Why is Latin American democracy in disarray?
Persistent inequality and frustrated expectations have taken a toll, exacerbated by the COVID-19 pandemic
Latin American democracy is suffering. On June 6th a left-wing outsider, Pedro Castillo, won the Peruvian election with a razor-thin lead over his similarly unpopular rival, Keiko Fujimori. The first round of the election, held on April 11th, was the first in history where the number of blank and null votes exceeded those cast for any presidential candidate. This caps a year of instability, during which the country had three presidents in one week after huge political protests in November. In Mexico, recent midterm elections ended a season of unusually widespread violence and confirmed President Andrés Manuel López Obrador’s populist hold on power (though his party’s majority in Congress was weakened). In the same week, the regime of Daniel Ortega in Nicaragua arrested four leading opposition figures ahead of an election in November.
Many other Latin American countries have faced democratic backsliding in recent years, from El Salvador to Bolivia to Brazil. Even in Chile, long regarded as one of the region’s success stories, recent elections to the Constitutional Convention dealt a blow to established parties, which have struggled to retain legitimacy since massive protests in October 2019.
Not all is doom and gloom. Latin America remains the third most democratic region in the world after Western Europe and North America. In 1978, 17 of the region’s 20 countries were authoritarian (Mainwaring & Pérez-Liñán, 2015: 115). Today, all except three are democracies, though most are flawed. Even recent examples provide reasons for optimism. The midterms in Mexico had the highest turnout of any Mexican election so far this century, defying criminal groups that hoped to maintain local control through violence. In Chile, the Constitutional Convention was itself the product of negotiation after the 2019 protests, and its composition, which mandated gender parity and quotas for indigenous representatives, raised the bar for inclusion. Many scholars have even suggested that massive protests against governing elites are a reflection of greater social gains and declining tolerance for corruption — signs of democratic vitality rather than stagnation.
But the quality of democracy in the region is clearly low, and appears to be deteriorating. Evidence of a so-called “representation gap” between citizens and politicians has been visible for a long time in high levels of electoral volatility (Mainwaring & Scully 1995) and the rise of populist outsiders (Weyland 1999). But it has become even clearer recently, with falling approval ratings for parties throughout the region and anti-government protests such as those in late 2019 which drew millions of people from Ecuador to Haiti. There is no single explanation for voter discontent in such a diverse region. But two factors help explain the growing representation gap: persistent inequality and frustrated expectations. Both have been exacerbated by the COVID-19 pandemic.
Latin America is the world’s most unequal region. Histories of colonialism and slavery have left a profound legacy of extreme inequality that spans multiple dimensions including income, race, gender and access to social services. Economic elites have been able to shape policies in their favour: the average tax rate on the highest income bracket across the region is a paltry 26%. In Guatemala, the top rate of income tax is only 7%; in El Salvador, there are no taxes on property or inheritance. Massive tax evasion and avoidance cost the region 4% of GDP in 2014. Meanwhile, people of African or indigenous descent are poorer everywhere. This is even true if adjusted for education: the Inter-American Development Bank estimates that wages for Afro-descendants are on average 17% lower than the rest of the population, while the adjusted wage gap for indigenous people is 27%. Such enormous disparities foster corruption, political instability, populism and low trust in institutions.
Inequality is both a symptom and a cause of corruption. It lowers economic growth, can promote state capture through rent-seeking behaviour, and forces marginalised populations into clientelist networks. Take Brazil, by some measures the most unequal country in the region. Inequality there has contributed to state capture by elites. In 2014, the so-called Lava Jato investigation revealed that administrators at Petrobras, the state oil company, had created a cartel with construction companies in which kickbacks amounting to perhaps $3bn were channelled to political parties. The investigation implicated virtually the entire ruling class, including three former presidents and more than 80 members of the political and economic elite (and many more politicians across Latin America). Anger at corruption led to mass protests and the impeachment of President Dilma Rousseff. The aftermath: the election of Jair Bolsonaro, a right-wing populist who has consistently undermined democracy (though Brazil’s institutions have proven robust).
The story is replicated elsewhere. In Bolivia, inequality based on ethnic exclusion contributed to the rise of Evo Morales, a populist who systematically dismantled the country’s institutions during his 15-year rule (Sanchez-Sibony, 2021). In Peru, where every president since 1985 has been credibly accused, investigated, or arrested for corruption, poorer voters overwhelmingly elected Mr. Castillo. In Colombia, inequality contributed to the persistence of the FARC, a guerilla movement which originally sought to close the gap between rich and poor. Today Gustavo Petro, a leftist populist and former guerrillero, is rising in the polls ahead of next year’s presidential election. In Chile, the flurry of independent and far-left candidates recently elected to the Constituent Assembly are a symptom of an ailing centre everywhere in the region. The lesson is clear: inequality contributes to political instability and provides fertile ground for populists, who undermine democratic institutions in the name of reaching directly to an ill-defined “people.”
Perhaps the most corrosive outcome of high inequality is low trust in public institutions, the bedrock of functioning democracies. 75% of respondents to a 2018 Latinobarómetro survey believe their government rules for the benefit of the few, a figure that rises to 90% in Brazil (see figure 1). Latin Americans trust the church, army and police far more than they do political parties or Congress (see figure 2). The perception that politics is rigged has led to dissatisfaction with democracy (see figure 3). Only 48% of respondents support democracy, down from 61% in 2010. The country with the lowest inequality in the region, Uruguay, is also where democracy enjoys the most respect, followed closely by Costa Rica and Chile (page 35 of report).
But inequality can only go so far in explaining poor democracy in the region. Here’s the catch: it has actually been decreasing for the past two decades (the pandemic reversed this trend). The average Gini coefficient fell from 0.56 in 2000 to 0.51 in 2017 — almost a 10% decline for a notoriously sticky indicator (see figure 4). A better explanation is thus that inequality is not decreasing sufficiently or fast enough, dashing expectations.
During the commodities boom from 2003–2014, the region experienced huge improvements in terms of trade, generating gains of 51% of GDP. Much of this money was used to expand cash transfer schemes to the poorest households. Such schemes contributed to important reductions in poverty: the IMF estimates that between 2000 and 2014, poverty in Latin America decreased from 27% to 12%. By 2015 around a third of the population had joined the middle class, double the number in 2001. The number of students in higher education soared.
This created rising expectations of future progress. But for many people, these expectations were not met: since the commodities boom ended, most countries have experienced stagnation or contraction. Economic growth has slumped from an average of 4.1% per year between 2003 and 2012 to a meagre 1% from 2013 until the pandemic. The growth of the 2000s was not accompanied by structural changes that could have locked in gains. Low tax revenues, low public investment, and low savings rates remained mostly unchanged. Economies did not become more diverse or productive, the main drivers of economic growth. Much-touted conditional cash transfer programmes such as Brazil’s Bolsa Familia help alleviate poverty, but do not produce good jobs. One study has found that students who received Bolsa Familia grants have faced significant difficulties finding good-quality jobs after graduating.
Most frustratingly, the era of growth was uneven and did not necessarily translate into greater social mobility. For example, though Chile’s poverty rate has fallen from 40% in 1990 to 8% today, a poor woman in Santiago can still expect to live almost 20 fewer years than her counterpart in a rich neighbourhood. Rising university enrolment has not yet created meaningful change: the OECD estimates that it takes a shocking nine generations in Brazil and eleven in Colombia for a person born in a low income family to approach the mean income in their societies, compared to two or three in the Nordic countries (see figure 5). The gap between opportunity and outcome might explain why the perception that income inequality has worsened has risen since 2012, even though it has not. Inequality of opportunity — the degree to which income inequality can be attributed to immutable factors like race, sex or family background — remains extremely high. This contributed to upheaval even before the pandemic, manifest in the protests of 2019.
But now the region is facing its worst economic crisis in history. It has contracted the most of any region in the world. Again, inequality has left an indelible imprint: the pandemic was imported largely by wealthy people returning from abroad. In Guayaquil, Ecuador, a middle class woman returning from Spain ignored government restrictions and attended a wedding that became a super-spreader event. Horrific scenes followed in that town, with bodies piled up on the streets. In March, a rich woman from Rio de Janeiro returned from vacation in Italy with COVID-19 symptoms. She didn’t tell her housemaid, who died a few days later from the virus. In Mexico, the first infection clusters were traced back to 17 people returning from a ski trip in Colorado.
The pandemic has sharpened and exposed inequalities. Unequal access to health services and social security have meant that Latin American countries have experienced some of the world’s highest rates of excess deaths (see figure 6). Though the region contains only 8% of the world’s population, it has accounted for over a quarter of COVID-19 deaths. Recovery will take longer because so many people have become poor. Informal workers, who constitute perhaps 60% of the region’s workforce, have no access to social security or unemployment insurance. Such workers cannot work from home. Students without computers cannot attend class. And the urban poor are much likelier to live in overcrowded slums. Inequality has come to determine life and death as never before.
The disparate consequences of the pandemic will further undermine democracy. Some leaders, such as in El Salvador and Venezuela, have used the pandemic to tighten their grip on power. Demonstrator’s demands for better services and accountability in 2019 and 2020 have been put to one side as governments struggle to find funds to deal with the virus’s fallout. Many political and economic elites have found ways to engage in graft during the crisis, from embezzling food aid programmes to selling overpriced ventilators and faulty personal protective equipment. The combination of these factors means that mass protests are likely to re-emerge as lockdowns ease. They have already done so in Colombia.
Persistent inequality and frustrated expectations are obviously not alone to blame for the region’s democratic ills. Party system fragmentation, sclerotic bureaucracies, unproductive economic structures, extremely high violence, and the rise of American-style culture wars also play a role. International factors are important too. Democracy has been in retreat everywhere for the past decade and a half, while the 2019 protests were probably influenced by movements in other regions too, such as Hong Kong and Sudan. The spread of social media, which Latin Americans are very fond of, must also feature in any explanation of citizens’ ability to express discontent.
But many of these factors are linked to persistent inequality. For example, it’s hard to understand party system fragmentation without rising polarisation, borne of distrust and a sense of unfairness, or unproductive economic structures without outsize elite influence that promotes rent-seeking behaviour, from low tax rates to protectionist measures in certain industries to lax implementation of competition laws. Persistent inequality is key to understanding bad governance, low state capacity, and low trust in public institutions in the region. Along with frustrated expectations, it undermines political stability and satisfaction with democracy. With higher poverty and greater inequality resulting from the pandemic, expect further political upheaval.
