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Will Think Tanks Prevent a Chilean Retreat from Free Market Principles?

By: Contributor - Nov 14, 2013, 6:54 am

EspañolChilean entrepreneurs have proven talent. When unleashed from the shackles of the import-substitution model and the socialism of the 1960s and the early 1970s, they helped create wealth at an impressive rate. Cristián Larroulet, secretary general of the presidency (similar to chief of staff) and a former think tank leader, summarized the change when he said, “While between 1944 and 1960 the income per capita grew at an annual average of 1.8 percent, between 1984 and 1997 it grew at a rate of 5.4 percent.” In 1980, Chile had the seventh highest income per capita in the region. It is now poised to become number one. Since 1990, the poverty rate has been reduced from 38.6 percent to 14.4 percent in 2011.

Despite all of the positive signs, the current Chilean administration has been losing popularity since early 2011 partly due to student marches and disruption of order, environmental protests and an Enron-like collapse. The Chilean free market model, which receives praise from abroad, is challenged at home. Books, such as “The Other Model,” which promote an activist and redistributionist government, seem to frame many of the debates.

One positive sign is the reaction to the challenges by the freedom loving members of Chilean society. New think tanks are being launched and established think tanks are repositioning themselves. Chilean entrepreneurs, who were some of the first to create think tanks in Latin America, are founding and funding new efforts.

Harald Beyer, an economist whose recent service as minister of education ended in impeachment, is returning to the Centro de Estúdios Públicos (CEP). CEP has a powerful and committed chairman, Eliodoro Matte. This leadership will likely nurture a new crop of talented researchers. Arturo Fontaine, who for over three decades led CEP to prominence, left the organization and will work as a contributor to build new audiences. Fontaine has an outstanding network of international allies and an atypical audience due to his best-selling novels.

Libertad y Desarrollo, which had over 20 of its members join the current administration, was successful in rebuilding its team and maintaining independence and continuity. The current leader, Luís Larraín Arroyo, who has experience in government, business and think tanks, will likely take advantage of the institutional stability.

The Instituto Libertad is also committed to free markets. It is aligned with Renovación Nacional, the same political party of President Sebastián Piñera, and collaborates well with several other think tanks. They have organized joint efforts with Fundación Jaime Guzmán (FJG) and with Libertad y Desarrollo. FJG focuses on attracting and preparing people for public service. Over 400 young leaders who passed through their programs have served at some of the most distinct municipalities. All of these think tanks favor traditional values in issues of life, family and culture. These groups favor a free market but are open to focused government intervention, especially those designed to improve the rules of the game.

Fundación para el Progreso, the new dynamic kid on the block, is positioning itself as a combination of a Cato CATO +0.66%/Institute for Economic Affairs U.K. (70 percent of their work), Atlas Economic Research Foundation (20 percent), and Hoover/Rand (10 percent). The Cato/IEA work will focus on producing public policy research rigorous enough to be used at universities but written in a language accessible to the educated layperson. The Atlas work will include networking, discovery and support for the efforts of other groups. The Hoover Institute/Rand Corporation work will support scholars so they can devote more of their time to produce new research and develop innovative ways to take these products to larger academic audiences. Nicolás Ibáñez, one of the most successful Latin American businessmen, is helping Fundación para el Progreso and other start-ups with important material support, but, perhaps most important, he is also helping build solid management structures.

The think tank market also includes groups that go beyond economics. Fundación Paz Ciudadana focuses on a united and secure civil society. A new crop of think tanks, staffed mostly by younger employees, are emphasizing personal freedom, human dignity and equality of opportunity. Instituto ResPublica is making efforts to strengthen its ethical and social foundations. IdeaPais has similar goals, but several staffers are very skeptical of pure laissez-faire and promote a more “Humane Economy.” This thinking is aligned with the approach of the late Wilhelm Röpke and insights of current economic philosophers such as Amartya Sen. Venturing into social anthropology and culture, the Instituto de Estudios de la Sociedad fills yet another niche.

Trying to cut across issues, from human rights to development, Horizontal brings together a team with diverse background and expertise. Finally, working mostly with university students, the CientoOchenta group tries to increase the appeal of the principles of the free society with a message of openness and tolerance to personal liberties and freedom.

Those who are concerned with the market for ideas can’t neglect higher education. Many outstanding Chilean universities have professors with a deep understanding of the free society. Most, however, are concentrated in the economic departments. The Catholic University, Universidad Adolfo Ibáñez, Universidad de Los Andes, Universidad del Desarrollo, Universidad Finis Terrae, have professors and economic departments sympathetic to free enterprise and a free society. Beyond economics, however, other departments tend to be dominated by champions of interventionism and new and old socialisms.

A good example is Fernando Atria, a scholar who is the leading proponent of a Constitutional reform that would give more executive power. He seeks to accomplish this by any means, good or bad. He is a co-author of “The Other Model” and a professor at the Universidad Adolfo Ibáñez, a university started by leading conservative businessmen. This open spirit, cultivated by conservatives who love the free society and open debate, is seldom reciprocated in other academic circles.

During a recent meeting in Chile, Gerardo Bongiovanni, a talented think tank builder from Argentina stated, “There was a time when Argentina, like Chile today, seemed to have it all to consolidate as a great country. Then, a shift to the populism and demagoguery of Juan Domingo Perón started a reversal of its fortunes that lasts until today. Can this happen in Chile?”

With a commanding lead in the polls, Michelle Bachelet is poised to return to the presidency. She continues to be surrounded by moderates. The socialistic elements in her coalition are stronger and more outspoken than ever. Camila Vallejo, who says that Fidel Castro is her role model, will likely win a seat in Congress. Will leaders like her prevent Bachelet from governing from the center? Although the current narrative has changed, all of the efforts noted above give hope that Chile will not follow the road of its eastern neighbor and will not squander the gains of these last decades. The future, however, is far from certain.

This article first appeared in Forbes.