During the 1950s, the Argentine president Juan Perón effectively aborted his populist programme when inflation neared 50%.2 In Peru, Alan García abandoned his stimulus programme in 1988, with inflation well over 1000%.3 In Venezuela, inflation is expected to reach one million percent this year,4 and people are fleeing the country to find food, but the policy direction still hasn’t changed.
What is it about the populist recipe that goes wrong? The literature focuses on two kinds of constraints: inflation and the balance of payments. Now these are things populists probably don’t see coming. They don’t understand the causes of inflation very well. And they may not even know what the balance of payments is.