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Neoliberal economics came next. The champions of this approach arrived in the late ’80s with an ambitious agenda. They did rectify macroeconomic imbalances, but they also overcompensated with privatizations and deregulation, which left a legacy of price-fixing and financial frailty. They also paid less attention to poverty, leading to rising income inequality.
In the late ’90s, leftist leaders intent on correcting the problems of the neoliberal era began to assume power. They, too, responded by overshooting the mark. To deal with income inequality, they expanded the reach of the state and reinforced their economies’ dependency on the export of natural resources, leading to rampant corruption, low savings and political sectarianism. In some cases, they neglected fiscal discipline, causing ballooning debts and deficits.
And now it’s time for post-left presidents. An encore performance of overcompensation and neglect is in the works.
Let’s begin with economics. On the plus side, today’s reformers have fewer reasons than in the past to overcorrect. Except for Venezuela and Brazil, Latin American countries are not facing imminent economic collapse. So there is less need for so-called big-bang reforms of the past, which produce a lot of mistakes and pain.
The real risk is misfiring — that is, going after the wrong target. The region’s key economic problem is overdependence on natural resources, yet most of the new hypercorrectors are ignoring the issue. In Peru, President Pedro Pablo Kuczynski went to China on his first foreign trip, an odd choice considering China’s contribution to keeping Peru reliant on mining.
To the extent that the new reformers propose a solution, it is to attract foreign investment by relaxing rules on exports. Such liberalization might increase investment, but as a policy to minimize dependence on exporting natural resources, it fails. If anything, it increases dependence on foreign partners.
Reducing such dependence requires instead establishing stabilization funds, improving education so workers learn more skills, and creating a more diversified service economy. Sadly, today’s presidents hardly talk about these tasks.
A second big item of the reform agenda is corruption. No other issue seems to mobilize the electorate more than disgust with corruption. Allegations of corruption destroyed the electoral strength of once-popular leftist presidents like Dilma Rousseff in Brazil, Cristina Fernández de Kirchner in Argentina, Mauricio Funes in El Salvador and Evo Morales in Bolivia.
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Cadu Gomes/European Pressphoto Agency
On corruption especially, Latin American presidents have a long history of misfiring. Under neoliberalism, the preferred strategy to deal with corruption was to “roll back the state,” in the assumption that a smaller public sector offered fewer opportunities for corruption. Under leftist presidents, the preferred strategy was to punish parties and expand “participatory democracy” in the hope that giving ordinary citizens more power to make decisions would turn them into effective watchdogs.
As antidotes to corruption, neither approach worked. Rolling back the state through privatizations produced new opportunities for collusion with the private sector and made oversight more difficult. Participatory democracy also failed to deliver: Many groups that signed up for it were too eager to be co-opted, which made them susceptible to collusion with corrupt officials. In Venezuela under Hugo Chávez, more than 70,000 community councils were created to help with community projects, receiving close to $8 billion in state aid, according to Reuters. Today, there’s little to show for all this money spent.
This time around, presidents, rather than rolling back the state, should build a rules-based state. Rather than relying only on citizen participation, they should give more power to a narrower constituency: the courts.
There are obstacles. Making the state more bound by rules and giving the courts more teeth limit the discretion of the executive branch, which presidents dislike. Sometimes, as in Brazil, the parties that support such moves are tainted by corruption scandals. And hypercorrectors, in particular, think that judicial checks hamstring them in their effort to overhaul a dysfunctional status quo.
Finally, today’s reformers have also inherited the problem of political sectarianism — the tendency of ruling parties to provide special favors mostly to loyalists and ignore opponents. Latin America’s radical left proved notoriously sectarian. Followers were rewarded with extraordinary state largess, often in the form of welfare benefits; dissidents were punished by being barred from such benefits. Opponents felt, rightly, that the state was using social policy to discriminate against them.
This kind of sectarianism is the reason for one of Latin America’s most remarkable paradoxes since the late 2000s: Poverty and inequality declined, but political tensions increased — not so much because social programs relied on redistribution (their funding actually came from exports rather than tax increases), but on favoritism. This produced a vicious cycle: Social programs made presidents popular, and that popularity encouraged them to create more rules that were biased against opponents, leading to polarization.
Today’s reformers face the challenge of reducing this dynamic. But it’s not clear that today’s hypercorrectors can; their electoral coalitions might not allow it.
In some countries, like Argentina and Peru, these coalitions consist of your typical anti-populist front: middle-class voters, technocrats and business, all aligned against inefficient government spending. They demand an exclusive focus on macroeconomic discipline.
In other cases, the electoral coalition behind today’s reformers is more religious, as is the case with Donald J. Trump in the United States. An alliance of evangelicals and Catholics is taking shape across the Americas, aiming to advance a very conservative agenda on sexuality and security. This new coalition, which is strongest in Brazil, Colombia, Mexico and Central America, wants presidents to commit to restrictive policies on abortion, gay rights, drug use and crime. Their latest target is “gender ideology,” the idea that gender identity is socially constructed rather than biologically determined. These groups claim that gender ideology is anti-biblical and oppose policies to protect gay and transgender people, family planners and nontraditional families.
Coalitions like this helped place Mr. Temer in power in Brazil and Jimmy Morales in Guatemala. In Mexico, they pressured the Congress to shelve a same-sex-marriage bill. In Colombia, they helped the right defeat, in a referendum, the government’s peace agreement with the FARC guerrilla group. In Nicaragua, they encouraged President Daniel Ortega, a former Marxist, to adopt an anti-abortion position. In Chile, they helped elect a significant number of mayors in the most recent municipal elections.
Like the radical leftists of the 2000s, these religious groups have adopted intransigent positions on issues they care about. Presidents owing their victories to religious conservatives may feel too indebted to these groups, and this is a recipe for more sectarianism. The challenge for these presidents is to establish what one could call a separation of church and party. If they insist on excluding the ever-growing sections of the electorate that are more secular, they risk heightening polarization.
There are two ways to interpret this moment in Latin America. One is to see it as a moment of an ideological pendulum shift from left to right. The other is to see it as a repeating cycle of hypercorrection, with crises of governance once again producing mega-reformers. Hypercorrection comes from crises and is prone to crises.
The prospects for breaking this unfortunate cycle seem uneven. On economics, the chances look better than in the past. But on issues of corruption and sectarianism, there is trouble ahead.
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