The Support to Market Economy is Lower in Latin America than in Asia.
The free market economy is the preferred model today for most people in the world, but not for everybody. Even in the United States, where 70% supports the free market economy, there is a 25% who do not agree with it. In Spain, that has been hit by by unemployment, the support to market economy is only 45%, while a 51% is against it. The most surprising issue is that a recent study made by Pew Research Center reveals that now the biggest support to market economy is coming from Asia: In Vietnam 51% of population support the market economy, in South Korea 78%, in China 76%. These countries have deeply suffered the chaos produced by the economic model of real Socialism, or at least they have had close contact with it. They are the ones who value free economy best.
In Latin America, the support to market economy is lower than in Asia. Here, according to the Pew survey, the strongest support comes from Venezuela -a country that has been devastated by state interventionism- with 67% of support. In Peru things are even, 53% prefers market economy and 31% of people do not believe that would be the best model. The lowest support to this model comes from Argentina (33%), this is the unusual case of a country that used to be developed, but it is not anymore.
The surveys made by Ipsos reveal that the support to the liberal model in Peru has increased in time. Thus, when people are asked who they prefer to determine prices, 66% answers that the market should do it and 29% think the the State should. Five years ago, the answers were 58% and 39%, respectively. The same way, when they were asked about the intervention of State in economy, liberals’ popularity -who state that economy should be intervened as little as possible, or not intervened at all- have moved from 22% to 36%, in five years. Meanwhile, the statists’ -who think State should control the whole national economy- have been reduced from 27% to 21%. Even the popularity of the ones who agree with a restrained intervention – “the State must intervene as much as necessary but leaving space to market- have decreased from 44% to 36%.
Though, the tendency is to value economic freedom, most people tend to have a “controlling tendency”. One of Ipsos’ questions shows the severity of this reality. They asked if the country (Peru) needed more laws and regulations or if it needed to eliminate regulations and formalities; the tendency was 50% towards the controlling option and 42% towards the non controlling one. Paradoxically, the explanation of those who favor the controlling tendency is that there is too much corruption in the country; they urge more laws to fight it. For most people, it is not clear that the abundance of regulations and formalities generates the perfect atmosphere for corruption and that it promotes the best incentive for informality.
It is also not clear, for most people, the impact of over-regulation over investment and employment. For example, according to a recent study made by Apoyo Consultoría, stated that the strong restrictions demanded by the Law of Promotion of Healthy Nutrition would affect the growth of the industry of food and drinks. Together with this detriment, we should add a collateral damage that is the stimulus to the consumption of foods prepared by informal companies or those who have questionable production standards.
This slowing down economy, that is affecting the country, should work as an incentive to deregulate, with the purpose of increasing investment and productivity. That is a field to find a discrete support from discerning political leaders of opposition. Everybody is aware that the sustained economic development of a country, requires a free economy; however, they also know that in the electoral campaign they and their candidates to the Congress will be tempted to make populists concessions. From the economic perspective, the biggest risk in 2016 it is not the victory of a candidate that promotes Statism or the tax irresponsibility, but a Congress filled -due to a preferential vote- with members of the Parliament, who are controlling, that promote regulations that hamper the national development, and in its excess, promote the informality that evades taxes.
Source : El Comercio
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