Introduction: The Economic and Political Costs of Austerity
The roots of the economic crisis lie with policies adopted in the 1970s. More generally in low-income neighborhoods throughout Latin America working-class families face economic insecurity, declining living standards, and increased malnutrition. The 1979 oil price shock marked the beginning 91 the economic downturn. Deterioration in the terms of trade for commodity exporters, sharply higher interest rates, and decreased import demand from the economically stagnant industrialized nations all contributed to the debt crisis of 1982. All stabilization and adjustment programs require considerable economic sacrifice from much of the population. In the wake of the 1982 debt crisis, governments throughout Latin America were forced to adopt some form of economic adjustment and stabilization plan, with varying degrees of sacrifice for the population. Some scholars maintained that attempts to impose economic stabilization programs tend to politically destabilize democratic regimes and contribute to the rise of authoritarian governments. The attitude of organized business interests toward economic austerity is more complex and less predictable.