Politics, recent, World Affairs

Chile’s Been Falling Apart for Years. Can It Repair Itself and Remain a Democracy?

“In Chile, a billionaire president pushes austerity while the military represses protesters,” Tweeted U.S. Senator and Democratic presidential aspirant Bernie Sanders on October 30. “Thousands have been arrested. Knowing Chile’s history, this is very dangerous. The solution here and across the world is obvious. Put power where it belongs: with working people.” The next day, Donald Trump’s White House put out a statement containing the opposite message: “The United States stands with Chile, an important ally, as it works to peacefully restore national order. President Trump denounced foreign efforts to undermine Chilean institutions, democracy, or society.”

Needless to say, both statements vastly simplify the situation in Chile, a country that still is used as a proxy battle for old-fashioned arguments for and against “neo-liberalism.” Like Sanders, some media outlets suggest that the current protests in Chile may be construed as toxic fallout from the free-market legacy of right-wing dictator Augusto Pinochet. On the other side are those such as City Journal writer Guy Sorman, who see the protests not as an indictment of free-market policies, but as a symptom of their incomplete implementation.

The protests began when students began a mass-transit fare-dodging campaign following the government’s announcement of fare hikes. The police have reacted with violence in some cases, and at least 20 lives have been lost. As of this writing, in the capital city of Santiago alone, the riots have caused US$1.6-billion in economic damage. Subway stations have been destroyed, and close to a third of the country’s supermarkets have been vandalized. Ironically, the effect of these protests in the name of ordinary people is that workers from Santiago’s poorer districts now have more difficulty getting to work, and family-owned businesses that depend on a steady flow of foot traffic have been hard hit. The government has been forced to cancel two high-profile international summits. The damage to Chile’s reputation and national prestige have been immense.

The fare hike was obviously only the tip of a larger economic iceberg. The level of income inequality in Chile is among the highest in the developed world. And the sense that ordinary people are shut out of the country’s leadership and wealth permeates public life. As Javier Sajuria recently wrote in the Washington Post, “most elected representatives come from a closed and small elite who are living in a far more privileged reality than the rest of the country…A United Nations Development Program report in 2017 showed inequalities in almost every aspect of public life, including access to health care and such services as pharmacies, police provisions and public transportation. Moreover, a recent study showed that studying in select Chilean private schools and being male are the strongest predictors of reaching top executive jobs in the country.”

In recent years, the Chilean middle class has seen its fortunes becomes more precarious, with many families staying afloat only through borrowing. Household debt as a percentage of GDP is now almost 45% in Chile, far higher than in other large South American nations. The causes are similar to those everywhere: rising housing prices, wage stagnation and a steady rise in the price of necessities such as water and heat. Middle-class families have been forced to cope with the costs associated with the country’s retiring “Boomer” generation and its meager pension earnings. The economic burden of caring for these elderly Chileans has fallen on their already burdened relatives.

Notorious cases of corruption and white-collar crime regularly dominate the news, which has contributed to a loss of trust in all forms of authority. An unintended effect of political reforms has been that successive Presidents have ruled without real majorities, and many people don’t feel like their vote counts for much. The current President, Sebastián Piñera, is a Harvard graduate whose net worth is almost US$3-billion. A sense of nihilism seems to animate many of the protestors, who know that something is rotten, but can’t articulate what it is—and so their anger is expressed with angry gestures that primarily inconvenience other marginalized citizens.

If the looting, arson and violence have had any upside, it is that they have made visible the existence of formerly ignored marginal groups. Adapting the Marxist term “lumpenproletariat,” opinion leaders sometimes refer to these groups as “the lumpen,” which is connected in the public imagination principally to two Chilean institutions: prisons and the Servicio Nacional de Menores (known as “Sename”), whose mission is to care for minors at risk. Both institutions have been almost totally abandoned by the state during the last 30 years. Prisons are operating at twice their original intended capacity. And a report released in 2018 found that about 1,300 children who were supposedly under the protection of the Sename died between 2005 and 2016. (Pedophile organizations have long been known to target the institutional shelters.) Public intellectuals in Chile on both right and the left have been issuing warnings for many years about how this fraying social safety net would one day lead to unrest. The phrase one often sees at the protests, Chile despertó (“Chile woke up”), speaks to a country that is opening its eyes to problems that everyone always knew were there.

The 2019 Chilean Protests. Photo by Hugo Morales / Wikimedia Commons

“Neo-liberalism was born in Chile, and here it will die,” is a demand you see on some of the placards—words that echo age-old left-right doctrinal arguments about the role of the state in helping its citizens. But alongside these grand slogans are a multitude of radically individualized messages, tagging distinctive causes, from pensions to transport costs to college tuition. Many seem convinced that it is possible to finance all of these causes only by taxing the rich. (Even some very rich people make this argument, on the understanding that they are speaking of the super-rich—which is to say, people richer than themselves.) Yet it’s hard to see anything emerging from this movement that isn’t some reformulation of the current corporate-friendly “neo-liberal” order that protestors say they detest. The present age, Kierkegaard once wrote, momentarily bursts into enthusiasm, and then shrewdly relapses into repose. That repose might only be avoided with the renewal of committed, grass-roots forms of civil society that become centers of political gravity in Chile.

Many educated and bourgeois figures on the left are seeking a “constitutional assembly” that would replace the Pinochet-era constitution in a way that emphasizes social welfare and the rights of citizens to participate in the political process. On the other side of the spectrum, many conservatives worry that a new constitution would simply become a catalog of social rights that encourage false expectations, and thereby sow the seeds for ever more unrest. Others are looking for fixes to the procedures of Chilean democracy, including a proposal to bring back Chile’s former mandatory-voting system, and thereby solve the problem of centrist voter apathy by decree.

A common fear is that the country will simply drift toward authoritarian populism in its left- or right-wing versions, a pattern that has played out often in the history of this region. When this happens, the common ingredients tend to be public disaffection, a scapegoating style of politics, and the false hope that ordinary citizens may be delivered from the dominance of a rich and powerful elite simply by ceding all power to a charismatic strongman who himself is plucked from among the ranks of that same elite.

The other option is the fostering of a spirt of civic responsibility. That would require long-term political commitment from citizens, the creation and nourishment of new forms of civil society, and the understanding that reforms take time, and so it is necessary in the interim to prioritize the assistance of those who are worst off.

Democracy requires both leaders and voters to exist in a permanent state of anticipation and reform. When they shirk that responsibility, history has a way of waking them up. This is what is now happening in the streets of Santiago.

 

Manfred Svensson is Professor of Philosophy at the University of the Andes, Chile. You can follow him at @SvenssonManfred

Pablo Ortúzar is a PhD candidate at the University of Oxford. They both work at the Instituto de Estudios de la Sociedad (@ieschile)

Featured image: Photo of Santiago, Chile by Elias Arias on Unsplash

Comments

  1. One major problem with these uprisings is that it is hard to identify the good guy. Obviously, the Chilean government is inept, repressive and undesirable, but the protesters are not exactly “the people” (boycotting the fare is one thing, setting alight metro services is another; when they loot, they don’t loot the superrich, they loot working people’s shops; many of the 21 dead died in fires caused by the protesters).

  2. One thing I think is that Marxism and hypercapitalism are surprisingly similar in that they aim to keep labor costs low (half of Chilean workers essentially earn the minimum wage. I think the best means to create a stable economy and society is to first create a large middle class. But I don’t think you can do this by taxing the rich. The UK Labor Party hiked up taxes on the rich in the 1970s, and it killed the economy because a lot of the rich simply packed off to live elsewhere, or moved their finances elsewhere. So, what I’d suggest is this: you can even lower personal taxes on the rich, provided that when it comes to businesses, 20-30% of clear annual profit has to be put in a kitty. That money can only be touched in specific circumstances, for example a recession (in which case it is used to keep everyone employed). If after five years, there has been no recession, 50% of the gathered amount could be spent on pensions or raises etc). It can only ever be spent on preserving the business. Naturally, such a model needs a lot of fine-tuning, but it could be a sensible strategy.

  3. Has not the use of Pinochet as the left’s boogeyman reached its sell-by date? If anything Chile seems a lot healtier than its South American neighbors. It has the highest income per capita of South America and is in the middle of the pack for income inequality, so much for “toxic fallout”.

    2018 income per-capita (Statista)
    24,588 Chile
    19,468 Argintina
    15,164 Brazil
    13,579 Columbia
    12,994 Peru
    12,035 Venezuala
    9,882 Ecuador
    7,174 Bolivia

    2017 Gini coefficient * (Investopedia)
    40.6 Argintina
    43.3 Peru
    44.0 Bolivia
    44.7 Ecuador
    46.6 Chile
    46.9 Venezuala
    49.7 Columbia
    53.3 Brazil

    • All of the above Gini indicators have been trending down for twenty years, a good thing.

    Back in 2008 I was much more informed on Chile when it was receiving a lot of investment funds fleeing the US at the time. The iShares Chile ETF (Exchange Traded Fund) rose from $6,639 in Nov 11 2008 up to a high of $16,968 on Dec 20, 2010. It was some time after leveling off in 2011 that investors here lost interest and I lost connection to what was happening there. As an outsider to Chile I do not see how the macro economic numbers now support a reason for more unrest in Chile than among its neighbors. But then here in the States many of our younger generation actually believe they have it worse than for any prior generation, one third even thinking kindly of communism. Possibly Chile has similar issues, some economic but mostly a generation suffering from mal-education.

  4. Chile is doing better economically than the rest of South America, but raise the subway fare $0.20 and that’s good enough reason to set dozens of subway stations on fire? It’s hard to be sympathetic to the protesters, particularly when they are ideologically-motivated students whom the author claims “know that something is rotten, but can’t articulate what it is.” Perhaps mal-education is the problem, as @Thersites suggests, and some perspective is a solution. If that doesn’t work, helicopter rides have served Chile well in the past.

  5. Throwing socialists from planes eventually pays for itself in economic gains. Sound strategy!

  6. It used to be perplexed that some on the left were outraged at this but made excuses when Pol Pot murdered half the Cambodian population (they are trying to build a new society), while simultaneously celebrating Che and wearing t-shirts with his visage. Mao murdered 50 million yet when an Obama official says Mao was one of her favorite philosophers, no outrage. Lenin and Stalin, “you can’t make an omelet without breaking a few eggs”. I don’t throw you into the camp using this double standard as I don’t know your history.

    By the standards of the last century Pinochet was a piker yet he is the one most reviled by much of he left. It used to mystify me, it no longer does.

  7. Insults aside I would rate Pinochet negatively for his political repression and positively for his economic reforms. So many other dictators were disasters on both counts. I still hold to my contention that he is a piker compared to other 20th century dictators and have often observed the left does what you accuse me of, minimizing the brutality of leftist regimes when the level of atrocity was much greater than in Chile and the eventual economic outcome was also much worse down to the level of starvation.

  8. And the sense that ordinary people are shut out of the country’s leadership and wealth permeates public life.

    That’s why they’re the ordinary people. Weren’t they shut out of the country’s leadership, they wouldn’t be ordinary people.

  9. Just clicking on your own links reveals that your lies were rebutted the first time around, and you had no answer to the rebuttals. Yet here you are reposting the original lies, hoping we won’t notice!

    Critics in Chile assert that the average pension provided by the private pension fund companies is around $340 per month, which is not better than the public pension system. But as the Chile-based Liberty and Development institute (LyD) has shown, that is like comparing apples to oranges. To calculate the private system’s figures, all those affiliated with it are taken into account, even if they have only contributed to their accounts once in their lifetime. The corresponding figure for the public pension system, however, only takes into account the pensions of those who have contributed for a minimum of 10 to 15 years, something that leaves out half of the people affiliated with that system. In addition, pensions under the private system are obtained through contributions that amount to 10 percent of wages, while in the public system the contribution is 20 percent. Correcting for those distortions shows that the value of the pensions the AFPs provide is three times higher than that of the public system.

    To properly evaluate the private system, one has to consider its performance with respect to those who have contributed to it regularly. According to data from AFP Habitat, a pension fund company, the average monthly pension for those who have contributed for more than 30 years is almost $1,000 for men and $500 for women. And while it’s true that many Chileans do not contribute regularly to their retirement accounts because too many work outside the formal sector and getting work is still too precarious for many, that is a problem that affects any pension system, whether public or private, and can only be solved with labor reforms.

    Nor is it true that the state has no role in providing pensions or that the AFPs steal from their clients, as is regularly asserted. As LyD Institute reminds us, the state has provided a pension for those who could not save a minimum amount from the beginning. And the fees charged by the AFPs are equivalent to 0.6 percent of funds managed, below the average of OECD countries.

    I had an extremely left-wing coworker a few years ago - an American who worked remotely from his new home in Chile. He railed against everything America does. He also effusively praised Chile’s pension system for being vastly smarter than the evil American 401(k), because the pension system required investment firms to guarantee minimum ROI.

    Jack avoids discussing the ROI of the Chilean pension system. He avoids any meaningful critique of its performance. He avoids comparing it to realistic alternatives. He parrots criticism that is deliberately as light on detail and context as possible, so as to amount to “this guy who contributed $50 to his retirement account didn’t see it transformed into a million dollars; the pension system is a joke!”

    Jack is a joke.

  10. JBN, During the Cold War, our side was in conflict with their side. Many people in this country supported the other side. Pinochet was on our side. Pol Pot, Mao, and Stalin were on the other side. That makes Mao’s Great Famine, the Killing Fields, and the Gulag highly relevant. You may not like being associated with the greatest tragedies in human history, but that is the choice you have made.

  11. …retirees who paid into the system. That’s not remotely the same as what you’re implying, which is that all of the Chileans who never themselves or via spouses contributed to the system would get comfortable pensions if Chile had the US system.

    Are you trying to bait-and-switch the notion that women can inherit their spouses’ benefits with the notion that everyone gets disability benefits without paying into the system? Because they don’t.

    All your sophistry (excuse me, “bullshit”) isn’t putting a dent in the fact that there’s no free lunch.

    Some of the most privileged people in the world are discontent.

    No more than under any other system.

    US Social Security would do literally nothing more for those people than Chile’s system.

    Shrieking “think of the children” doesn’t make your atrocious ideology acceptable. Nor does constantly invoking the poor, helpless, agency-lacking women. You should stop treating them like they’re all so helpless before @Ella-B gets offended!

  12. “Believe in Plutocracy”? While it is beneficial to engage with opposing points of view, including such aspersions are destructive to any understanding. Nothing new here, one of the big failures of the internet is the haven it provides for those who freely distribute insults.

  13. If you’re going to respond to 10% of my points, you don’t get to complain that I only responded to 90% of yours.

  14. The ills of socialism can be cured only with more socialism.

    This is what Hayek wrote about. I urge the gentle reader to check out at least the Table of Contents.

  15. I think that this way of thinking, known as the zero sum fallacy, is universal on the left.
    I was reading an article and comment thread on Slate the other day where only one person out the hundreds commenting understood that if Jeff Bezos didn’t exist , then his billions wouldn’t exist either.

Continue the discussion in Quillette Circle

36 more replies

Participants

Comments have moved to our forum

52 Comments

  1. Pingback: ¿El despertar chileno? - IES Chile

Comments are closed.