DEMOCRACY HAS returned to South America in this decade, a change of immense promise for the hemisphere. Because Argentina and Brazil were the crucial cases, it is troubling that a deep sense of disorder and decline has seized both countries. This disillusion is not yet irreversible, but the direction in which events are moving is not reassuring.
Inflation is soaring again in both countries, eroding the authority of both governments. Both had developed plans earlier to stabilize their currencies. Both then made bad compromises to boost their popularity before recent elections. Neither is currently succeeding in containing the inflationary pressures generated in those election campaigns. Their foreign debts aggravate their present troubles, but are not the cause of them.
Brazil's situation is particularly difficult, for its economic troubles are compounded by constitutional uncertainty. The process of writing the country's basic law has turned into a bitter struggle between President Jose Sarney and his adversaries, many of them in his own party. They want elections next year, to get him out of office as soon as possible. Mr. Sarney, not unnaturally, wants a longer term. In the midst of this combat, the prospect for a forceful and plausible economic policy has steadily receded.
Argentina's President Raul Alfonsin unfortunately lost his congressional majority in the September election and now, with diminished strength, is working to revive the plans that had earlier been working well. In the two countries the dilemma is the same. To control inflation, the governments have to do painful things. They have to open up protected markets. They have to trim down, or sell off, the enormously overstaffed state enterprises that developed through decades of political patronage. They have to raise taxes. All of those necessary remedies are, as you would expect, vehemently opposed by the people whom they threaten.
Americans are in a poor position to offer advice, since President Reagan and the U.S. Congress have just demonstrated their own inability to make the same kind of adjustment, though on a far smaller scale than that required in Brazil or Argentina. In both of those countries, inflation is now back up in three digits -- and in the politics of both, the military forces remain an influential and ominous presence. But there's also a certain unhappy similarity between those countries and this one. In all three, the economic requirements are clear and the political systems balk at dealing with them. Of the three, you might note, it is Argentina that is currently making the most serious attempt to regain its financial balance.