Wednesday, April 16, 2014
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Chile in the Streets

SANTIAGO – Almost everywhere I have traveled in recent months, I have been asked the same question: Why are Chile’s students and their families protesting?

It is a good question. Chile is one of South America’s most advanced and, until now, most stable countries. But, over the past 20 years, its people have achieved a mature political sensibility; they demand new rights and refuse to accept the restrictions lingering from the country’s recent undemocratic past. As a result, one of the region’s most prosperous countries has now become a less harmonious one.

Between 1990, when democracy was restored, and 2010, Chile experienced rapid economic growth, more than tripling its per capita income and making it possible to reduce poverty with targeted, highly efficient policies. In 1990, 40% of Chileans were living below the poverty line. By 2000, that share had fallen to 22%, and, by 2010, to 11%, with little more than 3% living in outright destitution.

Today’s Chile is very different from the Chile of 20 years ago. The 29% of the population that have left poverty behind are now an incipient middle class with new ambitions and goals.

As a result, demands for more opportunities and better living conditions have grown louder. Chileans are clamoring for adequate housing, access to better health services, a safer environment, and access to higher education – the most important factor in social advancement.

The number of university students in Chile has risen from 200,000 to 1.1 million in two decades, meaning that about seven in ten university students are the first in their families to receive higher education. But most Chilean universities are private, and public institutions charge high tuition fees. Scholarships and state-guaranteed loans are available, but are insufficient to meet growing demand. That shortcoming has forced the new middle class to scrimp, save, and borrow to educate their children, imposing an enormous – and increasingly untenable – financial burden on thousands of families.

Indeed, this burden has helped to fuel the current protests, which seem to mark the end of a political cycle that began with the restoration of democracy in 1990 and culminated in the election in 2010 of a rightist government for the first time since Pinochet stepped down.

During those 20 years, including 1990-1998, when Pinochet remained the army’s Commander-in-Chief, his right-wing allies retained the ability to veto legislation. Thus, despite the old right’s minority popular support, progress required compromise on many issues, including laws that favored genuine democracy, in order to win the agreement of appointed senators, most of whom defended Pinochet’s institutions.

Moreover, in an electoral system in which two representatives are elected for each district, the minority has a clear advantage. Many Chileans today are demanding a radical change towards a proportional electoral system.

But an economic cycle is also ending. Chile’s annual per capita income, now $15,000, has outstripped the rest of Latin America. But, along with the rise in income, how that income is distributed has become more important. In richer countries, the key wealth indicators are no longer determined only by per capita income growth, but also by socioeconomic factors that affect equality and inequality.

Finally, a social-policy cycle is also ending – one that attempted to lift the poor out of poverty through subsidies and direct benefits. This is no longer sufficient. To advance socially today, fiscal reforms must finance the new public services demanded by the middle class. Essentially, Chile needs a fiscal system that lessens inequality.

All of this explains why Chile, which has been a model for neighboring countries in transition, is experiencing an upheaval. The country is fundamentally stable. The authorities have managed public finances responsibly, and, since 2000, have followed a counter-cyclical macroeconomic policy. Furthermore, the government has relentlessly investigated the human-rights violations that occurred under Pinochet’s rule.

But today’s Chileans have a broader view of the world, are more empowered through social networks, and are using the Internet as a platform to demand greater participation in public affairs. These are the citizens who are in the streets, who demand change and reject neo-liberalism, with its deregulation and failure to protect the vulnerable from abuses of power.

Will the political class, both in the government and the opposition, be mature enough to understand that a two-decade-long political, economic, and social-policy cycle is ending, and that the country needs a new vision for the future? Those of us who have held public office hope so. We want Chile to continue to serve as a beacon of true progress for the region and beyond.

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  1. CommentedMike Muller

    This is a watered-down 'vanilla' explanation of the real cause of the unrest. The real cause is that the Chilean system is offering sub-prime education at a high cost, essentially the same phenomenon that happened in the real estate bubble in the US. Chilean students and their families realize this. The system has been and continued to be fundamentally rigged, and is not sustainable (metal commodities boom notwithstanding).

  2. CommentedMike Muller

    While it is true that more young Chileans are getting tertiary level education, this progress is flawed because of two related structural weaknesses. First, the quality of students is generally low because of poor primary and secondary education. Second, the growth in the tertiary student education is based on a -from a national perspective- flawed business model that seeks to maximize profit of the owners of educational institutions at the expense of quality of the educational service provided.

  3. CommentedFrank O'Callaghan

    The fundamental truth is that Human Rights are good for the Economy. Democracy and equality are the most productive forces in any society. Power imbalances almost always redistribute wealth. The question is merely to whom they distribute and from whom they take.

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