- Paul Constant is a writer at Civic Ventures and the cohost of the "Pitchfork Economics" podcast.
- He recently spoke with Historian Marcelo Casals about Chile's progress.
- The country faces an uphill battle as it votes on a new constitution in September.
- For more stories, go to www.BusinessInsider.co.za.
Chile has a long and proud history of political protests. But the uprising of late 2019, when more than a million Chileans took to the streets to protest outsize wealth inequality, was unlike anything in the nation's history. Those protests, which started over a subway fare hike in Santiago, led to a redraft of Chile's constitution, and in late 2021, a 35-year-old progressive liberal named Gabriel Boric ran on an anti-inequality platform to become the country's youngest president.
When he won the election, Boric promised to put an end to Chile's long-held economic system that favoured the wealthy and corporations, saying that "If Chile was the cradle of neoliberalism, it will also be its grave."
Historian Marcelo Casals joined the latest episode of "Pitchfork Economics" to explain how the redrafting of Chile's constitution is going, and whether Boric has moved toward his promise to end the nation's egregious wealth inequality. While strong steps have been taken toward making Chile's economy more inclusive, Casals said, that hard-fought progress is in a fragile state as the new constitution heads toward a public vote this fall.
The free-market economic policies that were put in place during the dictatorship of Augusto Pinochet in the 1970s have taken their toll on Chile: While Chile is the wealthiest nation in South America, that wealth is unevenly distributed. The nation is the most unequal of the 38 member countries of the Organization for Economic Co-operation and Development, and half of all Chilean workers earned less than R9,000 per month at the time of the 2019 protests.
Adopted under Pinochet in 1980, Chile's constitution prioritised the ownership of private property above all else, thereby allowing corporations to scoop up water rights, public land, and other resources. Casals said that the constitution also "defined the state as subsidiary," de-emphasising government as a last resort to step in when the free market fails to find a solution in areas like healthcare and education.
That hands-off approach to capitalism has created extreme, even life-threatening inequality. Chile is the only nation in the world with a fully privatised water market, and a 2020 analysis found that just "1% of registered actors own 79.02% surface consumption rights," which the authors term as an "abysmal" level of inequality. As a result, water prices for consumers in Chile are the highest in all of Latin America, mismanagement and deregulation has led to public-health emergencies, and the nation has suffered from a decade-long "mega-drought" worsened by climate change.
Chile's proposed new constitution under Boric goes up for a vote on September 4. It increases labor force participation by requiring gender parity in government roles and creating gender pay and hiring regulations that look to close the nation's shocking 20 percentage-point gap between male and female unemployment. The constitution also breaks corporate monopolies over environmental resources, enshrining environmental protections for clean air and water and blocking a few corporations from drawing wealth out of the nation's natural resources and away from the country. And it also establishes government offices that would create a social safety net ensuring more robust economic inclusion from low-income populations.
Like most other nations, Chile has struggled with the pandemic and its resulting inflationary crisis, and the population is exhausted and angry. While voters gave progressive leadership a 78% mandate to write the new constitution, recent polling shows that they're waiting to make up their minds on the results. Support for the new constitution, which needs a simple majority to be adopted, is currently hovering near 40%, with just below a third of voters ready to reject it and the rest undecided.
"It'll be a very close call," Casals said. "If the new constitution is not approved, that will be a political disaster — especially for the left-wing government in Chile."
As with the United States, Brazil, and other countries around the world, Chile has seen the rise of a "conservative, anti-left, anti-progressive reaction," Casals said, adding he believes that in the next election, if the constitution isn't adopted, "a far-right populist candidate can be elected," and that candidate could reverse the progress Casals has made toward unspooling the nation's 40-year neoliberal campaign of deregulation for the powerful and tax cuts for the rich.
The last three years in Chile confirmed his belief that "things can change, and sometimes very quickly," when those in political and economic power lose their legitimacy in the eyes of the public, said Casals.
As inequality balloons out of control, a majority of the people will likely come to believe that their leaders are only serving the needs of an elite few at the expense of everyone else. Under those conditions, he said, even inspired by something as small as an increase in subway fares of a couple of rands, "people can create change in a very institutionalised way by creating a new political system."