Massive protests erupted in Chile following a government policy that increased the capital’s subway fare by 30 pesos, from the equivalent $1.12 to $1.16 per ride. The surge in the subway fare—already among the most expensive in Latin America—resulted in protests that originated in Santiago, the capital, but quickly expanded to the rest of the country.
The protests have been a mix of peaceful demonstrations—cacerolazos—and riots; all of which the rightist government led by President Sebastián Piñera has thus far handled poorly. While the government rolled back on the price increase, protests will likely continue in the upcoming days. The situation is growing increasingly polarized, as the small but powerful Communist Party demanded the president’s resignation. In an unsettling statement, Piñera said that the country is at war, which increased criticism from his detractors.
Ironically, days before the events broke out, Piñera boasted that Chile was an oasis in Latin America. Now, in the wake of protests that have left fifteen dead, thousands detained, Santiago’s public transportation partly in ruins, and a state of emergency in the capital and other major urban areas, the so-called Chilean oasis has come under scrutiny.
While the increase in the subway fare triggered the nation-wide protests, it is not the direct cause of the crisis. The price surge and its aftermath are the last straw in a series of events that have left Chileans burdened and weary in their everyday lives. Three interrelated issues lie at the heart of the problem: high levels of inequality, recurring abuses from the economic elites, and a mostly unresponsive political establishment.
Chile’s bumpy road to success
Academics have commonly labeled Chile as Latin America’s shining star. Evidence backs these claims. Chile’s democracy and standard of living are almost unparalleled in the region. Both features advanced stability that in recent years turned the country of 17 million into a hub of immigration. A report published this year revealed that 1,251,225 people (or 6.6 percent of Chile’s population) call Chile their home: including over 200,000 Venezuelans and Peruvians, 150,000 Haitians, and 100,000 Bolivians and Colombians.
Yet behind the image of prosperity, the Chilean model, implemented by Augusto Pinochet’s repressive dictatorship (1973-1990) and administered by leftist and rightist democratically elected coalitions, also fostered structural constraints. The first problem corresponds to high levels of economic inequality. With a Gini coefficient of 0.46 in 2017, Chile is one of Latin America’s most unequal countries—a revealing figure considering that the region is the most unequal in the world.
High levels of economic inequality have Chile’s middle class under stress. A study published by the country’s National Institute of Statistics (INE) revealed that the monthly mean net income of Chilean workers consists of approximately $800. Chile’s middle class counts on a handful of governmental policies that alleviate household spending. According to the Organization for Economic Cooperation and Development (OECD), an intergovernmental economic organization that the South American nation joined in 2010, Chile ranked at the lower end of social spending, which in 2017 consisted of 10.9 percent of GDP (the OECD average is 20.1 percent). A heavy burden on households, added to a private pension system that provides modest-to-null incomes for retirees, has left the country’s middle class strained.
A second factor concerns the behavior of economic elites. There is a widespread perception that elites have benefited from the system without contributing their fair share. The evidence also points in this direction. Within the OECD, Chile is the country with the lowest tax of personal income as a percentage of GDP. Chile’s value-added tax (VAT) is also among the highest in the same pool of countries. In other words, Chile does not tax the rich in proportion to their net earnings—which facilitates the intergenerational reproduction of inequality, leaving the bulk of the tax burden to the middle class.
Economic elites, in turn, have taken steps to benefit even more from an already-favorable setting. In recent years, scandals have revealed how business groups—usually with family linkages among themselves—have frequently engaged in foul practices to maximize their profits. They have repeatedly colluded in determining the costs of medicines, poultry, diapers, and (even) toilet paper. Furthermore, the same business conglomerates have been found guilty of asking for political favors in return for generous campaign donations.
The third factor contributing to the malaise is how the political system has failed to react to growing discontent. Trust in political institutions and partisanship in Chile is at an all-time low. Voter turnout has also decreased. In the general elections of 2013 and 2017, less than half of eligible voters cast their ballots.
Political elites live in a bubble of their own making. With an average monthly income that borders $8,800 (or close to eleven times the monthly mean net income of Chileans), legislators have naturally grown distant from voters.
Instead of addressing the gap of representation, elected officials have recurrently taken on attitudes that border mocking voters. In 2015, the influential Christian democrat senator, Jorge Pizarro, attended the Rugby World Cup in the United Kingdom two days after an 8.4 magnitude earthquake struck his constituents in the city of Coquimbo. When the press revealed that deputy Joaquín Lavín Jr. was late to 82 percent of congressional sessions, he shrugged off criticism by stating that it didn’t matter to him if he was viewed as lazy.
If being out of touch with voters is already a trait of Chile’s political elite, then the problem seems to be even worse among government officials. President Piñera, who allegedly made his fortune through questionable business dealings, continuously fails to lead by example. Although Piñera openly criticized those who eluded paying the hike in subway fees that triggered the protests, the president himself dodged paying taxes for thirty years on his vacation home located in the south of the country (he subsequently paid the tax). On Friday, while protests and riots spread across Santiago, Piñera was seen dining at a restaurant located in the affluent municipality of Vitacura—an ill-advised decision that increased frustration among protestors.
In all fairness to Piñera, cabinet ministers and the opposition have not performed any better. In 2018, former Minister of Education, Gerardo Varela, teased schools suffering from precarious infrastructure to organize bingos to collect funds instead of counting on the government’s assistance. In another case of poor judgment, Juan Andrés Fontaine, the Minister of Economy, advised people to wake up earlier to make use of lower subway fares, which apply before 7 am.
While the Chilean model resulted in growth and turned the country into a beacon of hope in Latin America, it did so by fostering high levels of inequality. This outcome added to the abusive nature of the country’s economic and political elites has left Chileans—particularly the middle class—feeling frustration and despair. The recent waves of protests are a response to decades of neglect on the side of political and economic elites.
The protests must be read as a severe warning sign. If a majority of Chileans continues to perceive that growth benefits elites instead of average citizens, and if the political establishment remains out of touch with voters, then the country is at risk of a populist takeover.
As worldwide trends have recently shown, no nation—notwithstanding how superficially prosperous—is immune to populist politicians who feed on the discontent caused by the mix of economic inequality and a delegitimized political establishment. Chile, in this regard, is by no means the exception.
Lucas Perelló is a Ph.D. candidate in Politics at The New School for Social Research. You can follow him on Twitter @lucasperello
