September 16, 2015 Print

For many years, economists like Nobel laureate Milton Friedman referred to the “Miracle of Chile,” thanks in large part to free-market reforms that bolstered the Chilean economy, followed by political reforms that fostered a stable democracy. In recent years, however, Chile has increasingly begun to imitate the mediocre performance of other countries in Latin America, argue Jorge Gómez and Rafael Rincón in a new analysis from Chile-based Atlas Network partner Fundación para el Progreso (FPP).

“Chile has violently changed course,” the authors explain. “Not to center-left after a center-right administration, but to the radical left after more than two decades of liberal economics and politics that brought the country peace, progress and high expectations.”

Many factors have helped turn the ideological tide in Chile, including decreasing transparency and basic competency in the public sector, increasing taxation and spending, corruption scandals, and an egalitarian populism that punishes people who seek productive success.

“These changes have not been random or spontaneous. These are the result of patient work, a labor of producing and disseminating intellectual, academic and cultural contents to create an anti-liberal climate of opinion which is favorable to collectivism and statism,” Gomez and Rincon write.

The FPP analysis calls this new statist climate “Revolution 2.0,” a sweeping socialist structural overhaul of Chile’s government that is happening “in slow motion,” rather than through violent overthrow. The authors hope, however, that the economic and political fallout already being experienced in Chile is enough to stir the forces of opposition.

“The truth is that the speed with which the consequences have become apparent, added to the scandals in government and the entire political class, are triggering alarms and mechanisms that attempt to restrain things,” the authors write. “We could be at a new crossroads: the opportunity to correct the course or for a messianic demagogue, above good and evil and the political parties, to capitalize the sentiment, and also drive Chile into a storm of populism from which perhaps it may not be able to escape.”

Read the full FPP analysis in English, “What is happening to Chile?”

Read the full FPP analysis in Spanish, “¿Qué le pasa a Chile?”