Who needs institutions when you have leaders?

Patricio Navia

Buenos Aires Herald, August 14, 2013


The presence of charismatic leaders often conceals institutional weaknesses in Latin America. Though popular leaders inspire their people and get things done, institutional strength is more important in times of crisis. Either because they also make mistakes or because they eventually have to be replaced, leaders who concentrate power in their own hands are bad substitutes for autonomous and permanent institutions.


As Latin American countries prepare for an economic slowdown, nations that have relied on leadership and have failed to build strong institutions will find it more difficult to sail through times of distress and leadership renewal.


Since the transitions to democracy in the 1980s and after a decade of Washington Consensus hegemony in the 1990s, Latin American countries have experienced a prolonged period of economic growth. Poverty alleviation and the reductions of inequality have been achieved by left-wing and moderate governments in Latin America. Leaders who are openly anti-Washington Consensus and others who champion market-friendly policies have led Latin America through almost 15 years of sustained economic growth. Driven by demand from Asia, commodity prices have remained high for over a decade.


Though the economic policies promoted in the region are extremely varied, Latin American countries have uniformly placed importance in individual leaders as policy promoters. From moderate Lula in Brazil — who implemented market-friendly policies with a focus on reducing poverty and inequality — to more radical Hugo Chávez in Venezuela and Evo Morales in Bolivia — champions of anti-neoliberal policies and promoters of regional trade and integration initiatives — the policies implemented in recent years in Latin American countries are more associated with the presidents that have adopted them than with democratic institutions that can guarantee their continuity after the current leaders are gone.


When policies and economic models are associated with individual leaders, an inevitable sense of fragility calls into question their long-term prospects. Unless a strong institutional setup that can sustain the policies after the individual leaders are gone is created, the continuity of the economic model will depend exclusively on the presence of the leader who first implemented the policies. Because leaders become the best guarantee for the continuation of the policies, the inevitable renewal in national leadership usually evolves into a debate over the economic model the country will have in the future. Thus, those in favour of the policies unavoidably become advocates of the perpetuation in power of the national leader. Even if they see the need for leadership renewal, their higher interest in policy stability makes them compromise and accept the continuation of the leader as an inevitable externality.


Fortunately, history can be different. When leaders who favour certain policies build institutions that promote and defend those policies, regardless of who is in power, the economic model they implement can outlast their time in office. Moreover, those who favour the policies will no longer depend on their leader staying indefinitely in power. Institutions will replace individual leaders as the guarantors of the survival of the economic model.


Building institutions is easier said than done. The natural inclination in many societies is to concentrate power in the hands of a single person, rather than build autonomous and independent institutions that will promote certain policies even when the authorities would prefer to pursue a different path. A leader that strengthens institutions must be willing to give up power. Stronger institutions will make it more likely that their policies will outlive them, but they will be less powerful.


The history of Latin America is plagued with occasions when caudilllos (strongmen) emerged and implemented sweeping reforms that transformed their nations. After they were gone — or forcefully removed from office —other equally strong caudillos came and stirred the country in a different direction.


Policy continuity and stability are rare occurrences in Latin America. Normally, each new government seeks to reinvent the wheel, blaming past governments for all the current problems and raising expectations about what they can accomplish. However, as they fail to build strong institutions that can sustain the policies, leaders end up tying the future of their policies to their own political fortunes. If they are able to stay in power, their policies will survive. If they are replaced, their policies will go away with them. A new government will come into office and history will repeat itself as a tragedy and as a farce.


A decade of sustained economic growth is coming to an end in Latin America. Though the next decade will probably not be as bleak as the 1980s, growth in the next ten years will not be as robust as in the last decade. Precisely because economic slowdowns feed criticisms against the economic model — and economic crises make it more likely for new leaders to emerge — the next few years will test the resilience of the economic models in place in different Latin American countries. In countries where they were implemented by strong leaders, they will have fewer chances of surviving than in countries where they were deeply rooted in independent, autonomous and permanent institutions.