Latin America in an Age of Discontent

michael r interview
Michael Reid, Senior Editor at The Economist,
interviewed by LAC students, Maria Maria Puolakkainen,
Sabrina Escobar-Miranda, Pablo Uribe and Clement Bourg


Michael Reid is a journalist, writer, and commentator on Latin American and Iberian affairs. He is Senior Editor (Latin America and Spain) and author of the ‘Bello’ column at The Economist. His published books include Forgotten Continent: A history of the new Latin America and Brazil: The Troubled Rise of a Global Power. The Latin American Centre was pleased to welcome him to its Main Seminar Series on Friday, 28 February 2020, where he spoke about Latin America in an age of discontent, commenting on the Chilean case in particular. To continue the conversation, graduate students from the Latin American Centre sat down with Mr. Reid on a sunny Saturday morning to discuss drivers of discontent, particularly economic drivers, but also social issues, and the perpetuating harm of the drug trade in the region.


How would you characterize Latin America in the present time?

It is a very complex and difficult time. It is an era of discontent in Latin America and in many other parts of the world. In Latin America the discontent has had three different kinds of expression. One is that in most of the recent presidential elections the opposition has won and people [have] wanted change. The days of long political cycles and popular presidents are, on the whole, over, although Mexico might be an exception. The second manifestation of that discontent is the election of populist presidents in Mexico and Brazil. One is on the left, and one on the right, but they are similar in the ways they conduct politics. The third manifestation obviously has been the extreme demonstrations we have seen in half a dozen countries over different issues to an extent, but against a general background of popular frustration.

Young people protesting in Chile in 2019 had only ever experienced democratic rule and did not have memories of the dictatorship. How would you evaluate the importance of memory for these protests?

It is a complex question. I do think that the relevant fact in Chile is that the current generation of young people, who are the people out on the streets, have no memory or no direct memory of the dictatorship, as they have grown up in democracy. They do not have the same kind of fears and inhibitions that their parents and grandparents had. They do not worry about ‘rocking the boat’ in a way. On balance, it is a positive change, despite the risks for public order it entails.

I think historical memory is a contradictory term. Memory is not the same as history as it is subjective, fallible, and individual more than collective. History is different: it is an attempt to establish what the facts were in an empirical way. It is legitimate to remember, but it is also legitimate to forget, and both are morally legitimate positions. Each society does it in different ways. There is always an impossible trilemma of peace, justice and truth, and probably you cannot have all three. Societies tend to choose in different ways 

Staying with Chile, would you say that Pinochet’s neoliberal economic model brought us to current grievances, or would you attribute current events to more contemporary influences?

I think Chile is very different today than it was in 1990. Obviously, it’s much more democratic: Pinochet’s constitution has been amended more than forty times. The signature at the bottom of the constitution is now Ricardo Lagos (social-democratic politician who served as President of Chile from 2000 to 2006). There is much more state-provided social provision than there was [previously]. Chile is much less poor and much more ‘middle class’ than it was in 1990. If it’s the model, which model are we talking about? The model has changed. I think that Chile has economically been pretty successful. It’s been more successful than the average in Latin America.

That said, what you might call the ‘market society’, what Pinochet’s idea was, where social provision would be primarily a source of private enterprise and private profit, I think that has not worked so well. That is particularly true of the private pension system and the healthcare system. I also think that business was left unregulated in terms of monopolies and cartels for far too long. The democratic governments over the last twenty years have addressed many of these problems. But in light of what has happened, I would have to say that it was too little too late

In your opinion, why is Latin America so unproductive?

Partly because its workforce is fairly badly educated and trained. Partly because its businesses do not face enough competition, because there is too much protectionism. Distance involves natural protectionism as well. Labour markets are rigidly segmented: the portion of the labour force that enjoys formal economies is small, whereas the [portion of] informal workers who have no rights at all, is massive. This disincentivises firing, whereas productivity involves change and that requires flexibility.

There are other factors, like the organization of large cities in Latin America, which produce most of the value-added in the economy. They are becoming increasingly dysfunctional, because of the increasing difficulty to get around in them, and workers waste enormous amounts of time [commuting]. It is more and more difficult for companies to attain the land they need to expand. Urban planning is central. There is also the lack of childcare facilities: when women have babies, they are often forced to stay at home in low productivity micro-businesses, instead of doing the job where they could add the most value to the economy.

Finally, although not unique to Latin America, so many vested interests are protected by political systems in the region. Consider the extremely protected economy of Brazil: big businesses were the recipients of huge public subsidies under Lula and Dilma Rousseff. That was socially regressive. Public spending in Brazil is not socially progressive. Dilma used the BNDES, the state development bank, which became absolutely huge, and gave away loans at less than market rate to big companies. There was no social justification for that.

Salvadorans were shocked by the recent incident where President Nayib Bukele took the military into the country’s legislative assembly. Do you see an increase in the role of the armed forces across the region?

We've seen the incident you refer to in El Salvador. We've seen the Armed Forces play a role in the overthrow and resignation of Evo Morales in Bolivia. We've seen members of the Armed Forces play a prominent role in Bolsonaro's government in Brazil. We've seen a retired General in Uruguay form a new party and win 11 percent of the vote in what is probably the strongest and most consolidated democracy in Latin America and one of the strongest in the world, so that is something of a tendency.

In El Salvador, I think Bukele is a populist. Clearly, it would have been much better had he waited for the Parliamentary election, in which he would no doubt win quite a lot of support in the next Congress. However, many Salvadorans see the two-party system as a kind of entrenched establishment that doesn't want to change things.

On the whole, most armed forces in the region are not interested in taking power or going back to running their government. But the increased tendency has happened because political systems have become too disconnected, too rigid, and are not responding effectively enough to popular demands. It is a warning sign, but I think it is amber, not red.

In your opinion, what is the current reality of the relationship between the United States and Latin America?

The U.S. has historically been a very powerful presence and actor in the greater Caribbean basin. When you go further south, it's really not. We see that in how Bolsonaro had promised to move the Brazilian embassy to Jerusalem, and when he was elected, he didn't, because it’s not in Brazil's interest to do so. In Central America, there is a legitimate issue of questionable aid dependency. I realize that in the Northern Triangle countries, the elites have adopted a formula of paying very little tax, expecting the U.S. to put aid in, and allowing hundreds of thousands of migrants to leave, enter the U.S., and send back remittances. I think that's not a good way to develop your country. It's entirely legitimate for the Trump administration to question that influence.

That said, clearly, the Trump administration is not friendly toward Latin America. It does not offer anything particularly useful. U.S. protectionism is bad for Latin America, U.S. bullying is very bad for Latin America. I do think the U.S. has a legitimate right to protect its borders, and that is popular demand in the U.S., but there are ways of doing it more effectively and more decently.

There has been a resurgence of the ‘war on drugs’ discourse, where the U.S. has announced a new programme funnelling more money into combating the drug trade in Colombia. Can you imagine a United States that recognises its role in the drug trade as the chief source of demand for drugs, taking significant public health measures and other domestic policy steps that have an effect on the demand-side of the issue?

I think the Trump administration is taking a big step backwards, because since 1989, when George H. W. Bush had gone to Cartagena and met the presidents of Colombia, Peru, and Bolivia, the mantra had become ‘shared responsibility’. Trump has stepped back from ‘shared responsibility’ into a blame game. I think that it is negative.

The Economist has long argued in favour of legalisation, not because we think it is great to take cocaine, but because we think it’s a less bad public policy than prohibition, which is ineffective, and has a series of collateral damages. I think, sadly, that it is very hard to imagine democracies legalising cocaine, because you have to stand up and explain that to parents of teenage children as to why it’s a good thing.

That said, I think there are ways of attempting harm reduction at all levels. On the producer side, I am thinking for instance of targeting much more the processing, refining, and shipment of cocaine. Colombia does that much more effectively, probably, than anywhere else. It seizes about 300 tonnes a year. The problem is that the balloon effect works. You squeeze a particular trade route and they open a new one.

Do you think that legalising cocaine would target the cause of the problem? Consider financing organised crime groups: do you think they would just move onto a different substance?

They would, but cocaine is especially profitable. I do think that if one looks ahead 20-30 years, one already sees that drugs of choice vary according to fashion and innovation. A lot more synthetics are likely to dominate the market in the years ahead. Consider Chinese gangs setting up in Mexico. The landscape is constantly shifting. There is no doubt that the cocaine trade and its derivatives are a terrible problem for Latin America. It used to be an issue of production, but later also of transit. Now you have big consumer countries in Latin America such as Brazil, Argentina, and Chile, and demand is followed by organised crime. That [organised crime] is a real problem for democracy because they represent economic and military power in illegal private hands. They also represent misery for millions of poorer Latin Americans.

Do you see Brexit and the UK’s “Global Britain” strategy as an opportunity for the UK to further develop its relationship with Latin American countries?

There is indeed an opportunity, the UK has already negotiated trade continuity agreements with Chile and Mexico replicating the effects of the existing relationship between the EU and those countries.

However, one has to be realistic. The UK first trade partner is the EU, and this has to do with the way global value chains are organised. Distance also weighs hard as an economic factor. For these reasons, the share of Latin America in UK trade has been very low for a long time. I don't imagine it will grow very much.

To conclude this interview, if you could give one piece of advice to young journalists, what would it be?

Well, firstly, I admire the bravery of young journalists. It’s increasingly hard to make a good living. I would say to them, specialise. The provision of general news is a commodity. It generates very little value. Thus, if you have specialist knowledge of any kind - whether it’s about women’s issues, development, democracy, healthcare, pensions, climate change, anything like that - you become much more interesting and valuable. That said, The Economist does not hire people who studied journalism in the UK, unlike in the Spanish and Portuguese-speaking world. We have people who are bright and who have a good education. Some of them will be economists. Most of them will not be and will have studied other domains. To sum up, I would aim at combining a good general education with trying to get good specialist knowledge. 


Oxford, 9 May 2020