Bloomberg Opinion — Campaigning to regain the Brazilian presidency next month, Luiz Inácio Lula da Silva likes to dwell on the past, evoking the halcyon years from 2003 to 2010 when, as he likes to put it, the country was run by “the guy who was considered the best president in the history of Brazil.”
He has stuff to brag about. The Brazilian economy grew over 4% per year, on average, during Lula’s presidency — vastly outpacing the track record of his rival, current president Jair Bolsonaro. On Lula’s watch, Brazil slashed inflation by two thirds, reduced unemployment by half and cut public debt.
All this happened, he told national TV, as “we implemented the greatest policies of social inclusion in the history of this country.” The minimum wage rose by half, after inflation. Poverty fell from 40% to 25%. Infant mortality declined.
For all the wins, though, this Greatest Hits campaign strategy underscores a thorny challenge, not just for Lula, but for the full cohort of incoming left-wing governments hoping to redirect economic and social policy across Latin America: The world looks nothing like the halcyon years when the left was last in power.
Besides Brazil, where Lula seems almost certain to return to the presidency after elections next month, the left now governs Argentina, Colombia, Chile, Peru and Bolivia.
Yet while this may look like a region-wide ideological realignment, the leftward shift is largely the product of voters’ frustration with incumbent right-wing governments.
These voters share the sort of nostalgia animating Lula’s campaign. But bringing the good times back is likely to remain a goal out of reach. And voters won’t show much patience for the left-wing governments it restored to power in the hope of recapturing some of that past prosperity.
Despite a sharp slowdown toward the end, over 13 years Nestor Kirchner and his wife, Cristina Fernandez de Kirchner, presided over an economy growing 4.5% per year, on average. Bolivia’s GDP grew by 4.7% per year, on average, during the 14 years of Evo Morales’s government, substantially more than over the preceding 14.
But that was then, when China was buying commodities from across South America hand over fist and foreign direct investment was pouring in. Replicating these performances would require China’s economy to bounce back from the doldrums, the war in Ukraine to end, the global pandemic to peter out, and probably a lot of luck on top.
Bolivia’s natural gas production boomed during Morales’ time in office — allowing him to fund vast social programs. Argentina’s commodity exports to China doubled during the tenure of Kirchner and his wife. Brazilian exports to China rose seven-fold over Lula’s.
Argentina today not only is suffering galloping inflation, which is expected to hit 100% by the end of the year. Its economy is slowing from the post-Covid rebound. The International Monetary Fund expects it to grow by less than 2% per year, on average, over the term of the current president Alberto Fernandez, a close ally of Ms. Fernandez de Kirchner, now his vice president.
Bolivia’s economy is also growing substantially slower than in Morales’s day. And Brazil and Chile are also unlikely to buck the slowing trend. The IMF expects them to grow only around 1.5% per year over the next 4 years. What’s more, inflation is rising pretty much across the continent, threatening the livelihood of the politically powerful middle class. If interest rates in the United States rise much farther, their economic reality will get much worse.
As he touts his past successes, Lula might want to remember what happens to governments of the left when the economy sours on them. Lula’s hand-picked successor, Dilma Roussef, was impeached following a year and a half into a sharp economic contraction.
Argentina’s economy ultimately went south on Cristina Fernandez de Kirchner, helping turn the presidency over to the right-winger Mauricio Macri. In Chile, a couple of years of snail-paced growth led to the transfer of power from the socialist government of Michelle Bachelet to the right-winger Sebastian Pinera.
Whatever its ideological inclinations, the “pink wave” of left-leaning governments coming into power across the region will have its hands full navigating a very tight economic, not to mention political, space, where prosperity and voter patience may be hard to come by.
Consider Chile, where voters last year kicked Pinera out, replacing him with Gabriel Boric, a 36-year old left-wing firebrand who staked his political capital on a radically ambitious effort to draft a new constitution to replace the one inherited from the dictatorship of General Augusto Pinochet.
Among many other things, the 388-article charter created constitutional rights to housing, education, healthcare, free time, culturally relevant food, free legal advice, sexual education and to die a dignified death. Earlier this month, it was resoundingly voted down in a referendum. And Boric discovered that voter frustration at a previous government does not amount to a mandate for radical change.
Lula’s diagnosis of the challenges facing Brazil — where growth is anemic and nearly one in ten workers lacks a job; where 18.4% of the population subsist in poverty and the richest 10% percent of households makes 15 times as much as the poorest 40% — is spot on. The diagnosis would be similar across most of Latin America.
The question is whether the champions of Latin America’s left — Lula and Boric, Argentina’s Alberto Fernandez and Gustavo Petro in Colombia; Luis Arce in Bolivia or Pedro Castillo in Peru can deliver the kind of broad-based growth needed to meet the challenge. If not, expect soon to see a bluish wave moving in across the region from the right.
This column does not necessarily reflect the opinion of the editorial board or 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.”
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