Latin America: The temperature keeps rising

By Ingo Plöger, Brazilian entrepreneur, President CEAL – Brazilian Chapter 

First, it was the Amazon rainforest, then Asunción began to boil. In Lima, the population demands more from politicians. Protests in Santiago, burning polls in La Paz, Guayaquil on the march, elections in Argentina, Uruguay and Colombia. It’s getting really hot in the region! Everything seemed normal until a few months ago and, suddenly, the South American region became a melting pot drawing international attention. Other countries saw some effervescent moments this year in Nicaragua, Puerto Rico and Mexico. Did something unexpected happen in the region or will there be predictable but not perceived evolutions? It seems that the region’s population is really moving towards much deeper changes than what’s being reported. Discontent is undoubtedly the propellor. Growing dissatisfaction is fueled by the new way of communicating through social networks, with or without fake news.

Most of the press can no longer publish news with analysis and background research, without it being run over by social media, where people in many cases begin to take sides, and it loses credibility. To make the communication environment even worse, deep fake news now takes frightening forms. If previously news and photos were assembled, now the combination of image, sound and voice make the receiver of this news faithfully believe it’s true. But deep fake is nothing but a cunning montage using Artificial Intelligence (AI). The affected person has no way to defend themselves in depth, speed and scope; it becomes a virus of lies and manipulation and of incredible contamination power. As the battle of communication technologies has no limit, AI propels the “tribes” with new truths fueling an already preconceived opinion and, in many cases, increasing discontent.

One of the sparks that ignited the fires was an increase in public spending. The increase in fuels, or the value of urban transport, is such a sensitive matter, especially when the population realizes that the next day they will pay more out of their pocket, without having any perceived improvement. This happened in Brazil in 2013, students in São Paulo demonstrated against the increase in metro and bus fares, which led to a widespread protest against corruption and mismanagement. In 2018, there was a general logistics stop in Brazil due to the truckers’ strike, caused by the increase in the price of fuel. Nothing different in Macron’s France and in other Latin American countries. Demonstrations in Chile began with the increase in tariffs and the people went to the streets. However, this is just the tip of a much deeper dissatisfaction.

The Latin American population, starting from Brazil’s largest brother, is involved in a severe movement of indignation to seek an improvement in life, combined with good policies, which are to eradicate corruption and mismanagement and are aimed at the greater common good. This last part is relevant if the concentration of income increases, particularly in an environment of low growth rates and with a vision of recession in the future.  Looking at the large figures, the income concentration of the richest 10% in Latin America has fallen in recent decades but is still at a very high level of above 50% (world inequality index), with Europe at 33%, USA 47% and Asia 47.5%. But in the case of Chile, its liberal and open economy maintains a concentration of 54.9% of GDP from 10% of the richest population. It turns out that the Chilean model, highly privatized, maintained the social security system by capitalization and by some misguided system increased the concentration of income harming the less favored class. Keeping in mind it’s a relatively small economy, the trade chains are highly concentrated, giving little competitiveness while prices for the poorest population remain high. The consumer sensitivity to any public increase of regulated prices is very high and becomes a political factor.

The march of the Latin American society requires more transparency, without corruption, better management, paying attention to social and environmental issues.

These values dominate the socio-emotional scenario of the region.

That caused Macri to lose the election, the matters that will be on the Uruguayan agenda, which will be decisive in Evo Morales’ Bolivian process, and having to be part of the solution to Ecuador’s dollarized economy. Bolsonaro in Brazil, with its best ongoing reforms, may have political setbacks if he does not observe the socio-environmental evolution.

The temperature in Latin America is rising. It is necessary to have a different solution to keep the agenda for development in these new turbulent times.



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