When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Already a subscriber? Log in.

You've reach your limit of free articles.

Get unlimited access to Worldcrunch

You can cancel anytime.

SUBSCRIBERS BENEFITS

Ad-free experience NEW

Exclusive international news coverage

Access to Worldcrunch archives

Monthly Access

30-day free trial, then $2.90 per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch
Economy

Latin America, Time To Pay The Bill For Economic Populism

As prices on oil and other raw materials drop, the cycle of what some call "macroeconomic populism" is hitting a rather tough patch, especially for Argentina and Venezuela.

In Maracaibo, Venezuela
In Maracaibo, Venezuela
Luis E. Gonzalez C.

-OpEd-

SANTIAGO — Making the reduction of income inequalities the sole focus of public policy — dubbed macroeconomic populismhas been a recurring presence in Latin American economic history. At certain times over the past 40 years, it has been costly and traumatic, which is true today for Venezuela and Argentina.

This policy approach often overlooks internal restrictions such as the simultaneous need for sustainable fiscal balance, price stability and wage alignment based on productivity. There are also external limitations such as balancing trade and improving the country's international credit rating, all hopefully within a framework of growth. And populism today has acquired an additional association with bad institutions that aggravate the problem of concentrated markets.

The populist cycle, which lives through three phases of varying duration, is often attributed to irrational voting motivated by an overwhelming faith in electoral promises that ignores potential long-term consequences. Others see the durability in populism in the unfortunate combination of unsatisfied social and political demands, as well as the absence of institutions that equitably distribute the benefits and burdens of society.

Raiding the market

From 1990 to 2003, Argentina had a growth rate of just 2.1% of GDP, an unemployment rate of 14.6% and average inflation rate of 197%. Venezuela grew about 2.5% a year up until 1999, with unemployment at 10.1% and average inflation of about 46%. There was public dissatisfaction with economic performance in both countries. There were calls to redistribute incomes as part of reactivating and restructuring the economy, as successor regimes took power and ushered their countries into "the antechamber" of the populist era.

In the first part of that period between early 2000 and 2011, attending to the social clamor of both countries was the recurring theme that justified a relentless rise in public spending and "raids" into market territority by imposing price controls of various types. The public welcomed measures such as fossil fuel subsidies as high as 80%, taxes and restrictions on dollar trading, import/export quotas, and certain tax incentives and industry nationalization.

External conditions were favorable. Increasing Chinese demand from 2002 boosted energy and commodities prices during that period — soya 25%, cereals 49.5% and oil 103.5%. This gave the confused impression of impressive growth, with rates of 4.8% and 7.1% of GDP for Venezuela and Argentina, respectively.

But the bill for these policies inevitably arrives. A more than 40% fall in crude oil prices and about 20% for other raw materials has decimated the revenues of both countries. Growing unemployment, the end of protected jobs, food and consumer shortages, power cuts and ballooning debt are all symptoms announcing the coming, third phase of the populist cycle: crisis and collapse. The International Monetary Fund expects both economies to shrink about 2% in 2015, and the mid-term panorama is somber.

Evidence shows that macroeconomic populism is unstable despite advances in the "good years," perhaps because of its exclusively short-term focus. Both these countries need institutions that will create credible and stable expectations that encourage investment, rather than promises that destroy what was built before them.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Green

Forest Networks? Revisiting The Science Of Trees And Funghi "Reaching Out"

A compelling story about how forest fungal networks communicate has garnered much public interest. Is any of it true?

Thomas Brail films the roots of a cut tree with his smartphone.

Arborist and conservationist Thomas Brail at a clearcutting near his hometown of Mazamet in the Tarn, France.

Melanie Jones, Jason Hoeksema, & Justine Karst

Over the past few years, a fascinating narrative about forests and fungi has captured the public imagination. It holds that the roots of neighboring trees can be connected by fungal filaments, forming massive underground networks that can span entire forests — a so-called wood-wide web. Through this web, the story goes, trees share carbon, water, and other nutrients, and even send chemical warnings of dangers such as insect attacks. The narrative — recounted in books, podcasts, TV series, documentaries, and news articles — has prompted some experts to rethink not only forest management but the relationships between self-interest and altruism in human society.

But is any of it true?

The three of us have studied forest fungi for our whole careers, and even we were surprised by some of the more extraordinary claims surfacing in the media about the wood-wide web. Thinking we had missed something, we thoroughly reviewed 26 field studies, including several of our own, that looked at the role fungal networks play in resource transfer in forests. What we found shows how easily confirmation bias, unchecked claims, and credulous news reporting can, over time, distort research findings beyond recognition. It should serve as a cautionary tale for scientists and journalists alike.

First, let’s be clear: Fungi do grow inside and on tree roots, forming a symbiosis called a mycorrhiza, or fungus-root. Mycorrhizae are essential for the normal growth of trees. Among other things, the fungi can take up from the soil, and transfer to the tree, nutrients that roots could not otherwise access. In return, fungi receive from the roots sugars they need to grow.

As fungal filaments spread out through forest soil, they will often, at least temporarily, physically connect the roots of two neighboring trees. The resulting system of interconnected tree roots is called a common mycorrhizal network, or CMN.

Keep reading...Show less

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Already a subscriber? Log in.

You've reach your limit of free articles.

Get unlimited access to Worldcrunch

You can cancel anytime.

SUBSCRIBERS BENEFITS

Ad-free experience NEW

Exclusive international news coverage

Access to Worldcrunch archives

Monthly Access

30-day free trial, then $2.90 per month.

Annual Access BEST VALUE

$19.90 per year, save $14.90 compared to monthly billing.save $14.90.

Subscribe to Worldcrunch

The latest