Chile: Goodbye Free Market, Hello Decline: How Decades Of Positive Growth Could Be Destroyed By The Results Of A Recent Election – by Alejandro Chafuen

Chile: Goodbye Free Market, Hello Decline: How Decades Of Positive Growth Could Be Destroyed By The Results Of A Recent Election – by Alejandro Chafuen

Only a few years ago it seemed that the free market changes in Chile had created an irreversible positive change. Over the last 30 years I have traveled frequently to the area and have witnessed that no other country in the region can boast of similar positive changes. Also, since the return to democracy, the presidential elections have been very competitive. Although the candidates have varied on their economic ideas, the differences between them were negligible. The left-center coalition that won last week’s election, however, has enough bad ideas and power in congress to put an end to the positive changes that were born out of the free market in Chile.


The new bad ideas, combined with the fact that on important issues Chileans have remained politically leftists, could lead to negative consequences for the free market. Recent survey results about the free market are baffling. The respected Latinobarómetro survey includes troubling responses to the statement, “The market economy is the only system that can lead a country to development.” The responses were negative toward free-market ideas. When asked about satisfaction with privatizations done in Chile in recent years, the responses were also very negative.
The results of the survey bewilder me. Before the recent elections, whenever I visited Chile, especially if attending one of the annual events of the think tank Libertad y Desarrollo, I was confidently amazed by having policy experts from both political ideologies at my dinner table. I seldom find this camaraderie in other countries, even among free-market think tanks. Chile seemed an oasis of healthy consensus. As it looks now, this was a temporary consensus of a group within my world of economics. It is clear now that economics is not everything.
Looking back at the climate of opinion before outgoing President Sebastian Piñera’s election in 2010, many sectors of the libertarian right, both foreign and domestic, criticized him for not being libertarian enough and squandering a free-market consensus. Clearly, Piñera had his doubts about such consensus. I attended a small luncheon during the early stages of his presidential campaign at the American Enterprise Institute (AEI) with Michael Novak, Charles Murray, Roger Noriega, and José Miguel Vivanco and I asked him about the apparent contradiction between the polls and my perception. Piñera believed that the Latinobarómetro poll was describing a problematic reality and his political response was to court environmentalists from the early stages of the campaign. In 2007, he offered major financial support to bring climate alarmist Al Gore to Chile. He also funded, from his own pocket, the environmental preserve known as Tantauco. He also helped to block the construction of Barrancones, a coal-burning electric plant, after it had received all the necessary approvals. As suggested by Luís Larraín, of Libertad y Desarrollo, these moves helped create the perception that he could be swayed by protests.
Looking back, it is impossible to speculate that a more consistent libertarian administration in Chile would have led to a different electoral result this past week. Others have blamed the loss on an excessive emphasis on economics as well as the libertarian left’s focus on the adoption of the politically correct doctrines of today. Certainly, an environmental and socially liberal agenda is no guarantee of political stability. In Australia, and particularly in Hungary, the excesses of the left have led to major victories for the right. As clearly shown in Chile, there are no permanent victories or defeats in politics.
Going forward, to win hearts, not just minds, freedom champions will have to use compelling language, where listeners can clearly determine that they are fighting for people, not just for macroeconomic figures. Last week, during a major Atlas Network meeting for thinks tanks, Arthur Brooks, current president of AEI, argued that the two most important values for voters are compassion for the vulnerable and justice for all. For example, on the issue of inequality, it is essential for the Chilean “right” to understand and explain that a large part of inequality is caused by the unequal distribution of economic freedom.
Rather than playing the blame game in Chile, friends of freedom should continue to build on the economic policy achievements that have been applauded worldwide. It is important to learn from defeat, but the goal must be to build and add. The creation of new think tanks in the region produces some optimism for the future. As consistency and continuity are essential for institutional development, traditional think tanks also need to remain strong, perhaps pivoting towards new horizons.
I am hoping that Chileans will not provide another example that corroborates President Ronald Reagan’s profound statement that we are always “one generation away” from losing our liberties.
Source: Forbes.com