Latin America’s Incoming ‘Pink Tide’ Suffers Rose Nostalgia

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Campaigning to win back the Brazilian presidency next month, Luiz Inácio Lula da Silva likes to dwell on the past, evoking the golden years from 2003 to 2010 when, as he likes to say, the country was ruled by “the one who was considered the best president in the history of Brazil.

He has something to brag about. Brazil’s economy has grown at more than 4% per year, on average, during Lula’s presidency, far exceeding the record of his rival, current President Jair Bolsonaro. Under Lula’s leadership, Brazil cut inflation by two-thirds, cut unemployment by half, and reduced public debt.

All of this happened, he said on national television, as “we implemented the greatest social inclusion policies in the history of this country”. The minimum wage has increased by half, after inflation. Poverty fell from 40% to 25%. Infant mortality has decreased.

Despite all the victories, however, this Greatest Hits campaign strategy underscores a thorny challenge, not just for Lula, but for the entire cohort of new left governments who hope to reorient economic and social policy across Latin America: the world bears no resemblance to the peaceful years when the left was in power for the last time.

Besides Brazil, where Lula seems almost certain to return to the presidency after next month’s elections, the left now rules Argentina, Colombia, Chile, Peru and Bolivia.

Yet, while it may look like a region-wide ideological realignment, the shift to the left is largely the product of voter frustration with incumbent right-wing governments.

These voters share the kind of nostalgia that drives Lula’s campaign. But bringing back the good times is likely to remain an out of reach goal. And voters won’t show much patience for the leftist governments they’ve restored to power in hopes of regaining some of that past prosperity.

Despite a sharp slowdown towards the end, Nestor Kirchner and his wife, Cristina Fernandez de Kirchner, for 13 years led an economy growing at an average of 4.5% per year. Bolivia’s GDP grew by 4.7% per year, on average, during the 14 years of the government of Evo Morales, significantly more than during the previous 14 years.

But that was when China was buying raw materials from all over South America and foreign direct investment was pouring in. To replicate this performance would require the Chinese economy to rebound from the slump, the war in Ukraine to end, the global pandemic to peter out, and probably a whole lot of luck to boot.

Bolivia’s natural gas production boomed during Morales’ tenure, allowing him to fund extensive social programs. Argentina’s commodity exports to China doubled during the tenure of Kirchner and his wife. Brazilian exports to China have increased sevenfold compared to Lula’s.

Not only is Argentina currently suffering from galloping inflation, which should reach 100% by the end of the year. Its economy has slowed since the post-Covid rebound. The International Monetary Fund expects growth of less than 2% per year, on average, over the term of current President Alberto Fernandez, a close ally of Fernandez de Kirchner, now its vice-president.

The Bolivian economy is also growing much slower than during Morales’s time. And Brazil and Chile are unlikely to buck the slowing trend. The IMF expects them to grow only around 1.5% per year over the next 4 years. Additionally, inflation is rising across much of the continent, threatening the livelihoods of the politically powerful middle class. If interest rates in the United States rise much more, their economic reality will worsen.

As he touts his past successes, Lula might want to remember what happens to leftist governments when the economy goes downhill. Lula’s hand-picked successor, Dilma Roussef, has been ousted after a year and a half of severe economic contraction.

Argentina’s economy ultimately swung south on Cristina Fernandez de Kirchner, helping cede the presidency to right-winger Mauricio Macri. In Chile, a few years of slow growth led to the transfer of power from the socialist government of Michelle Bachelet to right-winger Sebastian Pinera.

Whatever their ideological leanings, the “pink wave” of left-wing governments coming to power in the region will have their hands full to navigate the very tight economic space, not to mention the political space, where the prosperity and patience of voters can be hard to find. .

Consider Chile, where voters last year expelled Pinera, replacing him with Gabriel Boric, a 36-year-old leftist arsonist who has staked his political capital on a radically ambitious effort to write a new constitution to replace the one inherited from the dictatorship of General Augusto Pinochet.

Among other things, the 388-article charter created constitutional rights to housing, education, health care, free time, culturally appropriate food, free legal advice, sex education and a dignified death. Earlier this month it was overwhelmingly rejected in a referendum. And Boric has discovered that voter frustration with a previous government does not equate to a mandate for sweeping change.

Lula’s diagnosis of the challenges facing Brazil – where growth is anemic and nearly one in ten workers are unemployed; where 18.4% of the population lives in poverty and where the richest 10% of households earn 15 times more than the poorest 40% — that’s perfect. The diagnosis would be similar in most of Latin America.

The question is whether Latin America’s left-wing champions – Lula and Boric, Argentina’s Alberto Fernandez and Gustavo Petro in Colombia; Luis Arce in Bolivia or Pedro Castillo in Peru can provide the kind of broad-based growth needed to meet the challenge. Otherwise, expect to see a bluish wave moving into the area from the right soon.

More from Bloomberg Opinion:

Should the United States say goodbye to Latin America? : Eduardo Porter

In search of political salvation, Bolsonaro deploys his wife and his prayers: Clara Ferreira Marques

Governance must trump ideology in Latin American elections: Shannon O’Neil

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Eduardo Porter is a Bloomberg Opinion columnist covering Latin America, US economic policy and immigration. He is the author of “American Poison: How Racial Hostility Destroyed Our Promise” and “The Price of Everything: Finding Method in the Madness of What Things Cost”.

More stories like this are available at bloomberg.com/opinion

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