Story by Victoria Voigt.
The current safety and social situation in Latin America seems like a real Catch-22. There are many reasons for issues like systemic corruption, massive grey market and lack of fair leadership. I spoke about all of those with a man who not only analyses these problems for a living but, who has also experienced them firsthand. He says that socialist doctrines within the countries’ governments aren’t a problem there, it’s the crisis of elites that makes it all difficult to obtain a healthy economy and democracy.
*Adrián Rocha is a Political Scientist from Buenos Aires, Argentina. He’s focused on Political Theory, International Relations, and Public Affairs.
Victoria Voigt: The Latin America we see today is an area of 20 million km2 and a population of nearly 650M of people in all, living in 20 different countries. This region is famous for its diversity and multiculturalism, but also for its almost predominant political system which is socialism. Is socialism the only reality Latin Americans know? How does it manifest itself?
Adrián Rocha: What we understand by Latin America contains several sub-regions, such as South America, Central America, the Caribbean, and Mexico. Each region also has internal dynamics that have always been linked to the world market. Political processes in Latin America tend to depend on the international scenario, and fundamentally on the terms of trade. Cuba is the only country with a communist economic and political system, and always showed little capacity to adapt to technological and economic transformations due to its dogmatism. The rest of the Latin American economies have been adjusting to the changes in the prices of the main products they export. In the 1990s, for example, pro-market structural reforms were introduced in many Latin American countries. Then, with the rise of China and the growing demand for commodities, from the year 2000 onwards approximately, center-left governments appeared. Some of them very authoritarian, like that of Chávez in Venezuela, who after his death was replaced by the dictator Maduro. But the vast majority of Latin American countries are not socialist. The problem is that after the subprime crisis in 2008, the world economy has not achieved an auspicious recovery, and that has impacted the whole world, generating a great distrust of societies towards political elites. We saw this in Chile, Haiti, Ecuador, Bolivia, as well as in Catalonia, Iraq, Iran, Egypt, and Lebanon.
VV: 20th century and modern times prove that socialism has failed to solve the toughest, yet basic problems of humanity like poverty, hunger, exploitation, economic oppression, sexism, racism, the destruction of natural resources and the absence of truly participative democracy. What are the key reasons why it is still so popular in the countries of Latin America?
AR: Well, as I said before, I’m not sure that socialism is so popular in Latin America. I rather think that we are witnessing a general crisis of the elites, not only in Latin America, a crisis that gives rise to populism. The real problem of liberal democracy, not only in Latin America, is populism, not socialism, which indeed has already shown that it cannot solve the fundamental problems of society, because it doesn’t allocate resources well, producing more poverty and needing to become authoritarian in order to control everything. The key problem in Western societies is populism, because it uses democratic methods to attack the democracy and its institutions, as Steven Levitsky and Daniel Ziblatt show in their book How Democracies Die (2018).
In addition, it’s important to note that due to the general recession in the region many governments have exaggerated the use of fiscal resources for policymaking. This has been changing the incentive structure, because the State, as it gets bigger, constantly needs to extract more resources from the private sector, which is beginning to be suffocated by the tax burden. This alteration doesn’t respond to socialist policies, but to an abuse of the fiscal deficit to finance productivity deficits, as well as innovation, balance of payments and investment problems. This is a historical dilemma for Latin American economies: by one hand, how to integrate into the world market by adding value, and on the other one, they have to avoid abuse fiscal and monetary policies, in order to finance the domestic market and backward industries.
VV: According to Goldman Sachs’ BRICS review of emerging economies, by 2050 the largest economies in the world will be two of Latin American countries such as Mexico and Brazil which makes it the only continent in the world to have as much as two nominations. What stands behind this enormous success yet with the highest levels of income inequality in the world?
AR: I think that this estimate shows that the population factor is still decisive in having a competitive economy, even when it comes to very poor and unequal societies. Indeed, one of the comparative advantages of a relatively poor but densely populated country is that it can compete with low labour costs. It seems that the Malthusian hypotheses have been refuted once again by the cases of China, India, and Brazil. We are in the middle of the Fourth Industrial Revolution, as Klaus Schwab called this process. The most revolutionary meaning of this change is based on the constant and simultaneous transformation about our sense of time, space and knowledge.
In any case, inequality brings other problems, much more dangerous for global stability, such as the proliferation of drug trafficking, which in many countries succeeds in capturing people displaced from the system, as well as social explosions and the emergence of populist movements that can be left or right-wing. Narrowing the gap between the rich and poor is necessary to consolidate an Open Society, as Karl Popper proposed. I like to believe that Popper would agree that inequality is an enemy of Open Society.
Image: REUTERS/Sergio Moraes
VV: In recent years, corruption has been under public scrutiny like never before in many countries. How do you see it changing on the mass scale?
AR: I believe that the problem of corruption has a twofold dimension: on the one hand, it’s moral, because it concerns all citizens whose resources are taken by opportunistic politicians and businessmen, but on the other hand, it’s a systemic issue, because the democratic game is about leaving room for discretion. Game theory has studied very well the problems of discretion in subgame-perfect equilibrium. What happens is that many times, in contexts of imperfect and asymmetric information, agents have no motivational incentives not to act in a discretionary way. That is why, on a massive scale, it’s important to consolidate national and international institutions that at least produce imperative incentives that constrain the scope of action of the corrupt. If we can’t consolidate a motivation incentive structure, we should consider creating an enforcement structure to reduce corruption.
VV: Income from tourism is key to the economy of several Latin American countries. How does the difficult situation of safety in these regions affect the development of tourism?
AR: This is one of the most important challenges in Latin America. Tourism represents one of the historical pillars of the economy of all Latin American countries. The problem of security is a very sensitive public policy issue, as governments, in general, do not usually agree on it. Few governments in Latin America have taken a decisive stand against organized crime. We have already seen how in Mexico the State has lost control of several areas and needed to negotiate with narcoterrorists. Latin America’s great challenge for the coming decades is to solve the problem of drug trafficking without giving in, but also without a wave of spreading violence. To achieve that it’s essential to have good intelligence and strategic plans.
VV: What are the biggest social challenges Latin America is facing? And what is it that Latin Americans need the most now?
AR: The greatest social challenges facing Latin America are to promote growth and prosperity and to reduce economic and symbolic inequality. To achieve this, countries must implement public policies that provide incentives for innovation and entrepreneurship, but without neglecting symbolic equality and, above all, equality of opportunity. We have already seen how one of the most developed economies in Latin America, such as Chile, is witnessing a social cataclysm precisely because it’s been neglecting symbolic and inclusive issues. It’s not a novelty that insofar as societies develop, their citizens demand more and more rights. Therefore it’s essential to accompany growth and development with plans for inclusion since these make it possible to create an integrated social ecosystem, which prevents the rise of populists and demagogues.
Contact Adrián: firstname.lastname@example.org