September 7, 2012
The Roots of Chile’s Malaise
by Andres Velasco
Andrés Velasco was Chile’s finance minister from 2006 to 2010, earning praise for innovative policies that included a measure to save Chile’s copper windfall in a rainy-day fund. At the forefront of Latin America’s economic transformation as both an academic and a policymaker, he served as chief negotiator for Chile’s participation in NAFTA in the 1990’s, and has consulted for the International Monetary Fund, the World Bank, the Inter-American Bank, and several Latin American governments.
Margaret Thatcher famously once said that “there is no such thing as society.” Today, the people of Chile are showing just how wrong she was. For more than a year, young Chileans have been taking to the streets to protest. Many foreign observers have declared themselves surprised. Why would the citizens of a successful emerging country be so upset? What could they be upset about?
Chile’s student-led protest movement has generated much re-thinking within the country. Intellectuals of the old left, pointing to persistently high income inequality, have argued that the economic gains made in the 22 years since the return of democracy were more illusory than real. In this view, Chile’s economic model has failed its citizens and is in the process of “collapsing.”
Defenders of Chile’s current rightist government, pointing to ongoing economic growth and unemployment under 7%, have argued that there is no deep reason for discontent. In this view, if the government stays the course and the economy keeps growing, the malaise will pass. Read On: Project Syndicate