Maria Hicks argues that economist Sebastian Edwards is right to warn against neopopulism in Latin America because it threatens much of the region’s future prosperity
Left Behind: Latin America and the False Promise of Populism
2010, University of Chicago Press
Reviewed by Maria Hicks
IT’S PROBABLY greater than any other book in modern times, outside the Bible.” – American public figure on Left Behind
If the promise of a book of near biblical importance piqued your curiosity and you are still reading, I’m afraid you’ve been misled. While the above quotation is in fact genuine, using it as an epigraph to a review of the economist Sebastian Edwards’ newest book Left Behind: Latin America and the False Promise of Populism is decidedly duplicitous.
Why? Because the American public figure is the late televangelist Jerry Falwell and the book to which he refers is the first in the bestselling Left Behind series — Christian fiction about the end times.
Sebastian Edwards is a well-respected economist who has written a serious, comprehensive volume on Latin American economic history — so why would I lead with such overt duplicity?
Because it parallels the duplicity of the promise of populism in Latin America that Edwards warns against in his book. But while you and other misled readers will lose just a few minutes of your time by reading this review, the false promise of populism threatens the future prosperity of the half a billion people living in Latin America today.
Early on in Left Behind, Edwards cites three generally accepted principles leading to high long-term economic prosperity and growth: institutional strength and transparency; policies that promote competition, efficiency and exports; and keeping inflation under control and avoiding major currency crises. The rest of the book is largely a study of the various ways these principles have been (and continue to be) violated in Latin America, and the economic stagnation that these violations perpetuate.
To be fair, many Latin American nations have learned from their past failures to adhere to the three principles, and deliberate reforms are now in place that will prevent similar failures from recurring.
For example, Chile, “Latin America’s Brightest Star”, has been able to free its economy from the chains of post-war protectionism. In the last three decades Chile underwent a series of pragmatic reforms, which proved to be the catalyst to an economic success story unprecedented in Latin America. Edwards stresses that governmental policy initiatives have been integral to the success of the Chilean export sectors. The government has kept inflation low, opened up the economy thereby encouraging competition, and improved the rule of law as well as safety and security for both its citizens and foreign investors.
Unfortunately, Chile is largely the exception. The economic reforms of the 1990s and 2000s — intended to capture Latin America’s fair share of the wealth that globalization brings — in most countries in the region remain incomplete.
When the people of Latin American see these reforms not for what they are, incomplete, but rather as evidence that globalization is bad, populist or neopopulist movements often benefit. It is the spread of this misinformation through the population that Edwards fears. The characteristically charismatic populist leaders use fiery rhetoric to appeal to “the people” and identify the supposed causes of and promising solutions to inequality.
With a set of economic policies “aimed at redistributing income by running high and unsustainable fiscal deficits and expansive monetary policies and by mandating wage increases for public-sector workers that are not justified based on increases in productivity”, Edwards rightly concludes that populism cannot possibly be good for the economies and citizens of Latin America.
Neopopulism has already led to new constitutions being adopted in Venezuela, Ecuador and Bolivia. New constitutions in these states were written “with the purpose for refounding these nations, recognizing some unalienable rights of the indigenous populations, and granting vast and very detailed rights to the people, especially the poor, and to regional interest.”
What these constitutions really do is establish political and economic instability because they can be and are always revised. This deters foreign investment, and without funding, nothing can be done to prevent the promises of constitutional rights and services to the people from becoming empty promises.
Although Edwards finds it necessary to consider Latin America as a whole in the book, he does note that “averages tend to hide a rich and textured reality”. While Latin American nations have many structural and institutional features in common, they succeed or fail to advance economically at different rates and they all have distinct economic, political and social realities. So while Latin American nations have in common two centuries of economic decline, Edwards predicts these nations will not share a common future.
Instead, Edwards sees Latin America in the 21st century being split into three distinct clusters. One group will fall under populist control and will suffer economically, socially and politically as a result. Another group will neither embrace populism nor implement the policies required for substantial efficiency gains. In this group countries will maintain the mediocre historical economic status quo. A third, much smaller group, will strengthen their institutions and introduce policies that encourage innovation and efficiency. As a result incomes will grow, social conditions will improve and inequality and poverty will be reduced.
Edwards is confident that his native Chile has secured its membership in the third group, but as for which countries might join Chile he is largely unsure.
With the recent enthusiasm over the economic performance of Brazil, some might argue that the country’s long term prospects look good. But while Edwards believes that the populist threat has been largely averted in Brazil, he is certain the country will not join Chile unless existing impediments to growth (weak institutions, non-competitive markets, etc.) are dealt with.
Edwards’ knowledge of Latin America and its economies is expert, and the breadth and depth of his research might at times lead to deluges of data in which the reader becomes lost.
But taken as a whole, the thorough but concise compilation of economic history, theory, and Edwards’ own insights makes Left Behind a very satisfying read; even if Edwards’ implicit skepticism of the Latin American people being able to resist the false promises of populism is a bit disheartening. It seems only time will tell if Latin Americans are as easily misled as you were.