Populist governments come and go. Their economic legacies are harder to dislodge.
Elections are supposed to change things. And in one sense, they do: when a populist government loses power, the rhetoric changes almost overnight. The speeches shift in tone, the enemy-of-the-people framing disappears, and international observers breathe a collective sigh of relief. But rhetoric is not policy. And policy, it turns out, is far stickier than the governments that created it.
This pattern has consequences for how we evaluate political transitions, assess reform prospects, and understand why economic recovery in post-populist countries is almost always slower and harder than it looks from the outside.
To see the pattern clearly, it helps to have a tool that separates what governments say from what they do. The Latin American Left-Leaning Populism Index (LALLPI) is designed for exactly that purpose. Rather than measuring populism solely through rhetoric — as most existing indices do — LALLPI distinguishes between three components: populist rhetoric (POP_R), economic populist policies (EP), and institutional populist policies (IP).
Rhetoric captures the degree to which a governing party uses populist language — anti-elitism, people-centrism, us-versus-them framing. Economic populism captures the concrete policy environment: business and labor market regulations, government interference in the economy, monetary and financial freedom, and trade openness. Institutional populism captures the health of democratic institutions: rule of law, judicial and legislative constraints on the executive, corruption, freedom of expression, and property rights. Each component moves independently. A government can have high rhetoric and moderate policy. A successor government can inherit high policy scores with virtually no rhetoric at all.
That last scenario is not hypothetical. It is what the data shows when populist governments leave office.
Argentina's transition from Kirchnerism to Macri's Cambiemos coalition in December 2015 is one of the clearest natural experiments in recent Latin American political history. For over a decade, the Kirchnerist governments of Néstor and Cristina Fernández de Kirchner pursued an aggressive program of economic nationalism: energy and utility subsidies on an enormous scale, expanding state intervention, capital controls, manipulation of official statistics, and a steady erosion of institutional checks on executive power. LALLPI captures this trajectory — both EP and IP rising through the Kirchner years as the economic and institutional landscape deteriorated.
Macri's election represented an unambiguous rhetorical break. Cambiemos was a centrist, market-oriented coalition that campaigned explicitly on institutional normalization and economic reform. POP_R falls sharply at the 2015 transition — exactly what one would expect. What does not fall, at least not immediately or substantially, is the policy environment. Energy subsidies could not simply be eliminated without a phased adjustment that still generated significant political conflict. The central bank had been hollowed out institutionally and could not recover its credibility by decree. The regulatory apparatus built over twelve years of Kirchnerism remained in place. Property rights and judicial independence do not automatically strengthen when a new government stops attacking them — the damage is structural, and reconstruction is slow.
By 2018, the last year of available LALLPI data, Argentina's EP and IP components remain elevated relative to the pre-Kirchner baseline, even as POP_R sits at levels reflecting a non-populist governing coalition. The chart tells the story in a single image: rhetoric and policy diverge at the transition and do not converge within Macri's term.
[Chart: Argentina — POP_R, EP, and IP, 2003–2018, with vertical line at 2015]
If Argentina's case is compelling, Ecuador's is even more striking — because the rhetorical shift there cannot be attributed to ideological opposition winning an election. When Lenín Moreno succeeded Rafael Correa in May 2017, he did so as Correa's chosen successor, running on the same political platform that had governed Ecuador for a decade. And yet within months of taking office, Moreno began distancing himself from Correa's style, abandoning the confrontational anti-elite rhetoric that had defined Correísmo, and eventually breaking with his predecessor entirely.
The rhetorical shift is visible in the data. POP_R declines at the 2017 transition in a way that reflects Moreno's genuine repositioning. What the LALLPI data reveals next is more nuanced — and more instructive. Ecuador's institutional populism index (IP) shows a meaningful recovery after 2017, even though Correa's rewritten constitution remained formally in place. The institutional damage, it turns out, was more elastic than it appeared: once the political pressure driving it was removed, judicial behavior, constraints on the executive, and related indicators began to recover. Formal constitutional changes are sticky by design, but the informal norms and practices that animate those institutions responded to the change in political environment more quickly than one might expect.
The economic legacy is another story. Ecuador's EP component remains elevated after the transition, and here the public choice logic bites hard. Correa's decade had created dense economic constituencies: state enterprise employees, subsidy beneficiaries, and regulated industries that had reorganized their operations around the existing framework. Reversing those arrangements meant concentrating immediate losses on organized groups while spreading the gains of reform diffusely across the economy over the long run — a politically losing trade that even a willing reformer finds difficult to execute. Moreno inherited not just the policies but the incentive structure that made them durable. The rhetorical break was clean; the economic break was not.
[Chart: Ecuador — POP_R, EP, and IP, 2007–2018, with vertical line at 2017]
The Argentina and Ecuador cases are not anomalies. They illustrate a general mechanism that public choice economics has long identified but that political commentary tends to underweight. Populist policies are not just bad economics — they are durable bad economics, because they are designed, intentionally or not, to create the conditions for their own persistence.