Lagging Behind Latin America: The Temptation And Trap Of Economic Populism

Ben Li / Wen

After waking up in irrational prosperity, people's awareness of crisis and their ability to reflect have been significantly improved. For example, various theories about trap have been popularized in recent years: Middle Income Trap, Thucydides trap, Tacitus trap, liquidity trap... Even the Minsky moment is widely known. This has been growing at an extraordinary rate for forty years, and it is a mature and progressive trend towards a connotative and sustainable developing country.

The most fearful trap comes from the seemingly charming temptation. In the ancient Greek myths and legends, the seduce siren, who had a natural voice, used songs to seduce the sailors crossing the sea. This beautiful trap eventually led to the sinking of the passing ships. As Wilde's famous saying goes, "I can resist anything but temptation. I am still curious about you, so frustration is still going on.

With the intensification of counter globalization, populism is increasingly confusing. The book, which supports the publication of the lure of Latin America and populism, reveals the two sides of the temptation and trap of economic populism. In addition to dispel doubts, it is no more than a simple antidote.

The theoretical discussion on Latin America is not a new topic. In 2007, the author's "rise"? In the book "two possibilities of economic development in the next 10 years", we have discussed this issue in considerable length. The first chapter of this book is "why can China's economy grow at a high speed?" The second chapter is "whether China's economy can sustain rapid growth?" The third chapter is "three contrasts of China's Road: La Americanization, Japan bubble and India mode". Domestic academics have begun to pay attention to the harm of the Latin American economic model, especially the drawbacks of inequality, but at that time, no one has clearly summed up the reasons for the sustained and slow decline of the Latin American economy as economic populism. If people see symptoms, Chilean economist Sebastian Edwards, through the long-term follow-up study and in-depth analysis of Latin American modern economic symptoms, is to find out the etiology and pathology.

According to the definition of the book, economic populism means "emphasizing economic growth and income distribution, but neglecting the risks brought about by inflation, external constraints and economic entities' response to positive non market economic policies". Its performance is poverty, polarization, corruption, underground economy and periodic political crisis. Especially since the beginning of 1998, many Latin American countries have fallen into a serious recession, while the Asian emerging economies of the same period, including China and India, have increased by ten times their per capita income. Brazil, one of the Latin American countries, known as BRICS, is finally dragging its feet.

The key is that, over the decades, despite the ups and downs, most countries in Latin America have repeatedly fallen into the trap of economic populism. For those of us who have been fortunate enough to experience the miracle of China's reform and opening up, their contrast and exclamation are particularly strong.

"Lagging behind in Latin America" is first due to the temptation from "public opinion". This direct, reckless and rude economic populism policy responds to the negative emotions of the people in the latecomer countries, and it is easy to get widespread public support at the very beginning. Therefore, "most Latin American economies are still subject to the strictest, most distorted and most protectionist regulation in the world." These policies, with the support of national pride and strong personal charisma, eventually brought more severe inflation, excessive unemployment and lower wages. Among them, the most enthusiastic poor class suffered the most in the end, which is hardly a tragedy.

According to the book, Latin American countries such as Venezuela, Argentina, Bolivia and Ecuador have gone back in most areas of the system, such as the protection of property rights, enforcement of contracts, the rule of law and judicial independence. According to the rule of law index compiled by the world bank, the average score in Latin America in 2007 dropped to -0.277 from ten years ago to -0.523, which is far below the level of -0.169 in emerging Asia, 0.636 in Asia, 0.636 in four, 0.907 in southern Europe and 1.853 in developed countries. Therefore, the horror of "Latin American disease" is that economic populism can neither protect efficiency nor promote social justice.

Latin America is lagging behind as a whole, but it is a special case to get rid of economic populism in Chile. Its difference is that it has better grasped the relationship between efficiency and social justice, and has become the most shining star in Latin America's economic development. Over the past 20 years, Chile's exports have been growing at an average annual rate of two figures. According to the statistics of the world bank in 2007, its rule of law index is higher than that of southern European countries, and the coverage of social safety net has been expanding while Chile's Gini coefficient is decreasing.

Chile's successful experience on the one hand is to get rid of the resentment mentality of the latecomer countries and the temptation of the populists. On the other hand, it is exactly the same with the basic experience of China's miracle, which is to promote economic reform and opening up. The book points out that "the long-term reflection and analysis of the left wing is the fundamental reason for the creation of the Chilean miracle". They gradually believe that democracy, tolerance, social progress, productivity improvement and respect for the rule of law are not contradictory. On the contrary, the key to success is to promote these goals by implementing a policy mix that encourages innovation and competition and provides effective protection for less fortunate people.

"Nothing new under the sun". China's economic rise, India's economic prosperity and Chile's emergence are all due to respect for the basic economic laws and ethical principles that are equally important in terms of efficiency and justice. To meditate and meditate, we also have confidence in the temptation and trap of economic populism. As the brocsky poem quoted in the book is: good luck ends sometimes, unfortunately also.