How Progressive are Progressive Economic Policies? A Note on Latin America's 'Catch 22'

Abstract

Most attempts by left-wing regimes to reduce Latin America's appalling inequalities in income and opportunities have failed. This article summarizes a few conclusions that can be drawn from wellintentioned but largely counterproductive policies carried out in the name of equality. Among these lessons can be mentioned: (1) the more,progressive' a government is, the more important it becomes to maintain conservative macroeconomic policies; (2) although inflation hurts the poor, attempts to suppress inflation with the help of subsidies, price controls and massive increases in state expenditure tend to hurt the poorest of the poor; and (3) honest, radical governments attacking 'speculation' with the wrong means easily end up creating an economic environment where honesty is punished, while 'speculation' and corruption are rewarded.