Why Chile’s Model of Success Suffered Severely at the Ballot Box

By: Hana Fischer - @hana_fischer - Nov 25, 2013, 5:48 pm

EspañolOn Sunday November 17, general elections took place in Chile, to choose the next president and some of the parliament. On the bright side, these elections were an improvement for democratic stability and openness; voluntary enrollment accompanied by mandatory voting for enrollees functioned without notable problems. These innovations first came out in October of 2012, during the municipal elections, and this was their first time under the pressure of a presidential election.

The quantity of presidential candidates running was also an interesting development during the campaigns. There were the candidates from the traditional parties, but others joined them and ran independently. (See a breakdown of the full field of presidential candidates here.)

The elections received worldwide attention, in particular because Chile is seen abroad by other nations as an example of how to overcome underdevelopment. Chileans, on the other hand, voiced their overwhelming desire for a profound change to the economic model they have. Michelle Bachelet of the Nueva Mayoría — the new name for the old Concertación party, which now includes the Communist Party — defeated the establishment candidate, Evelyn Matthei of the Alianza coalition, by more than 20 percentage points.

As could be expected, international observers found this decision perplexing.

That general “need” for change was already clear in the pre-election polls, and Bachelet’s public approval was largely favorable compared to other candidates. This situation might seem like nothing to worry about, because La Concertación, the party alliance that supports the former president in these elections, did successfully rule Chile for 20 years (1990-2010). The development that seems most alarming, however, is the pronounced public support for her new ideas and plans.

Bachelet argues that Chile is entering a “new phase.” Consequently, she plans to make profound changes to the development model that Chileans have been following so far. Specifically, Bachelet has offered to start a process towards “free and high quality” university education within six years. She he has promised to end incrementally the partial tuition system in schools that receive state subsidies, in favor of universal access. At the same time, she has proposed higher taxes on big businesses while, in exchange, reducing personal taxes. Finally, Bachelet has been in favor of drafting a new constitution to replace the one adopted in 1980.

In an interview with the BBC in September, Bachelet said, referring to her government plans, Chile needs education reform, social programs, a boost for small and medium enterprises, and labor policies to combat the large gap between higher and lower wage earners.

Her key opponent, Matthei, who has been secretary of labor during the government of outgoing President Sebastian Piñera, intends to continue along the same path that has so successfully allowed Chile to develop. Matthei knows she must do some adjustments, but she does not agree with the free higher education nor with drafting a new constitution. Her proposal is to make some amendments to refine the law, as Chilean governments have done for the last 23 years.

The election results confirmed the pre-election polls. Bachelet won easily with 46.7 percent of the vote on the Nueva Mayoría candidacy, the alliance composed of socialists, Christian democrats, and the Communist Party. However, Bachelet did not reach the goal of winning the presidency in the first round, for which she needed to exceed a majority threshold of the votes.

For this reason, the next president of Chile remains to be elected, on December 15. The final runoff ballot will be between Bachelet and the second place candidate, Matthei.

Matthei reached 25.0 percent of votes, after bracing for an even worse result. Some polls had predicted that she would receive only 14 percent. The rate of abstention is an important point, in this instance, since it was notably high. The latest official data places it at around 53 percent, so more than half of voters chose not to participate.

Regarding Matthei as the establishment candidate, it should be remembered that the nomination process presented several obstacles. The successful candidate assumed that position just four months before the election. Prior to that point, there were two other competitors who fell by the wayside for different reasons, after both resigned their campaigns: former ministers Laurence Golborne and Paul Longueira.

Golborne resigned because his party asked him to do it. He was involved in a corruption scandal involving “Jumbo card” and the bank accounts of a company he owned in the Virgin Islands. Regardless, at that time the polls still placed him as the most respected figure within the conservatives, with a good chance of competing with Michelle Bachelet. Longueira, on the other hand, resigned after initially winning the primaries, stating that he was suffering from strong depression.

Then, Matthei’s name came up when the political campaign had already advanced. Keep in mind the strength of the challenge, since polls conferred 84.1 percent approval to Bachelet when she left office in 2010.

Despite all the circumstances, you can correctly assume that, in this election, two opposing visions for Chilean society competed. The names of the candidates were almost irrelevant. They obviously had some influence, but the principal issue was in the battle of ideas.

Chileans could persevere on the political and economic path they already knew, which helped raise the quality of life among the population. Otherwise, they could choose the alternative Bachelet proposal: a return to socialism and statism, a path that led Chile through immense difficulties and traumatic consequences. Be that as it may, the election result shows the path more Chileans have chosen.

In the period from 1950 to 1975, Chile led the world in destroying its national currency. The rate of decline for the purchasing power of the population was 99 percent. Correspondingly, in face value terms, the cost of living increased by 11,318,874 percent, as noted in Denationalisation of Money by Friedrich Hayek. According to World Bank data, in 1980, Chile’s poverty rate was around 45 percent; homelessness was around 17.6 percent; inflation was between 20 and 30 percent annually; unemployment was on the order of 13 percent; and the economy was growing at a paltry 0.7 percent per year.

From the 1990s onwards, however, poverty declined and the general standard of living rose — both variables trending in a consistent manner. Currently, Chile possesses a poverty rate of 15 percent and an extreme poverty rate of 3 percent. Annual inflation is around 6 percent, and unemployment is at 6.6 percent. Since 1985, the average annual growth rate has been above 7 percent — currently at around 5.5 percent. The combination of these factors had a good result, and inflation-adjusted wages have been growing at between 4 and 5 percent per year.

Given these results, the path chosen since the 1990s can just be considered extremely beneficial for the Chileans. So, many are wondering, why does major portion of the inhabitants want to replace these policies for contrary ones which had led Chile to ruin when implemented in the past?

A possible answer could be that Chile’s mood is closely related to mass protests of recent years: students, environmentalists, and members of the gay and indigenous communities. One could counter-argue, though, that those protests are not the cause but the visible manifestation of more complex causes. Among these causes, one can speculate regarding the presence of a prevalent state of frustration and elevated expectations in society.

Why Chile's Model of Success Suffered Severely at the Ballot Box
Bachelet meeting with trade and retail union leaders. Source: official site of Michelle Bachelet.

Moreover, leftist, Marxist groups are actively working to spread radical ideas and capture dissatisfied agents, useful for their global project. It is no coincidence that most of the leaders of the student movement and its protests belong to the Communist Party. There are also fears that many of the indigenous agitations were encouraged by the Marxist Bolivarian Alliance.

Since the era of the former Soviet Union, their strategy has been “sowing agents” to function for their political project. The directives of the former “Comintern” (an international Soviet movement), specified agitation agents in different countries “to conquer,” and that the “professional revolutionaries” should be “young, determined, and devoted to the cause.”

However, these “communist” pressure groups are not so revolutionary; they simply want others to pay for the services they use — in this case, higher education. They do not offer in exchange any “social” compensation. They just want others to pay for their education, and there is a moral issue involved that no one seems to consider: “what is yours is mine, and what is mine is mine” is the sentiment of their demands.

Generally, Chileans do not seem to reject the benefits that capitalism has brought to their country. They shop at the malls, buy new cars, enjoyed increased comforts at home, and travel a lot. However, they do not appear to be foster the behavior that enables and legitimizes that standard of life: hard work, entrepreneurship, and savings. They want these goods and services without trying to work hard to get them. And that is the siren song leading them towards statism . . .

Another answer could be that Chile has fallen into what is called “the trap of middle-income countries.” In the book, Political Order in Changing Societies, Samuel Huntington argues that the explanation for the rise of social movements and political instability in developing countries originates in the emergence of the middle class, very aware of their rights and with access to education. These social instabilities occur when political institutions have not evolved quickly enough to cover the expectations of an empowered new middle class.

Perhaps the answer is a combination of all these hypotheses.

In making such an assessment, however, it is important to remember that more than half of citizens abstained — and one could interpret that to mean Chileans are in fact comfortable with the current status of economic and political things. When people feel the urgent need to change the political and economic “model,” they vote massively. This lack of interest may, in fact, be an encouraging sign.

For the future welfare of Chileans, though, we need both officials and leaders appealing to their good judgment. We do not want the country following the same path as Argentina, for example, where people and elites choose statism over rising to be a developed country. If Chileans want to know the results of the road of statism, they need only look to their neighbor.

Translated by Sofía Ramirez Fionda.

Hana Fischer Hana Fischer

Hana Fischer was born in and resides in Uruguay. She serves as a writer, researcher, and international affairs columnist in different media outlets. A specialist in philosophy, politics, and economics, she has written several books and received honorable mentions. Follow her @hana_fischer.