writing about it first as a journalist, then as a writer of region-wide books on the rise of market economics, child rights or, well, everything.

Most of what I’ve thought and done since then has been shaped by those years, but living in the UK, my attention has been diverted by other regions and issues. Scraps of news, whether exciting and depressing, filter through my timeline, but I’ve lost any overall sense of what is going on. So it was great to catch up with an Economist special report on the region. Some of it was new, some of it very familiar, but always well-written and laced with illuminating stats. Some excerpts.

‘Covid:  With just 8% of the world’s population, the region has suffered 28% of the officially recorded deaths from the disease….Covid has starkly exposed the fragilities of government in Latin America. “The health system reflects all the disparities, inequalities and inefficiencies of the country,” says one health official in Peru (which heads the World Health Organisation’s rankings of excess deaths from Covid). “It arrived when we had no plan and no leadership.” Officials had drawn up a strategy that required an extra $465m of spending on equipment and intensive-care beds. Although Peru’s public debt was relatively small (at 35% of GDP), they were given less than $1m. 

The Economy: when covid-19 arrived, the region was already suffering from stubborn and deep-rooted problems that the pandemic merely made worse. Economically, the 2010s were a “lost decade” (echoing that of the 1980s). Far from converging with richer countries, Latin America was falling further back.

Change in GDP in Latin America 2010-2019

Politics: This long period of relative economic stagnation has brought frustration over lack of opportunities, especially for younger Latin Americans, who have more education than their parents but whose expectations of good jobs have all too often been dashed. And this new social frustration has coincided with a marked political deterioration. Not only is democratic politics across the region discredited by the perception (sometimes exaggerated) of corruption, and by the corrosive cacophony of social media. But also, politics is increasingly dysfunctional and unstable, suffering from fragmentation, the weakening of political parties and polarisation to the extremes. These are ills of the democratic world in general, but they are peculiarly acute in Latin America.

Inequality: In a report last year, the un Development Programme highlighted Latin America’s toxic combination of high inequality and low growth, which it says are caused in part by a concentration of economic and political power; in part by widespread “political, criminal and social” violence; and in part by systems of social protection and labour-market regulation whose very design introduces economic distortions.

Protests: The most dramatic sign of grievances is massive, and sometimes violent, street protests, widely dubbed “social explosions”. These occurred in Brazil in 2013 and 2015 and spread to Venezuela in 2017, to Nicaragua in 2018, to Ecuador and Chile in 2019 and to Colombia in 2021, as well as to communist Cuba in the same year, and to Peru in 2020 and 2022.

What is striking about this is that Chile, Colombia and Peru had until recently been three of Latin America’s more successful countries. Poverty had fallen. So in most Latin American countries did income inequality in the 2000s, although it remains higher than anywhere else bar Africa.

[But] the protests were about multi-dimensional forms of inequality—a sense of unequal and unfair opportunities and access to public services, from parks to justice. They expressed, too, a deep-rooted popular mistrust of institutions, political parties and leaders.

Changing Identities and Norms: In 2000 only 21% of 18- to 24-year-olds in the region were enrolled in higher education. By 2013 that figure had leapt to 43%, according to the World Bank. Poverty fell from 45.3% in 2002 to 29.81% in 2018 and the lower-middle class grew.

The cause of human rights was central to the establishment of democracy. It has since expanded to include socio-economic rights and a social safety-net. But there is growing demand for other rights, ranging from the environment to the situation of women and people of indigenous or African descent.

Murders per 100,000 people in Latin America

Weak States: Its weakness in Latin America is shown not just by impunity for the corrupt but by a chilling statistic: with 8% of the world’s population, the region accounts for 37% of all murders, according to the un. Once largely confined to Colombia, Peru and Bolivia, drug mafias have spread throughout Latin America and diversified into extortion and human trafficking. 

Foreign Relations: China is now a bigger trading partner than the United States for all the main Latin American economies except Mexico and Colombia. It is also an important investor, initially in oil and mining and more recently in infrastructure and manufacturing. The United States still matters, especially as a private investor and because of its sway in international financial institutions. But it has lost influence, partly because of its own political gridlock. It lacks ambassadors in eleven posts in Latin America. China’s diplomatic operation in the region is now more effective. 

Where Next? Latin America’s left tends to be too Utopian, populist and anti-capitalist. The right fiercely defends its privileges and monopoly rents in the name of freedom. And the political centre has collapsed. Its failure is linked to that of liberal technocrats, brought up in a segregated upper-middle class that has too little knowledge of everyday realities.

“Top-down reforms have failed,” concludes Sofía Ramírez of México Cómo Vamos, a pressure group. “The road is bottom-up, the middle class to local power.” Mayors tend to be closer to the people than Congresses, and local government is a solid recruiting ground for national office. But mayors can also be corrupt and incompetent. And the region’s political systems are failing in their most basic function of channelling interests upwards and then arbitrating among them.

Politics suffers from design defects. Uniquely in the democratic world, Latin America combines directly elected executive presidents with legislatures chosen by proportional representation. That makes it hard for governments to command parliamentary majorities that will enact reforms. This mattered less when presidents were popular and parties were fewer and were more open to negotiation. But those days have long gone. Many Latin American academics now favour parliamentarianism. But presidentialism is an indelible part of the political culture. This issue has not been a matter of serious debate, even in Chile’s convention.’

Hats off to the author, Mike Reid. As always with The Economist, you don’t have to agree with everything, but it’s really worth reading – comments from FP2P readers in the region appreciated.

June 29, 2022
Duncan Green