After the nineties most of the Latin America countries, followed a turn to the left, probably searching a new path more socially inclusive to guarantee Governance and democratic stability,not necessarily because of markets failure but more so because of lack of adjustment in the instituional framework to allow markets to work properly.
Governance and social inclusion are legitimate objective which come out not only from the left, but also from the right( Compassionate Conservative approach). The difference lies upon the means to achieve it. While the Latin America left, quite differently to their moderate European counterparts, believe in distributive policies based on more taxes, subsidies, and regulations, in short a bigger State to get better living conditions, the moderate right believes in the ability of individual choices throughout markets both based and within the proper institutional framework, to get such objectives. Given the fact that leftist Government in the majority of the cases, have followed the traditional old fashioned paradigm of trying to replace markets instead of cooperate actively with it, few countries like Brazil, Peru, Uruguay ,and Chile arise like the pragmatic exceptions, to counterweigh the more ideological approach of other Latin America economies. But Chile´s experience of focusing too much on distribution, is currently showing its limitations as well, because of the negative impact on the rate of economic growth.(This year, with copper price above U$$4,02 lb, the Chilean economy is expected to growth at annual rate of 4 -4.5%,half the average rate of the nineties).-
Thus, the dilemma for the next decade is already settled down: Latin America must decide the proper economic path to improve its living standard. Distribution based on the State means more poverty, because the State is political by nature, which means that Social problems like poverty and inequality, are constrained to political realities,(poor people can wait the next election), and it is not in the State ´s interest to solve it other than to save face. The link between the State privileges, political interest and power concentration on those who run the State, mean that they need “customers” to survive. Therefore,without any reforms on the colonial State, the real path is to focus on growth , free trade agreements with the new arising markets and more flexible approach to private initiative.
