Latin America’s Populist Hangover

On the morning of October 17, 1945, thousands of protesters in Buenos Aires marched on Argentina’s main executive building, the Casa Rosada, to demand the return of Vice President Juan Perón, who had been forced to resign a week earlier. The day was hot, and many of the men took off their jackets and even their shirts. This earned them the mocking title of los descamisados—“the shirtless.” Perón’s supporters promptly reclaimed the insult and turned it into a badge of honor. When Perón ran for president in the 1946 election as an unabashed populist, he toured the country in a train he named El Descamisado after his followers.

The descamisados, and those like them, were integral to the populism that dominated Latin American politics from the 1930s until recently. Starting with Brazilian President Getúlio Vargas, who first assumed power in 1930, and leading all the way up to Bolivian President Evo Morales, who entered office in 2006, Latin American leaders have repeatedly harnessed the power of the once excluded masses by railing against the establishment and promising a more prosperous future for their followers.

Today, however, even as populists are surging throughout the rest of the world, such voices have fallen conspicuously silent in Latin America. The region’s grandiose strongmen, with their cults of personality, have largely faded away. Recent elections have ushered in middle-of-the-road leaders, including one former investment banker, promising fiscal conservatism, free trade, and legal due process. In a striking role reversal, it is now Latin America that is watching, aghast, as populists elsewhere threaten to disrupt the world’s more mature economies.

Latin America’s struggles with populism, although far from over, offer some hints about where the current upsurge in populist rhetoric in the United States and Europe might lead. History shows that populism polarizes societies, weakens economies, and undermines representative democracy. But Latin America’s experience also demonstrates that democratic decline is not inevitable, that citizens’ movements can reform institutions and defend them against would-be populists, and that the disenfranchised will not tolerate empty promises forever.

USE AND ABUSE

Common as the term “populism” has become, populism itself is an elusive concept. The word is often used in a derogatory way to describe the strategy of politicians who seek popularity by appealing to the electorate’s baser instincts. But “populism” does have a more precise definition, and although the phenomenon varies somewhat from place to place, true populist movements share some fundamental elements. The most basic of these is an appeal to the excluded. Populists claim to represent a neglected majority by defying an undeserving but powerful minority. In Latin America, one of the most unequal regions in the world, populists found their first constituency in a working class that doubled in size between 1914 and 1945 as the region industrialized and that traditional society had failed to integrate. Later, in countries such as Argentina, Ecuador, and Venezuela, populists took advantage of the economic hardship of the “lost decade” of the 1980s, when growth stagnated and incomes plummeted, and the subsequent adoption of economic austerity, trade liberalization, and privatization—policies recommended by the International Monetary Fund, the World Bank, and the U.S. Treasury. In 2007 in Argentina, some six decades after Perón’s triumphant restoration, President Cristina Fernández de Kirchner came out on the balcony of the Casa Rosada to sing the same refrain: she, too, would represent “the people” against those who had shut them out.

Common as the term “populism” has become, populism itself is an elusive concept.

Despite casting themselves as tribunes of the people, populist leaders are just as likely to come from the elite as they are to emerge from the lower classes. And although they seek legitimacy through the support of the masses, populists favor top-down control. They build mass movements to increase their personal power, not to truly change the system.

Populists must hold together heterogeneous political coalitions, and to this end, they often employ redistributionist economic policies. These are often expansive: populists create new social programs, ramp up spending, and take control of parts of the economy. The resulting short-term economic booms make life better for their followers, but as a result of the government largess, debts build, inflation spirals, businesses scale back operations, and economic crises ensue. Those who benefited from the boom see their fortunes come crashing down again. In Latin America, this basic narrative has played out in Perón’s and Kirchner’s Argentina, in Vargas’ Brazil, and in President Hugo Chávez’s Venezuela.

But populism can also flourish with limited social spending. In the 1990s in Peru, for example, President Alberto Fujimori managed to cultivate a following, grab power, and reshape the country’s democratic institutions—most dramatically through a “self-coup” that dissolved Congress—all while implementing pro-market neoliberal reforms. His counterpart in Argentina, President Carlos Menem, did the same, opening up the country’s economy while packing the Supreme Court with jurists loyal to him and changing the constitution to allow for his reelection to a second term. Both leaders used targeted financial benefits to glue together their fractious support bases. But they were otherwise fiscally cautious.

Perhaps the most consequential feature that all versions of populism share is the weakening of liberal democratic institutions. Populist leaders concentrate power in their immediate circle; they gesture toward enhancing political participation and claim to expand the civic sphere, but in fact they bypass, and thereby weaken, crucial institutions, such as political parties, independent judiciaries, and the free press. Populist leaders favor administrative decrees and marginalize legislatures. They undermine checks and balances on executive authority by casting themselves as the sole arbiters of right and wrong and by encouraging their followers to distrust and oppose anything connected to the old establishment. This kind of demagoguery can devolve into overt efforts to silence critics—sometimes even through violence.

THINGS FALL APART

Beginning in the late 1990s, Latin America was overrun by a fresh wave of leaders claiming mandates from “the people.” Chief among them was Chávez, who first came to prominence in Venezuela as the leader of a failed military coup in 1992 and later reinvented himself as a populist champion of the downtrodden.

In 1998, Chávez won the presidency with the overwhelming support of poor Venezuelans, who remained a majority of the population despite the country’s oil wealth. Railing against the political oligarchy, Chávez promised to abolish poverty and create a more authentic democracy. As president, he dedicated himself to tireless self-promotion. He spent hours each week speaking to the nation on his television and radio show, Aló, Presidente, touting the achievements of his so-called Bolivarian revolution and excoriating foreign intervention.

Venezuela’s oil reserves furnished Chávez with more money than any of his counterparts in the region, and he spent it lavishly. He created numerous social programs, among them massive subsidies for housing, food, and basic goods; free medical clinics for the poor; and land-redistribution schemes that took from the wealthy and gave to the poor. He took control of the historically technocratic state oil company and nationalized other sectors of the economy, retooling them as organs of personal patronage.

The disenfranchised will not tolerate empty promises forever.

Chávez promoted intense political participation, holding 14 elections and referendums during his 14-year rule, yet true to populist form, he also ruthlessly undermined democratic institutions. He rewrote the constitution, strengthening the executive at the expense of the legislature; undercut the independence of the National Electoral Council, which oversees elections; packed the Supreme Court with loyalists; and politicized the state bureaucracy. He swept away the military’s autonomy by replacing independent officers with his acolytes. And he eviscerated Venezuela’s once thriving free press by revoking television and radio licenses and forcing the publishers of opposition-friendly newspapers to sell their operations to regime supporters.

A similar story played out in Argentina during the first decade of this century. In 2003, Néstor Kirchner came to power propelled by the rage of thousands of Argentines who, having suffered in the wake of the country’s 2001 debt default, took to the streets to chant “¡Que se vayan todos!” (Throw them all out!). Kirchner and his wife, Cristina, proceeded to rule Argentina for 12 years—Néstor for one term, Cristina for two—during which they cast themselves as the foes of the previous political generation, the military, and “international imperialist forces,” represented by foreign investors, the International Monetary Fund, and the United States.

During their time in office, the Kirchners augmented their power by fomenting antiestablishment fervor through rhetorical attacks on companies and elites, giving handouts to provincial leaders and potential voters, and, at times, resorting to outright intimidation in the form of legal action and tax audits. They created their own political base, superimposing their Frente para la Victoria (Front for Victory) coalition on the old Peronist apparatus by co-opting the older organization’s leaders and operatives. They often bypassed the Argentine Congress through decrees and tried to silence their critics, most brazenly by forcing through legislation to split apart Grupo Clarín, Argentina’s largest media conglomerate.

Early in Néstor Kirchner’s term, the Argentine economy was boosted by surging commodity prices and the government’s success in negotiating away much of the $100 billion debt on which the country had defaulted in 2001. Taking advantage of the boom, Kirchner upped the minimum wage, increased public pensions, expanded welfare programs, and tripled the public payroll; by 2015, the state employed one in every five workers. All this spending created huge fiscal deficits, led to rampant inflation, and helped push the economy into recession earlier this year.

EVERYTHING IN MODERATION

The Latin American populist surge that began two decades ago has now receded. Néstor Kirchner died in 2010; Chávez, in 2013. Cristina Fernández de Kirchner, hampered by term limits, stepped down in 2015 and is now mired in corruption scandals. Morales and Ecuadorian President Rafael Correa have watched their popularity fall as their economies have stumbled.

The global financial slowdown has hurt emerging markets especially badly, and falls in commodity prices have left state coffers empty and governments with outsize debts. As a result, it is far harder than before to build or maintain support through patronage. In Venezuela, for example, falling oil prices have decimated the economy, forcing the government—now in debt to the tune of $120 billion—to choose between paying interest and importing food and medicine. An exception to this trend is Argentina, which avoided the debt trap because it was shut out of international capital markets until earlier this year, when a new government resolved a decadelong legal fight with its remaining creditors, who had refused earlier settlements after the country’s 2001 default.

Voters in many Latin American countries, exhausted by the economic and political turbulence brought on by populist leaders, have now turned to moderate pragmatists. In Argentina last year, Mauricio Macri defeated Kirchner’s handpicked successor with promises to put the country on a more market-friendly path. In Venezuela, voters desperate to restore political checks and balances gave the opposition a supermajority in the 2015 congressional elections. Chávez’s successor as president, Nicolás Maduro, has responded by increasing his authoritarianism: violently breaking up protests, firing opposition supporters in the public sector, and threatening to close the National Assembly. Still, he faces the possibility of a recall referendum in the near future. Bolivians, meanwhile, handed Morales his first referendum defeat in February of this year, when they chose to retain the term limits he had hoped to lift. And Correa, eyeing his low approval ratings, has (so far) vowed not to run again in Ecuador’s 2017 presidential race. Finally, in June, Peru’s left and right united in electing a liberal 77-year-old banker, Pedro Pablo Kuczynski, as president, narrowly defeating Keiko Fujimori—the daughter of the former populist president—who many had feared would emulate her father’s heavy-handed style. But despite these recent successes, it is still unclear whether the more moderate leaders will be interested in or capable of rebuilding the national institutions that were weakened by previous populist governments.

CRIME AND PUNISHMENT

It would be wishful thinking to suppose that the region has become immune to the populist temptation. Whereas poverty and inequality were once the great mobilizers, corruption is likely to become the new lodestar for aspiring populists. Already, Latin Americans are turning against officials who have embezzled public money or peddled their influence for personal gain. Although no populists have yet managed to turn this anger to their advantage, they will certainly try, especially given the intensity of the public’s rage.

Over the last year, millions of Brazilians have flooded the streets, flying gigantic balloons bearing images of former President Luiz Inácio Lula da Silva and his successor, Dilma Rousseff (who was impeached by the Senate at the end of August), dressed in prison stripes. Sérgio Moro, the judge who has sent dozens of high-ranking politicians and business leaders to jail in a corruption scandal involving the state oil company, Petrobras, has become one of the country’s most popular political figures. And no wonder: more than 60 percent of Brazil’s members of Congress have been charged with corruption or other crimes. Meanwhile, in Guatemala in 2015, thousands of protesters filled the main plaza for weeks to demand that President Otto Pérez Molina step down over accusations that he and others stole tens of millions of U.S. dollars in customs duties. Pérez Molina now sits in jail, awaiting trial.

The anger is also palpable in Honduras, where thousands have joined vigils calling for the resignation of President Juan Orlando Hernández after an independent investigation revealed that the director of the country’s health-care system had stolen millions of dollars in public money. In March, protesters took to the streets again to demand justice after the murder of the indigenous leader and environmental activist Berta Cáceres. And in Mexico, in June, voters threw out the political parties of several governors embroiled in corruption scandals, in the process ending over 80 years of uncontested rule by the Institutional Revolutionary Party in four states.

It would be wishful thinking to suppose that Latin America has become immune to the populist temptation.

Many of these developments were made possible by reforms enacted by some countries in recent years to improve the transparency and accountability of government officials. Countries including Brazil and Mexico have passed laws requiring their public servants to disclose their finances, open public procurement to competitive tender, and provide greater access to government documents. The newly available information, acquired by intrepid reporters, has led to some of the explosive revelations described above.

The regional economic downturn has also made it harder for corrupt officials to hide their bad behavior. As public funds dry up, graft becomes more visible. The rise of social media has helped amplify these stories, allowing millions of Latin Americans to find out about the fancy homes and offshore bank accounts of public officials.

The backlash against corruption has also resulted from the rise of a new middle class throughout the region. Across Latin America, nearly 70 million people rose out of poverty during the first decade of this century. These people now have assets to protect and have become quick to denounce a system they see as rigged against them. Polls show that this middle class cares more about corruption than the rich, who are more likely to benefit from the patronage system. Middle-class citizens are also more interested in democratic governance than the poor, who are overwhelmingly concerned with their economic security (or lack thereof).

Most of the region’s politicians have yet to understand, much less harness, this ire. Unlike economic frustration, anger over corruption is directed squarely at them. And the independent citizens’ groups leading the current fight against corruption want stronger institutions, not charismatic leaders who will bypass them.

Earlier this year, in Mexico, over 600,000 citizens signed a petition calling for the government to bolster the country’s weak anticorruption laws, and on July 6, their demands became law. In January, after months of pressure from the Honduran public, the president accepted a new investigatory body modeled on the independent Guatemalan commission that helped force the resignation of that country’s corrupt president and vice president in 2015.

Still, the popularity of outsider candidates has not vanished. The former comedian Jimmy Morales won the 2015 presidential election in Guatemala by claiming to be “neither corrupt, nor a thief.” Since taking office, he has fulfilled his promise to uphold democratic checks and balances and has governed from the center. But this is due more to his temperament than to any real institutional limits on his conduct. A less scrupulous successor could take advantage of the nation’s weak institutions to mobilize the masses for his or her own gain.

In Mexico, Andrés Manuel López Obrador, who has launched this third attempt to become president, is trying to harness voters’ disgust over the current government’s corruption scandals. True to populist form, he has promised to take on poverty, expand social welfare programs, defend Mexican interests against foreign imperialists, and end the current political system, referring to the government and the opposition National Action Party as a political Mafia that must be destroyed.

Populism limits long-term economic growth.

Although Mexico has generally avoided populism in the past, the government has aided López Obrador’s cause by dragging its feet on anticorruption reforms and failing to prosecute theft by its governors. Unless the government changes course in the next two years, López Obrador could become Mexico’s next president.

LOOK BEFORE YOU LEAP

Latin America’s long experience with populism offers some bracing warnings to other countries currently flirting with such politics. Today, the United States and many European countries face challenges similar to those that drove Latin America to populism in the first place, including economic dislocation, rapid social change, and political alienation. Should these countries actually let demagogues take power, they will suffer just as much as Latin America has—but, given their far greater power and influence, with far worse consequences for the rest of the world.

As Latin America has shown, populism limits long-term economic growth. Unpredictable policymaking leads to repeated crises and market gyrations, which in turn reduce spending on infrastructure, education, and health care—the building blocks of prosperity. Today, even in countries that boast strong economies and sound fiscal discipline, such as Mexico, the mere threat of populism is already slowing investment and making access to capital more costly.

Latin America has also shown that even when populists leave office, their noxious legacies linger. Moderate successors struggle to build trust in polarized societies and must work hard to rebuild legislative and judicial institutions. As the gaps between social groups widen, it becomes harder to forge compromises—the lifeblood of liberal democracy.

Yet Latin America also offers hope. Having had their brush with populism, many governments in the region are now trying to immunize themselves against future bouts by signing international free-trade agreements, codifying the independence of their central banks, and passing balanced-budget laws—all of which will limit the ability of their successors to cause mischief. Several countries’ legislatures are also reaffirming their independence by limiting the ability of their executives to rule by decree. And Brazil, Guatemala, Mexico, and others are implementing judicial reforms, including moving to oral trials, which are more transparent because the proceedings are more open to the public, and strengthening the offices of attorneys general and public defenders.

The United States and European nations have much stronger democratic institutions and a centuries-old tradition of the separation of powers. But they are still vulnerable. If Latin America provides a lasting lesson for the rest of the West, it is to truly appreciate the importance of the checks and balances of representative government before having to experience their absence. For all the frustrations of legislative gridlock, Latin America’s experience has shown that gradual change is better than the alternative. It is up to voters, civic movements, and politicians themselves, even as they debate their differences, to defend and reinforce the institutions that make representative democracy work.