18/04/2021 Behind Chile's Protests Are Decades of Economic Injustice

DISPATCH

From Model to Muddle: Chile’s Sad

Slide Into Upheaval
Chile’s government has sought for years to fix inequality problems that date to free
market reforms under Pinochet. It just wasn’t nearly enough.
BY JIMMY LANGMAN | NOVEMBER 23, 2019, 12:33 PM

SANTIAGO, Chile—Chile’s most diehard protesters may be young people, but their
grievances possess a long lineage, one decades in the making.

A previous manifestation of the present turmoil occurred nearly a decade ago. Thanks
in large part to a new program offering government-backed student loans, in 2007, 70
percent of students in Chile’s expanding higher education system were the first
generation of their families to reach college. It was a widely lauded achievement, one
more sign that Chile was a cut above the rest in its Latin American neighborhood. But
then a few years later, these same students began to realize that, even if they did
graduate, they were headed for huge student loan debts and lousy, low-paid jobs,
because most were unable to get into the top universities. In May 2011, their anger
swelled into mass protest, exposing the downsides to privatized education and the stark
inequalities in Chilean society.

Those student protests—until now—were the largest demonstrations the country had
seen since the return of democracy 30 years ago. And Chile’s president then, as now,
was Sebastián Piñera.

With Chile’s inequality gap still unsolved, last month the protests were back, this time
in greater strength and more violent, causing Piñera to send soldiers into the street and
call off two major global summits scheduled for Chile for the end of this year: the
annual leaders summit in mid-November of the Asia-Pacific Economic Cooperation and
the December meeting of COP25, the annual United Nations climate change summit.
“When a father has problems, he must always put his family before all else,” Piñera said
in late October in announcing the cancelation of the international conferences to focus
on restoring “public order, security, and social peace.”

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18/04/2021 Behind Chile's Protests Are Decades of Economic Injustice

A small protest in mid-October by dozens of high school students jumping subway

turnstiles over a hike in transit fares has quickly exploded into a full-bore Chilean
uprising that has become the most significant chapter in this nation’s history since the
October 1988 plebiscite that put an end to the 17-year Augusto Pinochet military
dictatorship. From Santiago to other cities and towns such as Concepción and
Valparaiso, anger over long-festering economic inequality issues, low wages, meager
pensions, and a rising cost of living have Chileans pouring into the streets in protest.

The irony is that, until recently, this South American country of 18 million people has
been often dubbed “the Latin American tiger” by international technocrats and others
for its political stability and consistent economic growth. In mid-October, just days
before he decreed martial law in an attempt to quell the protests, Piñera boasted in an
interview with the Financial Times that the country is an “oasis” in a Latin America
region that has long been rife with social unrest.

Even more than that, what the economist Milton Friedman once called the “miracle of
Chile” has been for years touted as a long-successful experiment in deregulation and
open markets by University of Chicago economists and other free-marketeers. After the
1973 military coup, the country would become a living experiment for Friedman’s
neoliberal free market ideas, with the economist and some of his former Chilean pupils
urging Pinochet to implement them as a “shock program” to pull the country out of
economic malaise.

These same market principles would later become central as well to the Washington
Consensus, the economic policies that the International Monetary Fund and World
Bank have often foisted upon developing countries as part of their structural
adjustment programs as conditions for loans. The harsh austerity measures often
involved in their plans have been, as in today’s Chile, the object of fierce street protests
in many countries.

Were all the international pundits and experts wrong?

Overall, several macroeconomic indicators do show that Chile’s market economy has
had remarkable success since the country’s return to democracy three decades ago.
Moreover, the Chilean government has moderated its policies since it was known as a
free market haven under Pinochet. After Pinochet’s fall, the country moved from an
orthodox neoliberal economy to a “growth with equity” agenda. Chile continued an
emphasis on fiscal responsibility, stabilizing inflation, aggressively pushing for free
trade and export expansion, and deepening economic privatization that has seen the
economy grow, on average, about 4 percent annually since 1990. The country now has

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18/04/2021 Behind Chile's Protests Are Decades of Economic Injustice

the highest GDP per capita in Latin America, and the World Economic Forum ranks it
by far the region’s most competitive country. Most significantly, steady economic
growth together with creating modest social support programs cut extreme poverty by
more than 30 percent, to 8.6 percent in 2017.

Still, those numbers only tell part of the story. Privatizing health care and education has
led to more choices and greater access, but it also left the poor and middle class saddled
with mounting debt. Chile’s privatized pension system will leave many Chileans nearly
destitute in old age, with average pensions below the paltry minimum monthly wage of
301,000 pesos (about $400). And the cost of living in Chile has gotten increasingly
expensive while wages have remained low. Half of Chileans earn below just 400,000
pesos per month (equivalent to $500), and the distribution of household income in
Chile shows that just the top 20 percent earn more than they spend each month on
food, transport, housing, and basic services.

“We are talking about large portions of the population that are not benefiting. The
precarious middle class is especially angry,” said Rossana Castiglioni, a political
scientist at Diego Portales University in Santiago. She said effective social nets are
missing in Chile, because the center-left coalition governments that followed the
dictatorship made only tepid attempts to make structural changes to the economic
model. “Some thought the model worked … others simply did not fight for things they
thought they would lose in the Congress.”

Some of the anger by citizens has also been aimed at Chile’s longtime rich-poor gap.
According to World Bank data, 1 percent of Chileans hold 33 percent of the country’s
wealth, making it one of the 20 most unequal countries in the world.

And with the slow buildup of inequality, Chile has gone from model to muddle. Subway
stations, pension offices, buses, and more have been lit ablaze almost daily—even
historic churches have not escaped. Supermarkets, pharmacies, and shops have been
ransacked. In the center of Santiago, building after building has been plastered with
graffiti and slogans denouncing the government or frequent declarations that “Chile
despertó ” (Chile has awoken). Thousands of Chileans have engaged in a Latin-style
form of protest called cacerolazos, banging pots and pans from the balconies of
apartments or at spontaneous gatherings in the streets. One day last month, some 1.2
million people came together in a demonstration at a city square in Santiago that has
since been renamed by protestors as “Dignity Plaza.”

One month later: 22 people are dead, and more than 2,200 have been injured, including
230 people who have lost their eyesight from the rubber bullets, pellets, and tear-gas

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18/04/2021 Behind Chile's Protests Are Decades of Economic Injustice

bombs fired by state police at protesters. Well over 6,000 people have been arrested and
jailed, according to the Chile’s National Institute for Human Rights, which has filed 365
lawsuits over illegal detentions, beatings, torture, and other human rights violations
they say have occurred due to the conflict.

The lesson is obvious, some analysts say. “Countries need to take much more seriously
how to reduce inequality at the very top if they want to become more successful and
stable economies,” said Diego Sánchez-Ancochea, the head of the University of Oxford’s
Department of International Development.

A global commodity boom from 2003 to 2013 is frequently credited with reducing
inequality across Latin America and allowing 100 million more Latin Americans to join
the middle class. But Sánchez-Ancochea said the region’s reliance on primary goods
and income levels of the region’s rich elite remained unchanged. In the meantime, the
redistribution of income instead occurred from the middle class to the poor. A new
lower middle class formed—one with new demands and expectations. He said that
while economic growth does contribute to tackling inequality, it’s not enough to
prevent crises like that of Chile spreading to other countries.

“Tax systems need to become much more redistributive, and wages need to increase in
labor markets,” Sánchez-Ancochea said.

Chile’s economy and infrastructure are suffering greatly right now, and it has forced the
center-right Piñera government and the private sector to make concessions they had
brushed aside repeatedly in the past. “We see that the people are tired,” Alfonso Swett,
the president of Chile’s largest business group, the Confederation of Production and
Commerce, told reporters last month. “We heard a loud collective cry that maybe before
we heard only in muted tones, and this is a call that we must meet with humility.”

Initially, the Piñera government moved to calm Chile with a series of measures targeted
at the poor and middle class grappling with the rising cost of living. The government
announced it would immediately increase government-subsidized pensions by 20
percent, raise the minimum monthly wage to 350,000 pesos ($440), cancel a recent 9.2
percent increase in electricity bills, and cut the prices of medicines for the elderly. But
Piñera’s social agenda was received by most Chileans as too little, too late, and the
protests only grew in scope and size.

But late last week, a “social pact” was reached among representatives of Chile’s main
political parties to hold a referendum in April on whether to write a new constitution.
Many are cautiously optimistic.

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David Altman, a political science professor at the Pontifical Catholic University of Chile
in Santiago, believes democratic reforms through replacing the constitution fashioned
by the Pinochet dictatorship in 1980 will ultimately help diminish unrest. “Chile has
lacked the means to hear and process popular demands,” he said. “Citizens have no
meaningful tools to change their situation unless they throw a couple of Molotov
cocktails or block a road. Unless there is violence, the political elite don’t want to hear.”

Eight years ago, Giorgio Jackson, as president of the student union at Pontifical Catholic
University, helped to lead protests for reforms of Chile’s education system that also
raised inequality issues. In a meeting with the Chilean senate education commission,
the then-student leader told politicians they ought to be more concerned with being “a
guarantor of rights and not of consumer goods.”

Today, Jackson, 32, is a congressman and a leader of the Chilean left. He also represents
a new generation of Chilean youth that are unencumbered by the country’s harsh,
authoritarian past under Pinochet and eager to change the status quo. He sees forging a
new constitution as opening the way toward dismantling a system that has privatized
health care, education, and water resources but says there is a lot of distrust among
Chileans. “The political parties in this country always seem to reach agreements that
don’t make much of a difference,” Jackson said.

Surprised as anyone about the scale and scope of Chile’s social crisis, Jackson said
social and economic conditions here had long been ripe. “The economic model has
been benefiting only the few,” he said. “The Chilean family now realizes most workers
in this country are stuck in a cycle of poverty and marginalization that is unacceptable.”

Jimmy Langman is an American journalist based in Chile.

TAGS: CHILE, HUMAN RIGHTS

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