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Left and right, but mostly center

When the Asian and Russian financial crises blind-sided Latin America last year, analysts immediately predicted a popular backlash against free-market policies.

Their argument was hard to refute. For the better part of a decade, people in Latin America's biggest economies had been adjusting to the effects of liberalized trade, privatizations, increased foreign investment and diminished government subsidies. These free-market reforms had in many cases increased prices, unemployment and the gap between rich and poor. But voters tended to support the reforms because they preferred the resulting stability and low inflation, and because they hoped to eventually benefit from rising prosperity.

Then, as the financial crisis threatened to cripple one Latin economy after another in 1998, that prosperity suddenly seemed more distant than ever. Would frustrated voters conclude that free-market policies could not deliver on their promise and start calling for a return to greater state intervention in the economy?

Answers to that question can be glimpsed in the results of a survey of people's views on politics and the economy in 14 Latin countries and the United States, released earlier this year by The Wall Street Journal's Americas edition. The survey, entitled "Mirror on the Americas," indicates that even though most Latin Americans are pessimistic about the current situation, a clear majority continues to support market-oriented economic policies.

According to the survey, 61.2 percent of all Latin Americans believe their parents lived better than they do. And yet they do not want a return to the statist policies under which most of their parents lived. On the contrary: 58 percent of survey respondents said prices of products should be determined by free competition, 64 percent said the market economy is best for the country, and 69 percent said foreign investment in their country should be encouraged.

Eduardo Lora, an IDB senior research economist who has written about public perceptions of economic reforms, thinks these replies show that people are distinguishing more clearly between the appropriate roles of the state and the private sector. "Other surveys have shown that people still believe that the government should provide a safety net of essential services in areas such as health and education," he said. "But they no longer think the state should try to participate in the economy as a whole. Instead of criticizing capitalism, they are criticizing the failure of government to meet basic needs."

The survey also reflects another much-discussed trend: the retreat from Left-Right extremes of the political spectrum to more moderate, centrist views. Latin countries that as recently as the 1980s were perceived as being politically polarized are now showing a majority in the center. The graph at the left shows where people placed themselves on a political scale of 0 (Left) to 10 (Right). Notice that the white and light-shaded sections near the middle predominate, although the balance in all countries is slightly in favor of the Right. Indeed, in several Latin countries, the percentage of people identifying themselves as politically neutral (white) is now similar to the level in the famously centrist United States.

People can mean different things by "Left" and "Right," of course, and those meanings have evolved following the end of the Cold War and the era of dictatorships and armed conflicts. But what this graph shows is that most Latin Americans, even during a period of acute economic distress, are no longer attracted to radical solutions.

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