Much talk has been made lately about the Left’s recent defeats in countries throughout Latin America: Argentina, Brazil, and Venezuela most notably. These countries have been characterized by Leftist governments that had the luxury of exploiting commodity prices during the early-to-mid 2000s to finance their profligate social programs.
Various experts saw this new ‘pink tide’ as a viable alternative to free-market models of economic organization. However, the game has completely changed as of late. These very governments now find themselves on the ropes not only because of low commodity prices, but also due to increasing degrees of corruption and economic malaise – largely the result of years of economic interventionism now taking its toll on these nations’ economic and institutional foundations.
Essentially, the commodity price booms only masked the institutional rot that was dwelling underneath the economic house of cards many of these countries were already built on. Once prices plummeted, these governments could no longer maintain their artificial economies and quickly saw significant political reversals.
This post was published at Ludwig von Mises Institute on December 23, 2016.
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