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Monday, November 21, 2016

Chile Faces The Spectre Of Its Own Populist Backlash

Chile faces spectre of its own populist backlash

Anger over social inequality simmers in a country long viewed as well managed
Protesters in Chile have burnt buses, barricaded streets and even stormed congress this month to vent their anger at an establishment they say continues to fail them, triggering concerns of another populist backlash in the Americas.
“Chile seems ripe for a kind of populist solution to disenchantment,” says Robert Funk, a political scientist at the University of Chile, who argues that the same forces are at work that led to Brexit in the UK and Donald Trump’s rise in the US. 
That would be a remarkable change for Chile, better known for being staid, and long viewed as the best-managed country in Latin America. But Chile provided an early global symptom of middle-class rage in 2011, when students took to the streets in mass protests that reflected broader discontent with high levels of inequality. 
In reaction, when President Michelle Bachelet won a landslide election victory three years ago, her leftwing coalition promised to “bulldoze” Chile’s famous free-market model and introduce sweeping reforms
Nevertheless, discontent about social injustice remains widespread. The economy has slowed down dramatically, with growth averaging just 2 per cent a year, while there has been little change to inequality, as the impact of the reforms has yet to kick in. Ms Bachelet has seen her popularity plummet. 
“Here, there [in the US] and everywhere it’s a backlash to the technocratic mindset which began in the 1980s and 90s, but the results may end up being similar to what brought about that mindset — democratic regression and bad economics,” adds Mr Funk. 
The tension can be seen in street protests, most recently against a pioneering private pension system that has been copied around the world but today pays out less than the minimum wage to the average pensioner. 
Unprecedented high abstention rates in municipal elections last month — like in recent local elections in Brazil — also laid bare the extent of disillusionment among voters, scarcely a third of whom bothered to go to the polls. 
Now it is feared that the collapse of legitimacy and disintegration of the two-party system that has ruled Chile since the return of democracy in 1990 could clear the way for the emergence of outsider politicians. For example, a young student leader unexpectedly won the mayoralty of Chile’s second-largest city in the recent local elections. 
“There is a profound disenchantment with the establishment in Chile, but that doesn’t mean that people want the system to be completely overhauled,” says Jorge Burgos, who resigned as interior minister earlier this year after disagreements with Ms Bachelet. “The middle classes have grown a great deal — they just want to keep growing,” he adds. 
Chile rejected populism decades ago and instead saw a neoliberal model installed under the dictatorship of General Augusto Pinochet. Since then, most politicians have looked to soften the edges of a model that cut poverty radically, rather than destroy it. 
“Instead of a bulldozer, the task of the next government is to install a crane to rebuild the country and increase opportunities. Yes, there needs to be more social justice, but by building [on the past], not destroying it,” says Cristian Larroulet, an economist who served as chief of staff to President Sebastián Piñera. 
Instead of a bulldozer, the task of the next government is to install a crane to rebuild the country, and increase opportunities
Cristian Larroulet, economist
Government supporters openly admit to mistakes over the past three years. The ruling coalition was intoxicated by an unprecedented majority in congress. That led Ms Bachelet to rush headlong into complex reforms, such as higher corporate taxes to pay for free education, without discussing them sufficiently. 
“No one argues that tax and education reforms were not necessary, but the way they were carried out was poor,” says Ignacio Walker, a leading senator from Ms Bachelet’s coalition. “They generated a lot of noise, they used inappropriate language and there was a lack of technical expertise,” he added. 
In addition, the consequent collapse in business confidence compounded the knock that Chile’s economy took from the fall in copper prices — just when it needed confidence most. That led to a drop in private investment. 
Ms Bachelet’s reforms were also derailed by a series of corruption scandals — including one that involved her own son, who was accused of influence peddling in a business deal. “That was very damaging for Bachelet’s image. It was a blow from which she never recovered,” says Mr Burgos. 
Nevertheless, Guillermo Larrain, an economist who co-authored The Other Model, a book that inspired many of the reforms, hopes that whoever follows Ms Bachelet will consolidate the changes she set in motion. 
“Chile is like the US, where the instruments that they have been using for so long are not credible for coping with the problems brought about by globalisation,” says Mr Larrain. 
“In spite of the fact that some of the reforms [like education and tax] need to be reformed themselves, once those changes are introduced, we will have a better situation.”
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