To understand the consequences of populism we should explain what are the main characteristics of this movement. Populism is usually born of a charismatic leader who is perceived as part of the people, and who as part of the people understands their problems and difficulties.

Usually, populist leaders exploit the sense of mass oppression and social injustices to mobilise people, often against the interest of social or political elites. Furthermore, populist leaders remain in power precisely through their popularity, and therefore, it is necessary for them to implement policies that favour the people, which often means putting aside the laws and regulations of the constitution. This is reflecting in the nationalisation of foreign companies. Corporation and economic elites tend to be most affected by populist policies since the leader comes to them to create social antagonism that favours their position.

The leader is perceived as the ombudsman against the voracious interest of the corporation and the upper classes.



Grocery shortage in Caracas-Venezuela. Available at: 

The majority of Latin America lives in big inequality.  In the majority of the countries, the business productivity and capital concentration have raised a big gap between the rich and the poor.This social and economic phenomenon is not new. Different leaders have appeared during this century, using the redistribution of wealth as it greatest weapon campaign for achieving power.

Perón in Argentina, Allende in Chile, El Che Guevara and Fidel Castro in Cuba, Hugo Chavez in Venezuela, Evo Morales in Bolivia and Daniel Ortega in Nicaragua, are only some of the many examples of subsidiaries and populist politics in the continent. Expropriate businesses, give away subsidies and close the borders to trade are the first measures. Supposedly their main interest is to redistribute wealth, but the reality is not as well pictured, in the majority of cases they haven’t accomplished and in other cases, they have to achieve equality by bringing all the people to poverty.

In addition, during populism two main phenomena appeared that today can be seen in Venezuela; the scarcity and inflation.The debt crisis in Latin America was caused by the subsidiary governments seeking resources to cover their expenditures. This crisis broke out in the 1980s, especially in 1983 when debt reached $ 315 billion, accounting for about 50% of the Gross Domestic Product (GDP).

Contrary to what one might think, giving subsidies to the less favoured people does not improve their situation; on the contrary, it worsens it, because it constitutes an immediate and ephemeral solution, but not a policy that ensures long-term development. According to the latest figures Venezuela has an extreme poverty of 19% and informality is at 52%, that is one point less than 14 years ago when Chávez came to power.

  2014 2013
GDP (real growth rate) -5,7 -3,9
Inflation rate 121,7 % 62.2%

In Cuba, there is almost zero indigence and basic needs such as education and health are assured, but poverty is alarming, since the majority of the population lives at around $ 20 a month, without taking into account other variables that affect levels of life, such as poor development and lack of labor, economic, ideological and even personal freedoms.

Bolivia and Ecuador are two of the poorest countries in the region, although, in the latter, the poverty rate stands at 32.5%. It should be noted that this year’s estimated inflation for that country is 5% which marks a relative difference with Venezuela’s economic policies.


Translation: I protest against the knock. Blow to the pocket for inflation. Stroke on the stomach due to scarcity. Bullets hit because of insecurity. Knock on students. A knock at the corrupts. Blow to liberty of expression.  Manifestation Venezuela due to scarcity.  Available at:

Another of the mistakes that populism has is that despite providing access to education, they do not provide the necessary tools for a person to get out of the state in which they are. Their economies do not encourage the creation of  companies, producing  incompetence of the industry, which in turn generates unemployment. This is why most people living in countries with that  type of regime are satisfied with receiving the subsidy and do not take progress as a life option.

Although it would be utterly mean to say that countries with a free market and absolutely capitalist policies offer a good standard of living to their settlers, because the figures show that in these nations, such as Braz, there is a high level of inequality. What is certain is that populism and subsidiary states are not the answer to the social problems of nations.

By Anna Norata


Auyero, J., 2007. Routine Politics and Violence in Argentina. The Gray zone of State Power, s.l.: Cambridge University Press.

Bosoer, F. & Finchelstein, F., 2015. Latin America, the populist vs the people. Available at:
[Accessed November 2016].

Central Intelligence Agency (2016) The World Factbook Available at: [Accessed November 2016].

Freidenberg, F., 2011. Los nuevos liderazgos populistas y la democracia de America Latina. Lasa Forum, 42(3). Available at:

Subgerencia Cultural del Banco de la Republica, 2015. Populismo y Neo Populismo. Available at:

Torres, V., 2006. The Impact of “Populism” on Social, Political and Economic Development in the Hemisphere, s.l.: s.n.



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