After 2018 with an improvement of 19 places, in 2019 the country improved 7 places; Between 2017 and 2019 it went from position 142 to 112; populism hinders the progress in the region.
The long shadow of populism seems to keep bewitching Latin America, and Argentina. In this context, the arrival of Mauricio Macri to power seemed to be a breath of fresh air for the institutions of the country, and this was registered by the Institutional Quality Index of Libertad y Progreso Foundation, which registered a rise of 23 posts in both first years of Cambiemos management (reflected in the Indices 2017 and 2018). The improvement of 2018, which reflects what happened in 2017, was especially notable: 19 posts. In 2019, the Argentine marathon for a greater institutionalization continues, but with less speed, since this year the country climbed seven places in the ranking that the economist Martín Krause elaborates for Libertad y Progreso, and is carried out with the support of the Naumann Foundation, Relial and Agrositio (to see video of the presentation click here).
The Institutional Quality Index measures the health of the institutions of a country, understanding by institutions sound money, the transparency of the judicial system, the absence of corruption, freedom of the press, legal security, respect to property and the freedom to trade, among other topics. The health of these institutions has a direct effect on the attraction of foreign investments. The mentioned figure is based on an average of eight indicators of international prestige: Rule of Law and Voice and Accountability (World Bank); Freedom of the Press (Freedom House); Perception of Corruption (Transparency International); Global Competitiveness (World Economic Forum); Economic Freedom (Heritage); Economic Freedom in the World (Fraser) and Doing Business (World Bank).
According to Krause, since 2017 (the year that the Macri effect began to be felt in the Index, which has a lag of between 1 and 2 years), the country climbed 30 places, going from position 142 to 112. The slowdown this year it would be explained mainly in the lack of progress in index components such as the ease of starting a business or economic freedoms. “The persistence of the fiscal deficit, high inflation, high tax pressure and a still quite closed economy are holding back for the time being a major improvement in terms of economic institutions,” said Krause, who has been developing the index since 2007 and is an economist and professor of economics University of Buenos Aires.
In any case, the data of the local rise is not less. Before the Macri era, the country had registered the sad record of losing 99 positions in twenty years (1996 to 2016). They accompanied the country in “the podium of failure” Bolivia, with a drop of 100 positions, and Ecuador and Venezuela, which fell 74 positions in those two decades. All countries under intense effects of populism and then governed by the “socialism of the 21st century”.
Populism to the attack of institutions
It was precisely populism responsible for the fall of Argentina, and the one that lurks as a shadow to the region, threatening to degrade even more its institutions. That is why the presentation of the Index, conducted in Agrositio and conducted by the journalist Ricardo Bindi, dealt with how the remnants of populism keep Argentina and the region away from the quality of life and the level of investment in countries such as New Zealand or Denmark. Those responsible for abounding on the subject were the historian and economist Emilio Ocampo, coauthor of Populism in Argentina and the World, and the Peruvian lawyer and writer Enrique Ghersi, co-author with Hernando de Soto of “El Otro Sendero”. Both are academic advisers to the Libertad y Progreso Foundation.
“Populism can be defined as the easy, simplistic and arbitrary solution to structural problems facing a society proposed by an opportunist politician using a Manichean discourse that appeals to chauvinism and certain predominant beliefs. The populist solution is easy because it does not impose costs on the group or the majority that with its vote elevates the populist politician to power. It is also simplistic because it does not require any intellectual effort, which makes it particularly attractive in sectors with lower levels of education. But it is also simple because it appeals and promotes the nationalist fervor and prejudices, anxieties, fears and convictions predominant in broad swathes of the population. Its simplistic nature also explains its Manicheanism and paranoia: the discourse of the populist leader only admits good (the electorate that votes it) and bad (the enemy) that always conspire to harm or exploit those. The inevitable consequence, or rather its objective, of this discourse is to generate collective resentment, the sap from which populism is nourished, “said Ocampo.
“But the populist solution ends up being both destructive and self-destructive. Venezuela is the clearest test of it. Taken to the extreme, populism ends up destroying democracy and in its final mutation it becomes authoritarianism, “Ocampo said.
In turn, the writer Enrique Ghersi pointed out that the great pending task to get the region out of the grip of populism and have healthy institutions is to have an authentic state of law. “What we have here is a state of legality and not a state of law. Under the rule of law this controls the law. In the state of legality on the other hand, the law reflects power, “Ghersi said.
Finally the Argentine economist of the Metropolitan State University Nicolás Cachanosky points out: “It is difficult to exaggerate the importance of having healthy institutions. Living under a state of law that protects individual and civil liberties is a vital foundation for the development and growth of a long-term country. The institutions are not a mere academic or intellectual curiosity. They define if one is going to live with the quality of a citizen of South Korea or of North Korea.”