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Life's good in Chile. Why the protests?

South America | Economy & Society

[Leer en español.]

MY COMPANY'S HOME OFFICE IN LONDON recently sent me the text of an interview with Camila Vallejo, the charismatic leader of last year's massive student protests.

Among the questions Vallejo faced was this: If Chile is in fact an example for other countries in various areas of development, why are the people protesting?

It occurred to me that this is exactly the question the world ought to be asking. 

Chile enjoyed a growth rate of 6%, which outpaced other major regional economies, including Mexico, Argentina, Peru and Brazil.  Chile's per capita income is effectively (US)$16,000, and we benefit from political stability, strong human-development indexes, and high levels of foreign investment.  It would seem our problems with a restive population should be behind us.

But instead, Chileans have poured into the streets to protest subpar education, the lack of concern for the natural environment and the centralization that is drowning even far-flung regions. 

A quick look at the data will help explain these protests.  Chile prefers to compare itself to the 27 nations of the Organisation for Economic Co-operation and Development (OECD).  And on the issue of inequality, Chile sits at the bottom of the OECD rankings

While the norm for OECD countries is that the richest 10% of their population earns nine times what the poorest 10% earn, in Chile, inequality is three times higher.  Chile's richest 10% earn 27 times more than the lowest 10%. 

If we exclude the richest 10%, Chile's per capita income drops from (US)$16,000 to (US)$9,000.  60% of Chileans earn just (US)$800 per month. 

Consider education.  In Chile, free university education does not exist.  And university education costs roughly (US)$400 per month.  We can safely say the typical family is spending nearly half its income on education. 

And it is here we see the influence of the market.  Chile has one of the world's most open markets, and this very expensive education system was constructed on the premise of a free market.  Young people and families must secure loans in order to study, and these are repaid over terms of 20 years.  So far, there is no data to support claims that these sacrificial investments lead to higher future wages. 

This is why Chileans protest. 

It is true that the country's macroeconomic indices are excellent.  Chile's numbers are superior to her neighbors, and they put the country closer to developed world than ever.  But the lived reality is, unfortunately, very different.

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