Usually, when we get news of politics in Latin America, it’s about one of the dictatorships and a stolen election. But recently, some of the more stable, democratic countries have started to make choices that look odd from the outside. First, there was a presidential vote in Peru a few weeks ago, and the two candidates were very much at the extremes: a right-wing populist and a socialist. As of this writing, the vote is neck-and-neck, and we likely won’t know the results for several days — but the socialist, who wants to rewrite the constitution and focus on wealth redistribution, is narrowly ahead. Peru
Chile, which has been relatively stable since the ouster of Pinochet’s dictatorship in 1990, saw massive protests and riots in October and November, 2019 (pre-covid), the upshot of which was a plebiscite, and 78% voted for a new constitution. People were able to vote directly for delegates to the constitutional convention, and the results were a complete surprise, with the incumbent coalition garnering less than 20% of the delegates (they previously had almost exactly double that), and a strongly left-wing coalition, including the Communists, coming in with the second most chairs at 17.92%. Also, they’re almost all new — only 22% of the delegates across all coalitions had ever run for elected office before. That’s sending a message. Chile
Meanwhile in Mexico, President Lopez Obrador has been consolidating electricity and gas as state resources, which were formerly privatized. There’s a mid-term election underway, and although he appears to have fallen well short of the 2/3rds majority control necessary for sweeping, constitutional overhauls, he nevertheless seems to be gaining ground in the lower house, indicating growing support for his statist agenda. Mexico
Taken independently, none of these are particularly surprising or extremely newsworthy. However, taken together they start to look like a serious critique of the neoclassical economic and Keynsian macroeconomic theories that have dominated liberal-democracy policy since the 1950s. Partially, these countries are able to “get away” with this, because they are new, and their paradigms are not as entrenched. However, when we look at the state of affairs in the developed world, including unemployment, homelessness, real-wage value for the bottom 20%, and national debt, it is fairly clear that the Keynsian plan is … not working out as planned. When people go to the poles, they’re not thinking in terms of academic monetary supply and taxation theory, but I contend that the recent partisanship and voter extremism in the US and UK (and possibly Germany) is in fact sending the same message (though there are other reasons, too). Something is going to have to give — the main economies of the world can not continue to elastiplast their social policies (either left or right wing) together with public debt, and hope to compete with China.