Chilean Entrepreneurs Must Know Thy Enemy

Sebastián Dávalos, son of President Michele Bachelet, was forced to resign as sociocultural director amid allegations of influence peddling.
Sebastián Dávalos, son of President Michelle Bachelet, was forced to resign as sociocultural director amid allegations of influence peddling. (@Cooperativa)

EspañolThe recent “Nueragate” scandal has generated a great deal of public outrage and distrust within Chile. President Michelle Bachelet’s son, Sebastián Dávalos, and his wife, Natalia Compagnon, allegedly received a CHL$6.5 billion (US$10 million) loan in exchange for political influence.

Curiously, Natalia Compagnon’s company received this hefty loan even though it only possessed slightly under $10,000 in capital. Dávalos resigned from his sociocultural director position shortly after the news broke.

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Chile may be a model for the rest of Latin America to follow, but it is not completely exempt from the populism that has afflicted the region since its independence from Spain. The peddling of influence, vote buying, intimidation, cronyism, and demagoguery have all been fixtures of the Latin-American political experience for nearly two centuries.

Chile is, unfortunately, no exception, and this could be a sneak preview of the populist future that is to come.

This is by no means an isolated incident either. Nueragate was preceded by the recent Pentagate scandal, which involved allegations of various representatives from the conservative Independent Democratic Union party receiving illegal campaign contributions from the holding company Penta.

It is very clear that corruption in Chile is not confined to partisan lines. Unfortunately, the Hegelian-dialectic style politics of the United States appears to be making its way into Chile. The right and left are effectively becoming two wings of the same bird of prey, while Chileans are denied a true alternative to the statist political establishment.

This type of corporate favoritism is natural in many political systems, even the most developed and stable of them. But in the case of Chile, a country with slightly over 20 years of stable democratic rule, these incidents can quickly metastasize into much nastier cases of corruption. If left uncontrolled, this could lead to the rise of a demagogic leader, sending the country spiraling down the populist path.

Chilean entrepreneurs have been derelict in their duties in promoting the very policies that enabled them to become so prosperous. They have grown fat and complacent in their status, and will do anything to protect it, even if it means getting into bed with corrupt politicians.

In a recent column, Axel Kaiser, the great Chilean classical liberal and executive director of Foundation for Progress, brilliantly highlights the danger of the business class ignoring shifts in public opinion. At the end of the day, there will come a time when no matter how many politicians these corporate big wigs buy, public opinion will just be too much to handle. This will lead to widespread nationalizations, the unraveling of Chile’s innovative pension program, and a complete state takeover of the education system.

Chilean business owners must not only defend the economic model that lifted Chile out of dire straits, but also call out their corrupt colleagues who use the state to secure short-term benefits. If not, the general public will show them no mercy. In times of economic and political crises, the entrepreneurial class is usually the first to be targeted by the masses and populist politicians.

By not standing up to the corruption of their colleagues, the business class is not only doing a disservice to its country, but it is also making the worst possible kind of business decision. Once the populist pitchforks are drawn, there will be no turning back.

Edited by Guillermo Jimenez.

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