This may come as a surprise, but support for the free market is reaching record highs in Latin America. And what’s even more amazing, capitalism is most popular in countries where leftist leaders lash out against it on a daily basis.
In theory, this could pave the way for a golden era for foreign and domestic investors in the region.
The startling information about the rise of pro-capitalist sentiment in Latin America is part of soon-to-be-released figures from Latinobarometro, an annual regional survey. According to the data, the percentage of people in the region who agree with the premise that “the free market is the only path to development” reached a record 69 percent in 2017, up from 57 percent when the question was first asked 14 years ago.
Lagos said she was “surprised” by the figures showing a significant rise in support for free market policies.
“In the past, there was a historic resistance to the free market and privatizations in Latin America. And now, suddenly, we are seeing this spike,” she said.
The region’s most pro-capitalist country is Nicaragua, a country run by leftist radical President Daniel Ortega. Yet fully 79 percent of Nicaraguans say the free market is the only way for a country to develop.
Honduras comes in second, with 78 percent support for the free market, followed by Bolivia, Ecuador and Venezuela, with 76 percent. By comparison, 67 percent of the people say they agree with that idea in Argentina, 66 percent in Mexico, 64 percent in Brazil and 59 percent in Chile.
When I first saw these figures, my reaction was that the numbers reflect the ups and downs of populism in the region.
The annual poll shows that support for the free market in the region reached its lowest point in 2007. That was when leftist populist leaders in Venezuela, Ecuador, Bolivia and Argentina benefited from economic booms fueled by record world commodity prices, and gave away huge amounts of money in subsidies.
But when the commodity boom came to an end around 2010, most of these economies tanked. People realized that their leaders had wasted their economic bonanzas in populist fiestas, and left their countries virtually bankrupt. A new generation of centrist and right-of-centre leaders won elections or inherited the presidencies in Argentina, Peru, Brazil and other countries, and seem to have convinced their people — at least for now — that no country can achieve sustainable growth without private investments.
Will Latin America’s new love affair with — or tolerance of — the free market last? History tells me not to bet on it. Latin America’s politics tends to swing like a pendulum every 10 or 15 years. When world commodity prices go up, authoritarian rulers and state-centred policies thrive. When commodity prices go down, private investors are courted like kings.
But optimists can find some reasons for hope in the new data. In Argentina, support for the free market has risen from 51 percent in 2003 to 67 percent in 2017, while in Colombia it has grown from 57 percent to 67 percent over the same period, and in Venezuela from 51 percent to 75 percent, the Latinobarometro survey shows.
In an ideal world, this would be a perfect time for the United States and Latin America to forge new economic alliances, and compete more efficiently with China. They could finally create a hemisphere-wide free trade zone that has been proposed by all recent U.S. presidents, from George H.W. Bush to Barack Obama.
Unfortunately, now that the United States has its biggest chance in years to improve economic ties with the region, it is ruled by an ignorant isolationist who threatens to slash the free trade agreement with Mexico and Canada, and has just increased U.S. tariffs on Argentina’s key biodiesel exports.
As this survey tells us, this is a great opportunity to improve U.S.-Latin American economic ties. But it is being wasted, while China continues making inroads in Latin America.