Is Uruguay too stable for its own good?

“Safe change that will not be radical.” It is not a political slogan to set pulses racing. Yet a campaign centred on that message was enough for Yamandú Orsi of the Broad Front, the left-wing party, to win the presidential run-off in Uruguay on November 24th. Mr Orsi, a former mayor of Canelones, the state surrounding the capital Montevideo, beat Álvaro Delgado, the former chief of staff to the current centre-right president. Mr Delgado was weighed down by a spate of scandals in his party and a post-pandemic uptick in inflation. He too ran a cautious, centrist campaign. “The centrifugal force [in Uruguayan politics] is towards moderation, towards convergence,” explains Gabriel Oddone, who will be Mr Orsi’s finance minister.

Stability is at the very heart of Uruguayan politics. Both candidates repeatedly promised it. A phalanx of analysts argues that it is the country’s great virtue. It has, indeed, helped the country of 3.4m become one of the most prosperous in Latin America, with relatively low inequality and a largely functional welfare state. Yet increasingly Uruguay demonstrates not just the benefits of stability, but also its limits as a development strategy.

Uruguay’s culture of stability and moderation is, of course, laudable, especially compared with the region. It helps avoid big screw-ups and keeps extremists away from power. Unlike in neighbouring Brazil, election results are always accepted in Uruguay. Its political parties are long-established and are the most trusted in Latin America. The separation between church and state is so absolute that Christmas is officially known as “family day”.

Economic stability is taken even more seriously. Mr Oddone and Diego Labat, who would have been finance minister had Mr Delgado won, often seem as though they could be in the same party. “Macroeconomic stability is a fundamental condition to be preserved,” says Mr Oddone. The vanquished Mr Labat fervently agrees. Uruguayans are so conscious of the value of economic stability that last month in a referendum they rejected the tempting chance to retire five years earlier because it would have ballooned the deficit. All this gives Uruguay low inflation and the cheapest sovereign borrowing costs in Latin America. Compared with Argentina, a nightmare of inflation and capital controls, Uruguay is an economic paradise.

Argentines have noticed. Many of the richest choose to live in Uruguay. One of those, Marcos Galperin, Argentina’s richest man, says he appreciates that newly elected parties do not feel the need to “break everything and change everything”. Uruguay’s fans are not just billionaires. When asked which society he admires Gabriel Boric, Chile’s leftist president, replied, “I like Uruguayans a lot.”

But Uruguay’s focus on stability seems to come with a worrying lack of urgency about a slew of entrenched problems. Between 2005 and 2014 surging commodity prices paired with sound macroeconomics helped the country boom. Then the commodity super-cycle ended. On many measures since 2014, a period in which both of the main political blocs have had power, Uruguay has stagnated. Income per person, which grew by more than 50% in the nine years to 2014, has only increased by 7% in the nine years since. The whole region has struggled in the latter period but Uruguay’s performance is worse than that of Bolivia, Paraguay and Colombia, nobody’s idea of economic superstars.

Inequality, which had been plummeting, has edged up. Poverty has been stuck for a decade at around 10% of the population. The state remains bloated; more than 15% of the economically active population works for it. Yet striking economic ambition was in short supply on the campaign trail. Mr Delgado’s big promise was to make Uruguay Latin America’s most developed country within five years; by most measures it already is. Mr Orsi’s loudest economic message in the campaign was simply that he will not mess up macroeconomic stability.

Uruguay’s schooling system is struggling. Scores in PISA tests, an international comparison programme, have been stagnant since 2015. About half of the country’s students drop out of high school early. Despite all this Mr Orsi, allergic to sounding radical and with an eye on teachers’ unions, promised, “I am not going to propose major educational reforms.”

But most alarming is the worsening security situation. Uruguay’s annual murder rate is about 11 per 100,000 people, some 16 times higher than in Spain. That is up from an already high eight per 100,000 in 2014, even with an incarceration rate that is the tenth highest in the world. Yet both parties largely promised more of what their parties did in their most recent terms. Neither had much impact.

None of these is an easy problem to fix. Successive governments have attempted reforms. But faced with serious problems in growth, education and crime, political parties ought to offer more than right- and left-flavoured versions of more-of-the-same certainty. Uruguayan politicians’ preference for comparing Uruguay with its troubled region, rather than the rich world, is a concession to mediocrity. Perhaps the electorate does not want deep reform, but it has not been seriously offered it for years (the big talking points of the third-largest party in this election were animal welfare and mental health).

Might Mr Orsi be bolder in office? “Let’s hope so,” sighs Martin Rama, one of Uruguay’s leading economists. The trick is to find ambition and radicalism of a centrist variety, not the inflation-inducing sort popular in the rest of the region. Radical reforms driven by those furthest left in Mr Orsi’s party could be worrying. Still, the lesson of the past decade in Uruguay is not just that stability is crucial. It is also that stability alone is not enough.