OPINION: If You’re Shocked About Chile, You’re Part of the Problem
Noah Ahmed (SFS ‘21) is a guest writer for the Caravel's opinion section. The content and opinions of this piece are the writer’s and the writer’s alone. They do not reflect the opinions of the Caravel or its staff.
Protesters march in Puerto Montt, Chile.
In an interview with the Financial Times last month, Chilean President Sebastián Piñera proudly asserted, “Chile looks like an oasis because we have a stable democracy, the economy is growing, we are creating jobs, we are improving salaries and we are keeping macroeconomic balance.”
Seriously? It seems that the Chile known to its billionaire president is drastically different from the one known to its discontented citizens.
Since the government increased metro fares by 30 pesos ($0.04), mass protests have roiled the country. Weeks of demonstrations have left 24 dead, 2,000 injured, and 7,000 arrested. What began as a response to the four-cent hike has quickly and inevitably manifested itself as a movement of widespread anger against the rampant inequality and scarring historical legacies that continue to plague Chile. Its people have suffered under an unjust economic and political system for decades; desperation and discontent boiled for 30 years, and it took just an extra 30 pesos to bring them to the streets.
When General Augusto Pinochet established a military dictatorship in 1973, he hijacked Chile’s economic, political, and social systems. Pinochet’s government favored the economic philosophy of Milton Friedman and the neoliberal “Chicago Boys,” limiting government involvement in market regulation and the provision of public services. He wrote this inflexible model into the 1980 Constitution that he forced upon the Chilean people. When a national plebiscite ousted Pinochet in 1990, the constitution remained—as did its stringent standards for passing amendments. This means that adapting laws on health, education, and other social issues remains an arduous process.
The political obstacles inherited from Pinochet’s dictatorship did not hamper Chile’s surface-level economic growth, though. Chile’s overall economy flourished after 1980, and the portion of the population living in poverty decreased from 31 percent to 6.4 percent from 2000 to 2017. While these figures glamorize Chilean development, deep inequalities and economic imbalances grew ominously beneath the surface.
“The richest one percent of the population earns 33 percent of the country’s wealth.”
The end of the global commodities boom in 2014 severely stalled growth and foreshadowed the problems that arose from insufficient investment in infrastructure, education, and social services. Within the OECD, Chile ranks third in income inequality and last in general government spending. The richest one percent of the population earns 33 percent of the country’s wealth. More than 1.2 million pensioners receive significantly less than the minimum wage. Due to rising healthcare costs, stagnant educational reform, and high utility costs, Chile’s lower and middle class are frustrated with a system that subjugates them to the legacy of the country’s traumatic history, the control of its elite, and its imbalanced economic policy.
In light of this, it is not difficult to understand why protests have erupted. The outburst of violence and the urgent expression of popular demands should have been expected. Yet, the world was shocked. The world was shocked that the long-exalted staple of Latin American democracy and economic growth—the “Miracle of Chile”—had descended into chaos. That stunned reaction is seriously misguided and representative of the recurring failure of governments and elites around the world to recognize the fundamental problems that lead to a Chilean-type crisis in the first place.
“The promise that political leaders spouted for years—that free markets would generate prosperity and solve domestic challenges—fell short, extremely short.”
Neoliberal capitalism has failed Chilean citizens both economically and politically. Not only have Chileans been chained to a constitution imposed upon them through undemocratic means, but the constitution itself built systems that, left unchecked, ultimately bred the inequality and inequity rampant today. The promise that political leaders spouted for years—that free markets would generate prosperity and solve domestic challenges—fell short, extremely short. A combined force of historical legacy, economic adversity, and false hope led to the frustration of millions.
These shortcomings of neoliberal capitalism have emerged elsewhere, too. Argentina, Italy, the United States, and other nations have all witnessed similar forces at play. It is time for governments and elites to overcome their willing naiveté and recognize the political and economic discontent boiling beneath the surface of the globe.
Domestic inequality rages onward as the lower and middle classes gain little from their countries’ economic growth. In some cases, political injustices and historical legacies exacerbate these tyrannical structures. Responsible actors need to scrutinize the realities of “economic growth,” “democracy,” and “political stability”—terms referenced by Piñera—where surface-level meanings often diverge significantly from their true application. It is scandalous that the only ones expecting Chilean-type protests against the system are the ones who are suffering under it.
Given this reality, there are important implications for Chile. First, Chile has already embarked on a mission to write a new constitution, a task which 78 percent of citizens support. The drafting of a new constitution must not only involve newly-elected representatives but also create better social safety nets and public services.
Second, based on the political foundations of a new constitution, Chileans need to think assiduously about how to develop an economic system that simultaneously spurs growth and serves the majority of its population. By diversifying its economy, improving its tax system, refining the pension system, and linking education with the labor market, the country can increase revenues and spur comprehensive growth necessary for expanding public investment in social services and retaining foreign investors. Free markets will bring prosperity only if they are free, fair, and democratic.
Third, greater dialogue must occur between social classes. Santiago’s elite can no longer ignore the deeply-entrenched inequality that brews in cities and towns across the country. These problems have developed over generations and will need generations to improve. Conversations have already begun, and actions should soon follow.
The rest of Latin America should understand these implications because they apply to other nations, as well. The continent’s real growth in GDP averaged a mere 0.8 percent over the past six years. Economic development particularly fizzled after the end of the commodities boom, when a sense of relative prosperity gave way to dimmer prospects as economies remained imbalanced and uncompetitive.
A 2018 public opinion poll revealed that a historic low of only 20 percent of Latin Americans believe their countries are making economic progress, while 48 percent believe they are stagnating and 28 percent believe they are receding economically. Issues of corruption, inequality, and political power only exacerbate Latin Americans’ views. Consequently, the region has recently entered rocky waters: Colombia, Ecuador, Haiti, and Honduras have faced large-scale protests; firmly anti-establishment presidents were elected in Brazil and El Salvador; Peru dissolved its corrupt parliament; Bolivia’s president fled to Mexico; and Argentines threw out the incumbent government. Widespread sentiments of lower- and middle-class frustration blanket the continent and cover the entire political spectrum.
“Most crucially, they need to govern for their citizenry. Only then will disparities be properly addressed before they produce more grave consequences.”
To combat inequality and inequity, governments need to rethink investment and spending strategies, re-couple educational reform with economic priorities, sensibly balance public-private collaboration, and redistribute political power to the whole of society. Most crucially, they need to govern for their citizenry. Only then will disparities be properly addressed before they produce more grave consequences.
Evidently, there is much to understand from the protests in Chile. If we inspect the economic, historical, political, and social context surrounding the mass demonstrations, it is not surprising that they arose with such intensity. The fact that the protests shocked the world simply indicates the persistent failure of governments, elites, and others to comprehend the underlying problems that precipitate disorder like that in Chile.
The Chilean government and others across Latin America must shake their ignorance and recognize the emerging political and economic demands of their people. Other countries face a similar crisis to the one in Chile, and more will face crises in the years to come. Actors had best take swift action to resolve current issues and prepare for future ones.
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