Political Punishment for Economic Growth in Chile

By: Carlos Sabino - @Sabino2324 - Nov 14, 2013, 7:49 am

EspañolIt would be reasonable for voters to reward the policies that benefit them and to reject those that bring about stagnancy or failure. If a government promotes growth and improves its country’s economic situation, citizens would leave the same party or the same people in power. But public opinion does not respond in such a logical and straightforward way; rather, it is moved by sentiments and images that are far from rational.

That is the case with what the polls are showing in Chile, which is now preparing to hold a general election.

President Sebastián Piñera’s center-right administration has attained rapid economic growth in a small number of years, rising per capita income from a little over US$15,000 to $20,000 — the threshold usually considered an income of a developed country. But voters do not seem to favor him or the incumbent candidates. Today, they are decidedly leaning towards the left, in favor of former President Michelle Bachelet. Her coalition now includes the Communist Party and has shifted towards a remarkably more statist position, which runs counter to the country’s recent experience.

Indeed, if Chile overcame the backwardness it was immersed in half a century ago, it was not by virtue of the Christian Democrat Eduardo Frei’s reformist policies or the revolutionary changes introduced by the Socialist Salvador Allende. Rather, it was because a group of economists, known as the Chicago Boys, put the country on the free market path and substantially reduced state intervention in the economy. They did so during the long administration of Augusto Pinochet, who took dictatorial office after overthrowing Allende’s socialist government, which had generated scarcity, economic stagnation, and high inflation in Chile.

Eventually, the southern nation began to grow, after overcoming a period of cuts, and it reverted to democracy in the late 1980s.

The governments that followed, from a center-left coalition, were sensible enough to maintain the economic course established during the dictatorship. Growth continued incessantly, and Chile became the highest-income country in all Latin America, with a thriving economy, very low poverty rates, and significant improvements in education and health care.

Now, however, the perspectives have changed: there are prominent calls to widen the scope of the state in education and social security, and the same slogans from a left wing that had been discredited by history are now being chanted again. Unfortunately, voters seem to favor these changes that will create fewer jobs, undermine economic growth, and expand dependence on what is commonly known as the “welfare state.” That is a society in which the state takes on more and more functions and paternalistically provides the population with all kinds of services.

Why do so many Chileans favor such a shift, forsaking the ideas that took them out of poverty and into the developed world? The answer is not simple, as mentioned before, and may be somewhat disturbing.

As their economic resources grow and the population moves away from poverty, Chileans probably wish to widen the scope of the state in their society in the same way that developed societies have done so, to make it an entity that acts as the guardian of citizens. Today, however, the welfare state consumes almost half of the economic resources in those countries and is superficially presented as a prodigious body that grants all sorts of goods and services in exchange for practically nothing. Chileans probably think they are sufficiently advanced as a society to have that kind of state, which we should call paternalistic or, in this particular case, “maternalistic.”

But the reality, we know, is very different. The welfare state is the root of the crisis that has devastated European countries, of the monumental indebtedness in the United States, and of the over two-decades long paralysis of the Japanese economy. We should not take it as a point of reference or as a goal to be reached, but rather as a sort of mirage that might make us create serious economic, social, and even moral problems.

But such is democracy: the Chilean electorate, as all electorates, will vote according to its illusions and the images projected by some of its leaders, without considering the long-term consequences of its decisions. Let us hope that the new government has the good sense to avoid extreme measures and to follow, in essence, the path that has proved so beneficial for Chile in the last few decades.

Carlos Sabino Carlos Sabino

Sociologist, writer, and university professor, Sabino is director of the masters and doctoral programs in history at the University of Francisco Marroquín, Guatemala. Follow him @Sabino2324