{"id":5510,"date":"2024-12-10T12:15:34","date_gmt":"2024-12-10T11:15:34","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=5510"},"modified":"2024-12-10T12:28:05","modified_gmt":"2024-12-10T11:28:05","slug":"lessons-from-the-continent-of-populism","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/12\/10\/lessons-from-the-continent-of-populism\/","title":{"rendered":"Lessons from the Continent of Populism"},"content":{"rendered":"<p><i><span style=\"font-weight: 400;\">*The views expressed in this article are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.<\/span><\/i><\/p>\n<p><i><span style=\"font-weight: 400;\">Latin America has grappled with populist governments and leaders since the 1930s during the Great Depression. The three waves that characterize its history offer valuable lessons to countries like those in Europe now confronting populism for the first time. Populism can lean left or right, adopt various economic policies, but one outcome is consistent: the weakening of democratic institutions.<\/span><\/i><\/p>\n<p><span style=\"font-weight: 400;\">Populism in Latin America has a long history that holds important lessons for the rest of the world. The phenomenon can manifest in diverse forms, both left- and right-leaning, with different economic repercussions. However, one consistent feature is the weakening of institutions, whose consequences can last for decades.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Defining the phenomenon has always been challenging, but to paraphrase U.S. Supreme Court Justice Potter Stewart\u2019s famous remark from 1964: you know it when you see it. And Latin America has seen a great deal of populism throughout the 20th century and the early decades of the 21st. There have been three main waves: the first in the 1930s, the second in the 1990s, and the third from the late 1990s into the 21st century.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The framing of \u201cus\u201d versus \u201cthem\u201d\u2014a hallmark of populism, along with \u201cthe people versus the elites\u201d\u2014took different forms in each of the three phases. However, economic conditions (often influenced by external factors) have always played a critical role.<\/span><\/p>\n<h3><b>The &#8220;Classical Populism&#8221; Wave<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The first wave of populism in Latin America, or &#8220;classical populism,&#8221; began in the 1930s during the Great Depression. Protectionist policies adopted by advanced economies caused a collapse in the prices of natural resources on which Latin American exports depended. Impoverished rural workers flocked to cities, triggering the mass urbanization of many Latin American countries. These former peasants, forced to migrate to cities, became the primary supporters of populist leaders, who positioned themselves as champions of the <\/span><i><span style=\"font-weight: 400;\">pueblo<\/span><\/i><span style=\"font-weight: 400;\"> (at that time referring to impoverished workers, but excluding people of Indigenous descent) against traditional elites accused of colluding with foreign powers.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Policies redistributing wealth from the elites to the \u201cpeople\u201d were enacted, and demands for greater inclusion yielded some results. For example, women gained the right to vote in Argentina in 1951, and previously stigmatized groups, such as the <\/span><i><span style=\"font-weight: 400;\">descamisados<\/span><\/i><span style=\"font-weight: 400;\"> (shirtless ones) in Argentina, were reframed as embodying positive virtues. Charismatic leaders like Getulio Vargas in Brazil, Juan Domingo Per\u00f3n in Argentina, Jos\u00e9 Velasco Ibarra in Ecuador, and Victor Haya de la Torre in Peru positioned themselves as the voices of the oppressed while authoritatively claiming to represent the \u201cwill of the people.\u201d New political organizations emerged, such as the APRA in Peru, the Peronist Party in Argentina, and the National Revolutionary Movement in Bolivia, shaping domestic politics in these countries for decades.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What characterized the economic policies of this first wave? They focused on restricting imports in favor of domestic producers and state-funded, debt-driven industrialization. The key element was state dirigisme, inspired by the corporatism of fascist Italy and the centralized economic planning of the Soviet Union.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The first wave of Latin American populism ended in the 1960s with the rise of right-wing authoritarian regimes, politically bolstered by the Cold War and economically by the failures of populist policies. This era paved the way for the debt defaults of the 1980s and the \u201clost decade\u201d in Latin America, setting the stage for the second wave of populism.<\/span><\/p>\n<h3><b>The &#8220;Technocratic Populism&#8221; Wave<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The second wave emerged in the 1990s. New leaders like Carlos Menem in Argentina, Fernando Collor de Mello in Brazil, and Alberto Fujimori in Peru rose to prominence. This time, the \u201cpeople\u201d were defended against incompetent governments, malfunctioning institutions, and national elites who had thrived during the first wave of populism. The rhetoric shifted away from the exploitation of national resources by foreign powers, instead targeting the incompetence of previous governments and institutions.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The economic policies of these new populist leaders reflected the neoliberal doctrines of the time, emphasizing market-oriented reforms presented as necessary to eliminate corruption and inefficiencies. These policies were shaped under the framework of what was known as the Washington Consensus\u2014a set of economic guidelines supported by the World Bank, International Monetary Fund, and U.S. Treasury Department, all based in Washington, D.C.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This second wave can be characterized as \u201cright-wing populism,\u201d in contrast to the first wave\u2019s \u201cleft-wing populism.\u201d However, the erosion of institutions remained a common feature. In some cases, this institutional weakening seemed to stem from frustrations over the inability to implement proposed reforms. One example is Fujimori\u2019s <\/span><i><span style=\"font-weight: 400;\">autogolpe<\/span><\/i><span style=\"font-weight: 400;\"> (self-coup) in Peru in 1992, when the president assumed full legislative and judicial powers, bypassing checks and balances to implement reforms\u2014a move that came at the cost of destroying essential democratic mechanisms.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The narrative of the second wave described leaders who needed \u201cfreedom\u201d from bureaucratic (and democratic) rules to overcome resistance from internal interest groups.<\/span><\/p>\n<h3><b>The Populist Reaction to Neoliberalism: The Third Wave<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">The third wave of populism in Latin America arose in reaction to the excesses of neoliberal policies, beginning in the late 1990s. The pendulum swung back to left-wing populism. This time, the <\/span><i><span style=\"font-weight: 400;\">pueblo<\/span><\/i><span style=\"font-weight: 400;\"> included rural masses as well as urban populations, with a particular emphasis on Indigenous groups (e.g., ethnopopulism in Bolivia). Socialism and anti-imperialism became the dominant ideologies, embodied by leaders such as Hugo Ch\u00e1vez and Nicol\u00e1s Maduro in Venezuela, Rafael Correa in Ecuador, N\u00e9stor and Cristina Kirchner in Argentina, Daniel Ortega in Nicaragua, and Andr\u00e9s Manuel L\u00f3pez Obrador in Mexico.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For these leaders, constitutions became \u201cliving documents,\u201d subject to frequent updates to amplify the voice of the people and reflect their aspirations\u2014prioritizing these over the rule of law and property rights. Economically, the state took on an expanded role, aiming to ensure more equitable income distribution and nationalizing industries, particularly in the energy sector.<\/span><\/p>\n<h3><b>Ideological Nuances and International Context<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Not just in Latin America but worldwide, populism can align with other ideologies. Political scientists describe populism as a \u201cthin ideology\u201d or a \u201cdiscursive framework\u201d that can merge with nationalism (as in some cases in today\u2019s Europe) or left-wing ideologies emphasizing income redistribution (seen in Latin America\u2019s first and third waves and now in parts of Europe).<\/span><\/p>\n<h4><b>Right- and Left-Wing Populist Governments in Latin America<\/b><\/h4>\n<figure id=\"attachment_5511\" aria-describedby=\"caption-attachment-5511\" style=\"width: 936px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5511\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-300x156.png\" alt=\"\" width=\"936\" height=\"487\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-300x156.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-1024x533.png 1024w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-768x400.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-1536x800.png 1536w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-2048x1067.png 2048w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-600x312.png 600w\" sizes=\"auto, (max-width: 936px) 100vw, 936px\" \/><figcaption id=\"caption-attachment-5511\" class=\"wp-caption-text\">Note: The vertical axis shows the number of countries with left-wing and right-wing populist governments in office in each year, along with their political leanings. The purple line represents the total number of populist governments, including those not clearly categorized as left- or right-wing. Source: Nicol\u00e1s Magud and Antonio Spilimbergo (2021). Economic and Institutional Consequences of Populism, CEPR Discussion Paper No. 15824.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">The international context played a critical role in the rise of populism in Latin America. Latin American economies have traditionally relied on exporting natural resources, making commodity prices a significant factor influencing the region\u2019s economic and political developments. The figure below illustrates the strong correlation between commodity prices and the rise of populism in the region.<\/span><\/p>\n<h4><b>Commodity Prices and Populist Governments in Latin America<\/b><\/h4>\n<figure id=\"attachment_5513\" aria-describedby=\"caption-attachment-5513\" style=\"width: 913px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5513\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_2-300x165.png\" alt=\"\" width=\"913\" height=\"502\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_2-300x165.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_2-768x423.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_2-1536x847.png 1536w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_2-2048x1129.png 2048w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_2-600x331.png 600w\" sizes=\"auto, (max-width: 913px) 100vw, 913px\" \/><figcaption id=\"caption-attachment-5513\" class=\"wp-caption-text\">Note: The left vertical axis shows the number of populist governments in office each year. The commodity price indices are set to 100 in 2005. Source: Nicol\u00e1s Magud and Antonio Spilimbergo (2021). Economic and Institutional Consequences of Populism, CEPR Discussion Paper No. 15824.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">High commodity prices bolstered the public finances of resource-rich South American states. Simultaneously, monetary policies implemented in advanced economies after the 2008 global financial crisis significantly reduced the cost of external financing. Both factors benefited populist leaders in power. Unsurprisingly, while past populist governments lasted just over five years on average, those of the third wave remained in office for more than eleven years on average. But with what consequences?<\/span><\/p>\n<h3><b>Populist Regimes and Institutions<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">By its nature\u2014and the rhetoric it employs\u2014populism undermines the checks and balances fundamental to liberal democracy. Populist leaders claim to be the sole legitimate representatives of the \u201cpeople\u201d and are therefore intrinsically opposed to a pluralist society that includes intermediary social bodies. As a result, the quality of institutions\u2014as measured in the figure below by an index of property rights protection\u2014deteriorates progressively during the tenure of these regimes.<\/span><\/p>\n<h4><b>Deterioration of Property Rights and Populism<\/b><\/h4>\n<figure id=\"attachment_5515\" aria-describedby=\"caption-attachment-5515\" style=\"width: 932px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-5515\" src=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_3-300x159.png\" alt=\"\" width=\"932\" height=\"494\" srcset=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_3-300x159.png 300w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_3-1024x542.png 1024w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_3-768x406.png 768w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_3-1536x813.png 1536w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_3-2048x1084.png 2048w, https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo_3-600x318.png 600w\" sizes=\"auto, (max-width: 932px) 100vw, 932px\" \/><figcaption id=\"caption-attachment-5515\" class=\"wp-caption-text\">Note: The horizontal axis marks the year (0) when a populist leader takes power. The vertical axis represents the Property Rights Index from the Heritage Foundation, which provides a composite measure of institutional quality. As shown, during their tenure, populist leaders systematically weaken property rights protections. Source: Nicol\u00e1s Magud and Antonio Spilimbergo (2021). Economic and Institutional Consequences of Populism, CEPR Discussion Paper No. 15824.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">When institutional quality declines, the economy suffers. Under populist governments, public spending increases faster than fiscal revenues, leading to growing budget deficits. Historically, such deficits were financed by printing money, causing inflation and eventually leading to full-blown macroeconomic crises, as documented in the seminal 1991 book by Rudiger Dornbusch and Sebastian Edwards, <\/span><i><span style=\"font-weight: 400;\">The Macroeconomics of Populism in Latin America<\/span><\/i><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is where the third wave of South American populism differs from the previous two: it coincided with the super-cycle of commodity prices, which temporarily allowed populist governments to finance deficits using export revenues from raw materials. However, the consequences of these choices eventually became apparent: public debt levels ballooned to unsustainable levels in many cases, foreign currency reserves were depleted, and inflation surged across the region, reaching hyperinflation in some countries. As in previous episodes of populism, massive fiscal adjustments became inevitable.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Populism is a recurring phenomenon and appears to be on the rise again, this time with new leaders from both the left and right. As Latin America\u2019s history teaches us, populism can take many forms, but the longer it stays in power, the more damaging its effects are on democratic institutions.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>*The views expressed in this article are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or [&hellip;]<\/p>\n","protected":false},"author":9018,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"coauthors":[217,66,216],"class_list":["post-5510","post","type-post","status-publish","format-standard","hentry","category-non-categorizzato"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Lessons from the Continent of Populism - Rivista Eco<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.rivistaeco.com\/en\/2024\/12\/10\/lessons-from-the-continent-of-populism\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lessons from the Continent of Populism - Rivista Eco\" \/>\n<meta property=\"og:description\" content=\"*The views expressed in this article are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.rivistaeco.com\/en\/2024\/12\/10\/lessons-from-the-continent-of-populism\/\" \/>\n<meta property=\"og:site_name\" content=\"Rivista Eco\" \/>\n<meta property=\"article:published_time\" content=\"2024-12-10T11:15:34+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-12-10T11:28:05+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.rivistaeco.com\/wp-content\/uploads\/sites\/2\/2024\/12\/Spilimbergo-300x156.png\" \/>\n<meta name=\"author\" content=\"Nicol\u00e1s E. 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