Let’s talk about what’s been happening in Chile. This is a country some people have described as an economic success story. But we’re also seeing this protesters angry at not being able to put food on the table get proper healthcare and just generally with how the country is run. So what are they seeing that others aren’t? Is there a flip side to Chile’s success story? Whether Chile can be described as successful depends on who you ask and ultimately where their politics lie. But let’s start with a look at Chile’s economy. And really any story about the country’s modern economy should start with these guys the Chicago Boys. They’re a famous, some would say infamous group of Chilean neo-liberal economists. In the 1970s they studied in Chicago under Milton Friedman, a champion of free-market capitalism and an eventual Nobel laureate. It was around that time back in Chile that General Augusto Pinochet staged a military coup to get rid of President Salvador Allende and his socialist government. Chile’s economy was a mess. Yearly inflation was running around 300% and a lot of people struggled to pay for basic necessities. So Pinochet needed a plan to fix the economy and the Chicago Boys had one. It went like this. The best social public policy is economic growth. If the economy grows you will have less poverty and so on along the time. In this part Chicago Boys their recommendation was right. Chile’s economy did grow. Thanks to freeing up the market Chile made trade deals with countries around the world, exporting things like copper and its internationally renowned wines. In 2010 Chile even became the first Latin American country to join the OECD, a club for developed economies. “Applause, backslapping and especially congratulations were in order at Chile’s presidential palace.” Chile’s economy has had its bumps but compared to its Latin American neighbours the country has become a sort of Promised Land. Between 2017 and 2018 Chile’s economy grew by about $20 billion. Compare that to Argentina where the economy shrank by $123 billion in that time. It’s no wonder tens of thousands of migrants from all over South America have moved to Chile for jobs in the last few years. This is one of the leading countries in GDP per capita. We have reduced our poverty from nearly 40% in 1990 down to 8.6% last year. So with that rosy picture in mind it’s tough to imagine why a four cent increase in metro ticket prices led to the biggest protests in Chile in years. Young people kicked it off by refusing to pay for the metro. Soon the protests grew. And spread. “The unrest on the streets of the Chilean capital and elsewhere in the country has been unrelenting.” But it also got ugly. People started burning stuff, there was looting and the government deployed the military. Protesters and police confronted each other. Thousands were injured on both sides and people have died. Now this movement has been about a lot of things but one of the big ones is inequality. 33% of Chilean GDP goes to the 1 percenters. That’s higher than almost everywhere. I don’t think there’s another country that has that level of inequality. What many protesters say is that the middle class in Chile isn’t middle class at all. That’s because in the government’s eyes a person can qualify as middle class even if they earn as little as $180 a month. For a family of four it’s about $630. I would be classified among the richest 20% in the country. And my monthly income is about 950 euros a month and I’m a professional with a master’s degree. I don’t think that’s a rich person. Chile’s National Statistics Institute calculated that 80% of people have no money left at the end of the month. Once they get through paying for food, transport housing and basic services it’s all gone. Unless they pay for stuff in instalments which in Chile you can do just about anywhere. A lot of people go to the supermarket with a credit card. They don’t even have enough to pay for that supermarket bill in cash. So in a way, we have seen a decrease in poverty but we have more people in debt. The protesters have another criticism and that’s against high levels of privatisation. In Chile utilities like water and electricity are in the hands of private companies. Whereas sectors like education and health have a mix of private and public options. Critics say that system is driving prices up and that the quality of public offerings are worsening. If a retiree hasn’t paid into a private pension, for instance they get a government allowance of just $180 a month. We have people who are receiving pensions after working their whole lives which are making them poor. They don’t cover their basic needs with the pension that they are getting. Access to good healthcare. That is really expensive. Access to private schools. That’s really expensive. Access to some universities. That’s really expensive. Now in response the Chilean government has raised the minimum wage, promised more money for health services and the very elderly. But some protesters say it won’t be enough. And now there’s division over just how much Chile’s free-market model should change. There are two perspectives for the crisis in Chile. One is Chile’s a poor country unequal society and so we need to change everything. The other is much more social democrat. We need to improve the pension funds the health and so on but we need to keep the competitiveness of the economy. And that’s the government’s message Yes, we recognise the need for social fairness but We cannot change things overnight and also we need to keep a country that keeps an economy working because if the discussion is about redistributing wealth we first need to create that wealth. Moving ahead won’t be easy. There’s been damage. Chile’s National Human Rights Institute accuses the police and military of serious abuses that include using excessive force during the demonstrations. Even Chile’s famously stable economy had its biggest drop in a decade and probably won’t recover for a while. But there is a plan to reconcile the country. It involves rewriting the constitution that was originally drafted during Pinochet’s dictatorship. Polls in Chile say it’s something 80% of Chileans seem to support and so does the president. In April a referendum will ask voters whether they want a new constitution and whether it should be written by an all-citizen body or include lawmakers too. If it goes ahead elections for that body are expected to happen in October. It’s going to be a long and politically difficult process but the idea is that Chile can write a new story if you will. A story more people can call a success.

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33 thoughts on “What’s the flip side to Chile’s economic success? | Start Here”

  1. Those idiots want to turn the richest country in South America into another Venezuela they need another Pinochet type general to take power and do away with these communists animals also most of the protesters are illegal immigrants from Bolivia, Peru people who don't belong in Chile same with Argentina also

  2. This is neo-liberal economics; Creation of wealth happens but distribution never happens; In the mean time every thing gets privatized- Education, Healthcare, Transport, Pension and Govt frees itself from all responsibilities……..

  3. Same thing is happening in the US but it is not emphasized because compared to other countries poor people in America have more money but have to use those dollars to pay for the same things but much more expensive prices.We are on the same model as Chile

  4. Long live Chile. I hope we have a future USA president that supports our central and south American family more.

  5. Milton's economic model will have workers produce wealth to enrich the business owners but that's it. The increasing competition between business owners and between workers will drive down profits and wages, reducing consumer spending which will hurt business' income . This will cause recession.

  6. Chicago boys made poverty to increase in Chile as never saw before in history, they have a world record in creating poverty (real)

  7. Capitalism is the culprit, it only benefits the rich, it is outdated and we all need a change or things will keep getting worst. It is not that difficult to understand. For every private company, making a projected profit is the true outcome, whether by raising prices for goods/services or offering low paying jobs and when a low paying job can’t fulfill the needs for day to day living, that is when issues become apparent.

  8. Wow….. in many ways this sounds just like the UK, the USA, France, Belgium, Spain, Portugal, Italy, Australia and many other countries …….. And of course the Alternatives of Argentina, Venuzela Cuba etc are no different …… except in those countries Everyone is poor and most have no jobs at all.

    So it actually sounds like, if there are Honest and Trustworthy Leaders the country is doing as well as many other countries & I hope it can last (All countries have vocal, violent political element) ….. but like the other countries, people need to be taught how to manage money to maximise its use. (It is a lesson I am only now understanding).

  9. Chileans have created a prosperous nations and they have the right to enjoy it. The problem is no longer the creation of richness, but its repartition. Greetings from Colombia, the struggle continue.

  10. Chile =
    Taxes and prices similar to europe
    And salaries ,services, health care, education 3rd world

    Its that simple
    Case closed

  11. Chileans protests was a massive hysteria.
    They already have a strong democracy.
    Socialists doesn't know what they are asking by. It's like:
    "— Democracy, democracy, democracy."
    So socialist is elected and pay the media for aprove the governance being done. And they will never know they already had democracy.

  12. The economic hardships Chileans are going through are to varying degrees similar to those of many other Latin American countries. Inequality, poverty, bad pensions, low incomes, expensive groceries, how privatizations made life more expensive, lack of care or empathy from governments for most of the population, most Latin Americans can relate to that. I'm not Chilean but with all due respect, from my point of view, when it comes to the social unrest seen in Chile, the Chilean government was begging for it. I pretty much feel that México could have also experienced social unrest if Federal Elections had not taken place. I remember very well how people were fed up. I was.

  13. There're actually 3 sides or "viewpoints" for this social issue:

    -Chile's a poor country because of foreign companies making money out of our Health and Educational systems, water and electricity (This is what the majority of people see, at least 60% of it)
    -Chile needs a few changes to make people "less poor" but we need to keep the neo-liberalist system running no matter the cost (This is what the government and the central-right say/believe in, 10% of the country more or less)
    -Chile's under attack from the commies/cubans/venezulans, they've brainwashed the poor and want to start a communist regime (This, as dumb as it may sound, is what the people on the far right believe, which is 20% of the country more or less; aka the "rich" class. This is why you all will see some sort of civil war between the "far-right-rich" [we call em "fachos"] and the "poor" protestants)

    Chile is a big mess right now, but you can all blame on the "rich" and Pinochet's constitution for making us poorer and poorer each day, and not allowing us to make new laws to even the field.

  14. Chile has higher prices than Spain for a third of the income for every person …and Spain is not that rich by European standards !!!…and Chile is the richest south American country by GDP per capita…

  15. I love that this channel casually glances salvador allendes presidency. He was the first marxist communist president, and was nationalizing all the industries, leading to economic instability and collapse due to his socialist policies.

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