What’s Happening in Chile

Chile is under a state of emergency

A 30 pesos (4 cent) rise in the price of a Metro (Subway) ticket has unleashed a level of anger few outside observers predicted. People have rioted, train stations burned, a state of emergency imposed and there have even been deaths.

This is tragic, but perhaps not entirely surprising.

Chile is Latin America’s success story. From socialist tatters to dictatorship and on to the neoliberal beacon of hope and prosperity that has fuelled a booming economy and the modern towers of ‘Sanhattan’ (South America’s version of Manhattan).

Yet underneath this modern infrastructure and economic stability remains an entrenched class system and the third worst Gini Coefficient in the OECD (after South Africa and Costa Rica).

*Gini is a measure of income equality (or inequality) within a country or region. The OECD is the Organization for Economic Cooperation and Development and has 36 members – all considered democratic.

Chile is one of those wonderful countries that is both improbable, yet somehow logical. It is a mainland island. Desert to the north, ocean to the west and ice to the south, all framed by the massive – and incredibly active – Andes mountains.

The entire country is home to only 17.5 million inhabitants – 7 million of whom live in Santiago, Chile’s capital. In fact, the Central Region of the country really represents over half the country’s population and virtually everyone knows where they belong. The class and economic system is so deeply entrenched, people can actually look different (in style and physical traits) according to their neighbourhood.

Due to rapid economic growth and massive problems elsewhere, Chile – and specifically Santiago – has experienced recent waves of immigration from Haiti, Colombia and, obviously, Venezuela. Needless to say, all the typical rhetoric about immigration is spewed in certain sectors, but the current unrest has nothing to do with minorities.

This conflict is all about income inequality and cost of living. It may be exacerbated by ideology and stoked by some anarchist types who get off on destruction, but the anger is real – and fair.

As quickly as possible – here is the background…

Back in the 1960s, Chileans democratically elected a socialist / communist government. The left-wing government had difficulty managing the economy – both due to ideological mismanagement and the many Cold War forces that opposed it (i.e. Kissinger).

By 1973 the economy was ruined and, on September 11, General Pinochet bombed the capital, killed President Salvador Allende and imposed military rule.

Pinochet kept order, killed many and developed an effective – albeit military – police force. The economy was handed over to the ‘Chicago Boys’ – economic devotees of Milton Friedman.

Over 30+ years, most of the economy was privatized. Pinochet even won a referendum to remain in power and gradually democracy was reinstated.

Despite all the trappings of obtuse nationalism endemic to South America, Chile’s economy grew and public debate developed.

So what happened?

Through all this development and growth, the Chilean government collected (and continues to collect) the least amount of tax of any developed economy.

Poverty has declined, but as basic standards have risen for the majority, the elite have remained entirely elite and apart. We can even tell you their family names and where they live. High up in this oligarchy is the Piñera family – yep, Sebastian Piñera, current (and previous) President of the Republic.

Chilean society is very divided. Schools are (mostly) private and socially closed. Healthcare is private (with a basic safety net) and wages are extremely polarized. The wealthy live well, the middle class do ok and the rest survive. Abject poverty is low, but those just getting by are numerous. Affordability in this vibrant economy is a huge challenge for many.

Now much more empowered than under military rule, the regular suspects – students, unions, etc – can speak up, and they tend to live in well defined communities. This minor rise in the cost of transport was simply the spark required to let the frustration of the majority alight.

Remember Ecuador two weeks before? Or the re-rise of Peronist populism in Argentina? This is Latin America.

After three hundred years of colonization controlled by a landed elite and the Catholic church, followed by 200 years of independence, somewhat controlled by the church and the same landed elite, people have again had enough.

As per civil war in Colombia and Nicaragua and as per Cuba’s revolution and Venezuela’s gradual collapse, the revolutionary left has failed most of the region.

The right-wing military regimes have been arguably worse. Therefore Chile has been a model.

So what happens now?

Southern Chile in all its glory – Osorno Volcano

Piñera has fired his cabinet (but not resigned himself). He has promised to raise taxes on the wealthy, increase the lowest wages and begin to invest much further in society. This seems fair.

Chile cannot and will not remain in a state of emergency. Its society is too democratic and its economy too successful. The loss of life in inexcusable and those directly responsible should be held to account.

Chile, as the region’s shinning light, needs to take its next steps towards an open, secular society with social mobility and shared wealth. It is interesting how quickly those in power have capitulated to the very reasonable demands of the 1+ million who recently protested peacefully.

Populism has failed everywhere. So has an entrenched class system (remember the Russian Revolution), and indeed raw capitalist orthodoxy simply does not better life for everyone.

Chileans, in all their wisdom are calling for a fair and just mixed economy. This seems reasonable.

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