by David Butler
It is a rather remarkable sign of a country’s recovery that the daughter of a victim of the former military regime and the daughter of a member of the former military regime can face off against each other in a peace, fair and free election.
So it was in Chile on Sunday. As the votes were came in, the centre-left candidate for president, former president Michele Bachelet was brought to be brink of victory with 47% of the vote. She will face Evelyn Matthei, who got 25%, in the second round but this is little more than a formality at this stage. Her Nueva Mayoria (New Majority) coalition have won 65 seats in the lower house (with 95% of the vote counted) on the brink of the four-sevenths majority need to enact major policy reforms. This electoral victory and the progress that occurred under twenty years of centre-left rule by Concertacion are worth celebrating.
Chile’s GDP per capita was both higher and grew quicker than the Latin American average for the most of the period of between 1990 and 2010. Obviously not all responsibility belongs to the centre-left government, but they proved themselves good stewards of the economy and invested in areas neglected by the Pinochet dictatorship. Chile was not badly affected the wave of recessions sweeping the world in the late 2000s, thanks to measures taken by Ms Bachelet.
The unemployment rate under Concertacion varied between 6 and 9% for most of the period. Whilst the recession saw a spike up to 11%, the rate has dropped rapidly to its current level of 6%. Inflation has generally remained within the central bank’s target range of 2-4%, ensuring that people enjoy price stability. Yet, there are challenges that remain: the weakness of physical infrastructure and the need for economic diversification away from the copper exports as a fuel of growth are headaches that need to be soothed in the medium-term.
As noted above, the Chilean economy is relatively dependent upon copper, which make up three-quarter of their exports. A sharp fall in the price in 2008 caused this sector to shrink in values. However, the centre-left government had invested in assets using revenues from the cooper boom in the early 2000s and were able to moderate the impact of the downturn. A truly counter-cycle fiscal policy almost unique amongst commodity exporting countries, according professor Jeffrey Frankel of Harvard university. This is has ensure that Chile’s public debt remains at a manageable 9.5% of GDP. Bachelet herself introduced a fiscal responsibility bill in 2006 to further enshrine principles on which this prudence was based. Despite this fiscal conservatism, the governments of Concertacion were able to raise spending on social security and education.
Despite growing prosperity and economic stability, Chile has problems in terms of freedom and human rights. The LGBT community, in spite of the passing of an anti-discrimination bill, face brutal violence and causal homophobia. The age of consent for homosexuals remains higher than for heterosexuals, having only been decriminalised in 1999. There remain in place horrendously restrictive abortion laws thanks to the continued influence of the Catholic church. Human Rights Watch have highlighted issues involving police brutality and the blurring of boundaries between military and civilian courts.
As a liberal democracy, Chile needs to quickly resolve these issues and protect freedoms vital to its citizens enjoying a good life.
Concertacion pioneered the use of informal parliamentary institutions to get over traditional Latin American problem of multipartism and presidentialism combining to create gridlock in so many republics. These informal bodies bound together coalitions by distributing executive positions and quotas of candidates across parties involved; creating cohesive policy-making units; and establishing a system of informal negotiations.
They will tested by the differences between Bachelet’s broader New Majority coalition and the previous parliamentary Concertacion coalition. The incorporation of New Majority’s non-Concertacion members (including Communist student leader Camila Vallejo) into the parliamentary coalition may well occur, bringing in new parties and individual not used to the system of negotiation and compromise.
Ms Bachelet’s manifesto is more radical than her previous ones or that of her predecessor and is focussed on the problem of income and wealthy inequality. She promises a more liberal approach to social affairs including limited liberalisation of laws on abortion and legalising gay marriage. Her constitutional promises are vaguer and should be treated with scepticism; she will not have luxury of a majority large enough to pass constitutional reform. Her promises to scrap tuition fees and turn private higher education into non-for-profits will cost on up to 2% of GDP, to be paid for by corporation tax rises. She will have to balance the continued need for economic growth and the advantages of Chile’s sound fiscal position with the need meet the aspirations of Chile’s young people. We should all hope she resists the siren call of Left Populism and recognises that long-term prosperity is best driven by market with strong supporting institutions and an enabling state
Regardless of Chile’s challenges, one can see its success when contrasted with the favourite “progressive alternative” of the Labour left, Venezuela. As events in recent days have shown, the Venezuelan economy is in a bad state with inflation at a staggering 54% and the government desperately introducing price controls in an attempt to cover their own failings.
In contrast to Chile’s fiscal responsibility, Venezuela has imprudently used their incredible oil wealth. The governments of Chavez and Maduro would have done well to funnel their oil revenues into a sovereign wealth fund, the profits of which could have been used to fund public services and cover necessary counter-cyclical action. This is without even touching on the human rights abuses, the relative lack of press freedom and packing of the courts by the ruling Socialist party.
Chilean progressives have achieved great things without dismantling the institutions and norms of liberal democracy. So whilst some continue to support the failing Bolivarian regime in Venezuela, anyone interested in showing what a progressive government can do for a developing country should look no further than Chile.
David Butler is a Labour party activist