Chile Unrest Has a Worrisome Message for the World
Comment of the Day

October 22 2019

Commentary by Eoin Treacy

Chile Unrest Has a Worrisome Message for the World

This article by John Authers may be of interest to subscribers. Here is a section:

The first is inequality. The Chicago Boys’ agenda delivered reasonably strong and stable aggregate growth, but Chile remains one of the most unequal countries on earth. It ranks as one of the leaders in inequality among members of the Organization for Economic Cooperation and Development, and, according to the World Bank, remains more unequal than either of its very different neighbors, Argentina and Peru. People are far angrier about a rising cost of living if it comes with a sense of injustice. 

Second, the catalyst was a proposal to raise public transport fares and energy bills. There is ample evidence from across the world that these will incite rebellion like nothing else — a point that those who hope to reduce greenhouse-gas emissions via a carbon tax should bear in mind. The violent protests of the Gilets Jaunes in France were over higher gasoline taxes, which were seen as penalizing car-dependent people in the provinces while favoring metropolitan elites. Mexico in 2017 saw riots and protests against what was known as the “gasolinazo,” a 20% rise in fuel prices that was a part of the government’s partial privatization of Pemex, the  monopoly state oil company. Last year, Brazil was rocked by protests and a strike by truck drivers in response to fuel shortages and a sharp increase in the price of diesel.

Third, Chile lacks a populist movement, or a canny populist caudillo politician. Such a figure might have been able to use public anger for their own purposes, but would also have had a better chance to control it. For example, Mexico’s left-wing populist president Andres Manuel Lopez Obrador frequently led public protests, but successfully persuaded his followers not to resort to violence. In Chile, where conventional politics lacks a party or a personality to channel their grievances, protesters have resorted to self-destructive vandalism. Which is to say, while charismatic Latin American populists understandably tend to make western leaders nervous, Chile shows that they can perform a vital function. 

Eoin Treacy's view

The Arab Spring originated in Tunisia in a protest over the price of bread. The unrest in Lebanon last week was a response to the proposed tax on WhatsApp users. The Hong Kong unrest probably has its roots in the rising cost of living. Chile’s protests are equally about the cost of living. Does that suggest, within a decade the world has gone from worrying about bread to bigger ticket purchases? The surge in asset price inflation against a background of largely stagnant wages is at least partly to blame for this deterioration in the political status quo.

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