The roots of Chile’s social discontent

Shocking street violence and massive demonstrations have taken Chile by storm. That this could happen in the most developed Latin American country, one widely seen as a successful example of a market-based economy, merits careful analysis. What are the roots of Chile’s social discontent?

Many have attributed this social explosion to inequality. This instinctively and emotionally appealing idea finds support in the fact that Chile’s income inequality is high by international standards. To be sure, while close to the average for the rest of Latin America, after Mexico, it is the second worst among the members of the OECD. Furthermore, a growing number of corruption and collusion cases have surfaced in recent years, often ending in underwhelming punishments. Many have concluded that the system favours the malfeasance of the elites.

This view, however, is challenged by the fact that Chile has made significant progress in fighting both inequality and corruption. By the most common measure of income distribution, the Gini index, inequality fell from 57.2 in 1990 to 46.6 in 2017.

Gradually, stronger legislation and firmer prosecutions have succeeded in identifying, punishing and limiting collusion and dishonesty. Faster progress is needed, but there is little doubt that the country has made steady progress on these fronts.

The social discontent has also been traced to a reduced rate of economic progress seen in recent years, with trend growth halving from 4 per cent to around 2 per cent since 2014, notwithstanding a temporary pick-up last year.

This slowdown, however, has been a far cry from what has happened in other countries in the region. The economy has suffered no recession and public spending and subsidies have continued to expand.

While economic factors — inequality and slower GDP growth — may help explain the social discontent, a more profound and encompassing explanation is the extreme disconnect in Chile between its political system and its citizens. Unlike income inequality, this stands out not only in comparison with other OECD members, but also relative to Chile’s regional peers. It is also apparent when we examine the country’s own development in recent decades.

First, in comparison with other members of the OECD, Chile is an anomaly, not only due to its income inequality but also because it ranks absolute last in the organisation’s measure of civic engagement (a component of its Better Life index).

The reasons are twofold. First, Chile has the lowest voter turnout and the second weakest level of stakeholder engagement with the development of regulations, after Hungary.

Second, the gulf separating the country’s citizens from its political system is a rarity not only relative to other OECD members but also, and unlike the issue of inequality, in comparison with its regional peers. According to the Economist’s Democracy index, no South American country has lower political participation than Chile. Of the 19 Latin American countries covered by the index, only Guatemala and Nicaragua have lower scores.

The current disconnect between Chileans and their political system is very high relative to what it was in the past. According to a well-respected local pollster, in May 2019, only 19 per cent of the population felt that they identified with a political party; this has fallen from 80 per cent in the early 1990s and 50 per cent in the 2000s.

A previous poll taken in 2017 reveals one of the reasons: 68 per cent saw political parties as highly corrupt, up from 40 per cent 15 years earlier. Congress did almost as badly, with 60 per cent perceiving it as highly corrupt, up from 25 per cent in 2002. It is thus not surprising that voter turnout fell from over 80 per cent in the early 1990s to 47 per cent in 2017, the lowest among OECD and Latin American countries other than Venezuela. While this is partly explained by a 2012 law that changed voting from compulsory to voluntary, most of the fall happened earlier.

Of course, economic and political explanations of the discontent are not incompatible. For a start, the political system is supposed to uncover and prioritise social demands and to change economic norms and policies accordingly. A system that is divorced from public demands for reduced inequality and faster growth is less likely to deliver what is needed.

In the Chilean case, a relevant example is what has happened to the demand for better education in public schools. The first significant manifestation of social discontent emerged in 2006, when protests by high school students demanding reform paralysed the activities of more than 400 schools. Such protests resumed in 2011, when a new generation of high school students joined a mobilisation led by university students, again to demand reform. Both movements received substantial support from the public, but in 2019 public school education remains in tatters.

The disconnect between the population and the political system creates further trouble still. When politicians fail to communicate the restrictions, trade-offs and prioritisation of demands, it is hard for the public to understand their choices and easy for them to become frustrated, distrustful and irritated. Especially in times of crisis, the risk of economic and political instability increases.

Chile’s political elites are now rushing to propose and push for a variety of major economic policy changes, in addition to a set of emergency measures presented by the government to Congress.

Their hastiness and disconnect with the public is dangerous. Wrong, populist policies may seriously impair the country’s capacity to maintain progress, with no assurance that public discontent will be placated in future. In fact, polls taken after the crisis erupted show that no political party has gained support, with all maintaining high disapproval rates.

The evidence presented here implies that Chile’s politicians should refocus their efforts. While it is urgent that they quickly agree on economic policy measures to deal with the emergency, it is more fundamental that they humbly accept their failure to connect with the public and work to correct their course. The government has taken notice and has said that it will convene a formal national dialogue with the people. This is an important first step to try to solve the deep roots of Chile’s social discontent.