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Latin America is coming apart at the seams

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BLOOMBERG:

In Chile, it was sparked by a minor increase in the capital’s subway fare. In Ecuador, it was the end of fuel subsidies, and in Bolivia, a stolen election. Latin America, which a decade ago harnessed a commodities boom to pull millions out of poverty and offer what many saw as a model of modernization, is in revolt. It’s not another pink tide, nor is it a lurch to the right; the movement is more a non-specific, down-with-the-system rage. Furious commuters are looting cities, governments are on the run, and investors are unloading assets as fast as they can.

With almost three dozen countries and more than 600 million inhabitants, Latin America defies easy generalization, which makes it difficult to predict what will come next. A few weeks ago, Evo Morales, the longstanding president of Bolivia, seemed headed for reelection. Today, he and his top aides are in exile in Mexico while some in his country have taken to the streets again to protest what they say was the military coup that removed him.

Two common factors stand out, he suggests: commodity dependence and the middle income trap, referring to the stagnation that often sets in after a population climbs out of extreme poverty and then struggles to achieve further development. Latin America is the most unequal, lowest-growth major region in the world right now, offering a cautionary tale for other parts of the globe with similar dynamics.

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