Sunday March 26, 2023
  • Venezuela
  • Mexico
  • Colombia
  • Chile
  • Brazil
  • Argentina
  • Podcast
Versión Español
PanAm Post
  • Home
  • Regions
    • South America
    • North America
    • Central America
    • Caribbean
  • Politics
  • Economics
  • Opinion
  • Podcast
  • Authors
  • Contact
No Result
View All Result
  • Home
  • Regions
    • South America
    • North America
    • Central America
    • Caribbean
  • Politics
  • Economics
  • Opinion
  • Podcast
  • Authors
  • Contact
No Result
View All Result
PanAm Post
No Result
View All Result

Home » Is This the End of the Chilean Economic Miracle?

Is This the End of the Chilean Economic Miracle?

Axel Kaiser by Axel Kaiser
October 29, 2013
in Chile, Elections, Free Markets, Ideology, Opinion, Politics, South America
FacebookTwitterTelegramWhatsapp

This November, Chile will face what could prove to be the most important presidential and parliamentary election since the one which brought democracy back to the country in 1990. For the first time in more than two decades, the Chilean people will choose between two opposing economic and social projects.

On the one hand, the center right candidate Evelyn Matthei promises to continue Chile along the successful economic path of the last decades. And on the other hand, former president Bachelet’s new socialist platform promises to make radical changes to the current Chilean economic system.

RelatedArticles

Three Signs That Elon Musk Has the World at His Fingertips

Trump Against Suppression of Human Rights

February 1, 2021
Three Signs That Elon Musk Has the World at His Fingertips

15 Republicans Who Voted Against Trump Are Already Facing the Consequences

February 1, 2021

The political parties of the the coalition that governed Chile from 1990 to 2010, the Communist party, and other minor left-wing groups merged into Bachelet’s coalition called “Nueva Mayoría.” The Communist party has historically been a destabilizing factor in Chilean politics and has been absent from government since 1973. Fully embedded in the logic of the Cold War, it still considers Fidel Castro´s Cuba the ideal political and economic system.

Despite its anti-democratic features and its limited number of supporters, Chilean communists have managed to become increasingly influential in national politics through the massive student movement that brought President Piñera´s government to its knees in 2011 and 2012.

Along with a systematic campaign against the free market economic model by leading progressive intellectuals, the leftist student movement — whose most emblematic leader is a member of the Communist Party — has contributed to an ideological radicalization of the classical left-wing political parties, including the Christian Democrats.

As a result of the radicalization, Bachelet´s political platform breaks away from the previous consensus among all major political parties on the need to preserve an economic model based on free market institutions. Questioning this economic consensus hasn’t happened since the return of democracy in 1990. Back then, the Concertación accepted and even deepened the free market economic model created by the military regime of General Augusto Pinochet, which took over power in September 1973 after the disastrous socialist experiment of president Salvador Allende and the Unidad Popular Government.

Back then, Chile was in the throes of hyperinflation, a bankrupted government, chronic scarcity of basic goods, and the complete collapse of economic and political structures. The new military regime decided to put a group of classical liberal experts in charge of the economy. The members of the economic team were called the “Chicago Boys” because most of them had attended postgraduate programs in economics at the University of Chicago.

Once in government positions, the Chicago Boys immediately engaged in several structural reforms, including price liberalization, the elimination of trade barriers and privileges to national industries, the enforcement of property rights, tax reduction, privatizations of state-owned companies, spending cuts, monetary stabilization and the privatization of social security.

As a result of this free market revolution, the Chilean economy boomed. In the last 35 years poverty has fallen from 50 percent to 11 percent, per-capita income has increased from 4.000 dollars to almost 20.000 dollars and inflation was reduced from over 250 percent per year to less than 7 percent per year. This remarkable record has been known as Chile’s ‘economic miracle’.

Key to the entire free-market transformation were the political institutions established in the Constitution of 1980, which despite several reforms in the last two decades continues to be the highest law of the country. Like the American Constitution, the Constitution of 1980 established a limited democracy. Its central aim was to secure economic liberty and private property so that the country would not fall prey again to collectivist tendencies that could threaten to destroy both the economy and the democratic institutions.

Accordingly, unlike the previous Constitution of 1925, the current Chilean Constitution severely restricts the ability of politicians to alter the foundations of the economic model. To a large extent, it has been these Constitutional constraints to political power what has enabled Chile´s economic and political success.

But the next four years could change that. Misses Bachelet, who will most likely win the coming election, has argued for a substantial rewrite of the 1980 Constitution, even by means that are not permitted under it. The aim of such a rewrite, according to her advisers, would be to end what they regard as an unjust “neoliberal” system. Instead, Misses Bachelet proposes to create a massive welfare state that provides all sorts of benefits to the people and will replace the market as the main engine of economic growth with government-led industrialization.

Some of the proposals include a takeover of the education system by the government, a dramatic increase in taxes for corporations, free higher education, switching the funded social security system back to pay as you go, and the re-election of the president of the republic.

The spirit of Ms. Bachelet, whose government program basically aims to revive many of the failed policies implemented by Chile from the 1940s to the early 1970s, has led some members of the center right to accuse her of following the populist path of former Venezuelan President Hugo Chavez. This comparison may seem exaggerated. What is in any case clear is that if Ms. Bachelet wins the next presidential election and her coalition manages to put forward the new socialist agenda, Chile’s economic miracle will face an unprecedented challenge which might seriously endanger its survival.

This article first appeared in Forbes Magazine.

Tags: chavismoChicago BoysChileFree MarketIdeology
Axel Kaiser

Axel Kaiser

Related Posts

The night Chris Rock turned into a 12-year-old whiny bully victim
Columnists

The night Chris Rock turned into a 12-year-old whiny bully victim

March 26, 2023
The new socialist supremacisms: a maoist cultural revolution undermines the US
Columnists

The new socialist supremacisms: a maoist cultural revolution undermines the US

August 21, 2021
GETTR: the powerful weapon of Trump and international right wing
United States

GETTR: the powerful weapon of Trump and international right wing

July 13, 2021
News

Maduro’s Trial Falls Behind Despite Coordination Between Interim Government and ICC

June 15, 2021
Three Signs That Elon Musk Has the World at His Fingertips
Columnists

Trump Against Suppression of Human Rights

February 1, 2021
Three Signs That Elon Musk Has the World at His Fingertips
News

15 Republicans Who Voted Against Trump Are Already Facing the Consequences

February 1, 2021
Next Post
Vice President Joe Biden Visits Mexico to Discuss Economic Relationship

Guatemalan Representatives Argue for Human Rights in D.C.

Subscribe free and never miss another breaking story

  • Venezuela
  • Mexico
  • Colombia
  • Chile
  • Brazil
  • Argentina
  • Podcast

© 2020 PanAm Post - Design & Develop by NEW DREAM GLOBAL CORP. - Privacy policy

No Result
View All Result
  • Home
  • Regions
    • South America
    • North America
    • Central America
    • Caribbean
  • Politics
  • Economics
  • Opinion
  • Podcast
  • Authors
  • Contact

© 2020 PanAm Post - Design & Develop by NEW DREAM GLOBAL CORP. - Privacy policy

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. Privacy and Cookie Policy.