Stagnant economies, declining popularity

Patricio Navia

Buenos Aires Herald, February 10, 2015

 

Since the commodity boom ended last year, Latin American presidents have seen their popularity decline. Though corruption scandals and other controversies have been directly blamed for the growing unpopularity of presidents in each case, there is a common trend of slowing economic growth and growing concerns over rising unemployment in all the cases. Scandals which would have been overlooked under more promising economic conditions are now hurting presidential approval rates all over the region.

 

It has been widely proven that economic conditions affect presidential approval. When the economy is doing badly, unemployment increases or inflation rises, presidential approval declines. Governments pay a high price when economic conditions deteriorate. In the 1992 presidential campaign in the United States, a key advisor to Democratic candidate Bill Clinton popularized the phrase “It’s the economy, stupid” to keep the focus on the uphill economic conditions that threatened the re-election of incumbent president George H. W, Bush. Clinton went on to win the election and the premise that economic conditions determine election results became even more popular.

 

In Latin America, economic conditions have also been strong determinants of presidential approval and electoral results. After the implementation of the Washington Consensus’ fiscally responsible economic policies in the 1990s, Latin American democracies experienced a period of sustained economic growth due to the high prices of their export commodities. Presidents easily won re-election and candidates from incumbent parties also went on to win all over the region. In countries with a weak or non-existent party system, the good economic times facilitated the emergence of personalistic leaders who concentrated power in their own hands but legitimized their rule by winning elections. With the exception of the 2004 presidential election in the Dominican Republic, all incumbent presidents won re-election in the region in the past 15 years.

 

Yet, as nothing lasts forever — and as the history of Latin American should have warned us that past commodity booms were always followed by periods of stagnation — the good economic times are coming to an end. Declining prices of exports have reduced government budgets and have limited the aggressive spending on social programmes observed in the past 10 years. The economic decline has resulted in a stronger demand for government spending, as unemployment has risen. The combination of higher demand for social spending and more limited resources in the hands of the government has proven a vicious circle in the past. When governments need to step up social spending, they have fewer resources to do so. Though a few governments in the region adopted some anti-cyclical policies in the boom years to save for a rainy day, most governments are unprepared to face the deteriorating economic conditions.

Inevitably, that will result in growing popular discontent with governments. When the economy is not doing well, voters are more likely to punish the government. The way in which that punishment is exercised varies. In countries hold elections in the upcoming months, opposition candidates will be more likely to win. In countries with no elections in the near future, public opinion will find other ways to punish governments. Corruption scandals are always a good way to channel popular discontent. When people are upset with the government, they tend to pay more attention to corruption scandals and hold the administration responsible for the wrongdoings.

 

This is not to say that corruption scandals only occur when the economy stagnates. Scandals are a recurring feature in many democracies. However, when the economy is doing well, governments have the opportunity to contrast the bad press associated with the scandals with good news about employment, poverty reduction and economic growth. As a result, people often overlook the corruption scandals because they see positive results elsewhere in a government’s performance.

 

In recent weeks, several scandals have deteriorated presidential approval in several countries. In Brazil, President Dilma Rousseff has a dismal 23 percent approval rating. In Mexico, President Enrique Peña Nieto’s approval has not recovered since it took a dive after the scandal associated with the disappearance of 43 students in Guerrero. In Peru, President Ollanta Humala has seen his approval slip as a result of controversies with some cabinet members and with his wife’s family business activities. In Chile, a campaign finance scandal has hurt all political parties (not just the right-wing party most involved in the controversy). Even in countries like Ecuador and Bolivia, where presidential approval has been high under presidents Rafael Correa and Evo Morales, discontent is growing. (As a non-Argentine and non-resident in Argentina, I dare not write about Argentine domestic politics).

 

Those countries have different political systems and their governments are not ideologically akin. Yet, they are all experiencing worsening economic conditions. The economic outlook for the coming months does not look good. That, more than the scandals itself, explains the growing discontent and the increasing disapproval of Latin American presidents. Because people fear bad things to come and they want to punish the government for leading their country in the wrong direction, people are using scandals as the excuse to punish governments for the deteriorating economic conditions.