January 30, 2009


Populism: The Illusion that Won’t Go Away

By Israel Ortega

Like the mirage of a spring in a sunny desert, the promises of a better life offered by populist politicians have been misleading people for centuries. This is particularly true in Latin America, where, since the first days of the Spanish Empire, countless figures have pledged economic equality — only to disappoint upon assuming power.

And with the current economic hardship facing so many of the world’s financial markets, populism seems poised to exploit the frustration of many and usher in a new wave of leaders aspiring to become the next Fidel Castro or Juan Peron. But like the illusion in the desert, populism is bound to again disappoint.

Of course, the goals of populist policies are not necessarily bad things. The problems begin when populist rhetoric inevitably translates into government regimes that curtail freedoms in the name of “economic justice.”

This is usually accompanied by higher taxes and increased regulations on businesses. In some cases, the suppression of property rights and freedom of the press become the norm, and populist leaders excuse it all for the sake of the “common good.”

Inevitably, corruption, mismanagement and abuse of power consume even the most benevolent of despots, proving that trading freedom for prosperity is an illusion.

As proof, look to the Index of Economic Freedom, published for the 15th straight year by the Heritage Foundation and The Wall Street Journal. Once again it demonstrates the direct link between economic opportunity and prosperity.

To create the Index, economists spend months sifting through data to measure business freedom, trade freedom, financial freedom, property rights and levels of corruption (among other factors) to determine the exact level of economic liberty in more than 180 countries. Their findings reveal that the more free a country, the more prosperous it is likely to be. The results debunk the popular wisdom of many on the Left that historical circumstances alone are responsible for the shortcomings of many countries. The authors spell out specific policy prescriptions that a country can follow to take steps toward economic prosperity.

From fighting corruption to making it easier to open a small business, a country can see its fortunes rise with specific measures and initiatives.

Earning the 2009 Index’s top spot in South America is Chile, which secured the number 11 spot overall on our list. Chile earned this distinction after scoring higher than average in all of our 10 measurements of economic freedom. Additionally, foreign investment continues to propel strong growth in Chile, where the rule of law is remarkably transparent and impartial.

Other Latin American/Caribbean countries in the top 50 include The Bahamas, Trinidad and Tobago, El Salvador, Costa Rica and Mexico. Many of the other 29 countries in the region were rated below the world average, however, underscoring how daunting the climate in Latin America is for advocates for greater economic freedom and liberty.

Unfortunately the biggest losers are the citizens in countries that are being led astray by spurious leaders. The people wait for economic fairness while slowly seeing more of their liberties and freedoms curtailed.

Contrary to what many would like to claim, capitalism isn’t dead. Absent the distorting effects of government interventionism, the free market will inevitably prevail and reward those economies that put a premium on economic opportunity and freedom.

There is absolutely no reason why more and more of our friends in Latin America should not become global economic leaders. The challenge for them will be to resist the illusion that people can trade their freedom for prosperity.

Israel Ortega is a Senior Media Services Associate at The Heritage Foundation. www.heritage.org

The complete 2009 Index of Economic Freedom can be found here: http://www.heritage.org/index/

Letters to the Editor Return to the Frontpage