Where did the Latin American left go?
Buenos Aires Herald, May 31, 2016
The arrival of Mauricio Macri to the presidency of Argentina and Michel Temer’s controversial rise to power in Brazil have produced a shift to the political right in the two most important economies in South America. Though Brazil’s right-wing turn was not triggered by an election and Argentina’s 2015 presidential election was a race between two candidates competing for moderate voters, there is no denying that left-wing rhetoric is less electorally appealing today in Latin America than a few years ago.
For most of the past decade, Latin American countries experienced a shift to the left in their presidential elections. Left-wing leaders of different kinds and backgrounds were swept into office almost everywhere. As the region experienced a period of rapid growth induced by a commodities boom, candidates who promised redistribution and promoted higher government spending had an unquestionable electoral advantage. With governments running surpluses, the promise of redistribution was able be delivered. Since there was plenty of money to go around, the distributive mood even extended in some cases to right-wing governments. Many governments adopted conditional cash transfer programmes to help alleviate poverty. To receive the funds, low-income families had to comply with requirements, such as sending their kids to school on a regular basis or bringing them at certain intervals to local clinics for health checks.
From 2005 to 2015, most Latin American countries experienced significant reductions in poverty figures. Many also made inroads in fighting inequality. Though left-wing governments more actively embraced those objectives — and put them at the centre of their political platforms — even conservative governments experienced success in helping to reduce inequality and expand opportunities. More than the ideology of the government, the size of the trade surplus in every country explained the notable progress in social programmes.
However, since all good things come to an end, the end of the commodity boom — which started in 2014 — drastically changed the mood in Latin America. The spending extravaganza was replaced by significant belt-tightening in countries with sound fiscal policies. In other countries, slow government reactions in cutting spending ended up producing budget deficits that have lasting negative consequences. Still, regardless of whether governments anticipated the storm that was coming or simply because the storm has dried up the national wallet, prospects for further reductions in poverty in Latin America are gloomy at present. To make matters worse, the end of the commodity boom has also sent shockwaves through national economies. Unemployment is rising and wages are stagnating. Just when the need for government intervention has increased, administrations are running out of money.
Distribution and generation
Left-wing governments seem to be better at distributing wealth than generating it. Because income distribution is the preferred rhetoric of the left, and because it produced electoral victories in recent years, left-wing parties have resisted the push to rearticulate their message in a context of austerity and fiscal constraints. When they are in power, such governments in Latin America resist adopting more fiscally prudent measures. Where they are in opposition, leftist parties denounce the spending cuts undertaken by conservative administrations. Either because those measures will further damage the economy or because the cuts mostly hurt those who benefit from social programmes — the poorest segments of society — many left-wing parties and leaders seem uninterested in showing that they also care about fiscal responsibility.
Unsurprisingly, the Latin American left longs for the years when the magic recipe was to spend the windfalls of the commodity boom on social programmes. However, as high commodity prices are unlikely to return anytime soon, the left finds itself in a difficult predicament. There will be little room for redistribution if the economy is stagnant. Yet, ignoring the structural challenge of stagnant growth faced by many countries, the left continues to talk about redistribution.
The right, on the other hand, feels more comfortable when economic growth is not taken for granted by the population. Conservative leaders feel at ease speaking about productivity gains and generating the conditions to attract foreign investment. Right-wing parties are increasingly more vocal about the need to restore solid growth.
The electorate so far seems inclined to give the right a chance at jumpstarting the economy. If the left was better at distributing wealth, the right seems to be more likely — at least in the eyes of the public — to find a way to restore economic growth.
As a result, if the left fails to put forward credible and practical propositions that can help restore economic growth in the absence of a commodity boom, it should brace for defeat at the ballot box in the coming years. The electoral dominance of the left over the last decade was associated with a winning message of redistribution, in the context of rapid economic growth. Promising redistribution when the economy is stagnant is not going to be a good second best for the left. Voters who care about redistribution care more about creating wealth in the first place. If the right continues to dominate the debate on how to produce growth, the next few years will deliver few electoral wins for the left.