9
with strong, encompassing labor unions than right-wing governments are. Thus,
left-wing governments can finance social-democratic programs and avoid
inflationary pressure because of negotiated wage restraint. An alternative
argument comes from Carles Boix (1998) that focuses on different ways of
shaping supply-side policies. Boix observes that internationalization of the
economy has forced governments to focus on the supply-side of the economy,
but there are different ways to shape supply-side policies that conform clearly to
partisan preferences. Left-wing governments are more concerned with
employment and therefore seek to increase productivity of capital and labor
through investment in education and infrastructure (and even potentially
through a public business sector). By contrast, right-wing governments prefer to
improve productivity and efficiency through increased private sector control of
investments. Thus, right-wing governments lower taxes and attempt to limit
public sector spending.
Garret’s argument is provocative and well supported empirically, but has
little application to Latin America. Latin American labor unionization rates are
low throughout the region (Murillo, 2003) and have been declining.
Furthermore, there are no encompassing peak associations, as in Europe’s social
democratic countries. Thus, the possibility for a negotiated outcome that
supports higher budget expenditures by maintaining wage restraint is not
present.
Convention