The End of the “Peruvian Dream”

Peru is a country of contrasts. While being one of the fastest-growing economies of Latin America in the last 20 years, reducing poverty by half in a decade and welcoming millions to a new middle class, most of this new economic engine of social mobility never quite made it through its own glass ceiling. This year, the pandemic exposed the structural fallacies of an idea of development that started to crack years before 2020.

Gross Informality on labor markets, incipient social welfare nets, and an absent and inefficient state, together, were Peru’s Achilles heel, creating the tragic conditions for the perfect storm currently ravaging the country.

Peru’s struggles are ancient, but the ills of today are understood looking through the last decades.

For over twenty years, a constant message resounded throughout both the public and political spheres; that you — anybody — can work from the bottom up of the social pyramid. You can become an entrepreneur, and eventually, join the new middle class.

After the disastrous socioeconomic collapse of the 80s and during the 90s dictatorship, Peru’s economy went through a severe neoliberal makeover that proved to sustain the country — at least economically — , creating a frame of stability. Once democracy was restored, and the years of internal conflict and turmoil ended, It seemed like Peru had a promising future. The economy was booming, and the republic institutions continued a path of democratic transitions and relative peace.

The Peruvian neoliberal paradigm encompassed an understanding that severely reducing government, and focusing growth around free trade and promoting private investment throwout the economy, were the main pillars of development. Although it has been proven that economic benefits were enjoyed due to these reforms, these policies were not sufficient and felt short to create the institutions Peruvians needed during these uncertain times.

The logic of neoliberalism, at least the Peruvian version, absent of critique and lacking long term vision proved to be deathly to the approximately 30,000 victims — officially — from the virus in the Andean country.

Although there are still uncharted months ahead, according to the World Bank, Peru’s 12% GDP drop will be the largest in the biggest economies of the region. The government of President Vizcarra, from early on in the pandemic, launched a massive economic plan to avoid a catastrophic economic plunge, by guaranteeing cheap loans, avoiding a chain-reaction bankruptcies in the already weakened economy.

As for family assistance, the government launched a series of cash transfers programs to millions of families in need of relief, being the last announcement by President Vizcarra a new program covering 8 million families.

The fact of the matter is that Peru’s neoliberal macroeconomic stability has indeed been able to deliver enough resources to sail through this crisis, however, these economic measures — so far — have felt short of their expectations by the general public. This is not only due to informality, poor housing, and lacking critical infrastructure, but also due to the blatant constraints imposed by an inefficient bureaucracy and the limited information the Peruvian State has of its own citizens.

Running a heterogeneous and fragmented nation such as Peru demands vision and knowledge of the complexities of its society. As Peru moves towards the 2021 general election, what Peruvians will remember in the years ahead, especially those most vulnerable falling back into poverty, are the failures of government translated into the collapse of the Public Health System and the socioeconomic fallout that is forcing low-income families back into poverty.

As for the immediate future, it is still a question whether new or low profile politicians will be able to capitalize on these circumstances to propel themselves to the national stage. Convincing the public that democracy can deliver a better future, might be even harder.

Peru’s political establishment has been in disarray for years since the massive global graft scheme under the leadership of the Brazilian construction company Odebrecht hit the region and the country in 2014. The ongoing Lava Jato investigations have proved to be a massive political bombshell shocking Peru’s political elites. It is a troubling crisis of political legitimization that has been exacerbated by the pandemic.

Addressing voters and showing them a path forward without falling into the dangers of populism is going to be a challenge in these conditions. For now, the main question is, will Peru’s democracy suffer? and with it, will the aspirations of social mobility of its people come to an end?