Don’t Slay the Chilean Puma

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A rewrite of the constitution would destroy the opportunity for the poor.

When Chilean President Sebastián Piñera cancelled plans to host the Asia-Pacific Economic Cooperation summit in Santiago this month, he called it “a difficult decision that has caused us a lot of pain.”

The pain for Latin America’s most successful economy is only beginning. Negotiations with terrorists and their political representatives seldom end well. Yet that’s what Mr Piñera seems to have in mind. He has opened the door to rewriting Chile’s Constitution to meet the demands of socialists, communists and others on the left. 

If Latin American history is any guide, a constitutional rewrite will strip away political and economic rights, concentrate power and leave the nation poorer and more unjust. The biggest losers would be the aspirational poor, who will be denied access to a better life in what has become one of the world’s most socially mobile economies. Social mobility is a far better measure of economic justice than income differences.

Chileans elected the centre-right Mr Piñera in December 2017 on his promise to strengthen the market-based economy. The fulfilment of that promise is now in doubt because of weeks of violence by left-wing extremists who are demanding concessions in exchange for putting down their weapons.

As riots continue in Chile much has been made of the income gap as a cause of the unrest. However, according to the Organization of Economic Cooperation and Development, Chile has some of the highest social mobility in the world

On Oct. 26, in an effort toward reconciliation, Mr Piñera asked his cabinet to resign. Nevertheless, as the Guardian reported, “fresh street battles and fires” broke out hours later. “Videos of bands of youth looting trucks on the nation’s primary north-south route circulated on social media,” the U.K. paper said, “while in Santiago the wail of sirens carried into the night.”

Mr Piñera has agreed to talks with the “citizens” whose interests are presumably represented by the firebombers and looters. Last week he announced that he would not rule out any “solution” or “structural reform.” On Wednesday government spokeswoman Karla Rubilar, with regard to a new constitution, said “there is nothing written in stone.”

This is a stunning surrender and it is hardly surprising that it seems only to have whet the appetite of the radical left.

Mr Piñera can claim to be responding to an Oct. 25 march in Santiago in which more than a million people turned out to protest. Yet there was no consensus as to their demands and many, though not all, were supporters of the left, who didn’t vote for him. 

As a politician, the president naturally wants to address grievances. Yet Chile has elections, and he has a responsibility to those not in the streets and a responsibility to uphold the law. To agree to a new constitution because of violence and intimidation would be an act of cowardice.

Not all unmet expectations can be solved by the state. The loss of social cohesion tied to modernization takes a toll on society. As journalist Timothy P. Carney observes in his book “Alienated America,” the inability to achieve the American dream is a social occurrence, not an economic failure. Arguably something similar has happened across the West.

What isn’t debatable is the economic gains, across the board, that the market model has created. Less than 9% of the nation now lives below the poverty level. In a 2018 Organization for Economic Cooperation and Development report titled “A Broken Social Elevator? How to Promote Social Mobility,” Chile stands out for its social mobility. According to the data, 23% of sons whose fathers were in the bottom quartile of earners make it to the top quartile. By this measure, Chile had the highest social mobility among 16 OECD countries in the study. 

Opponents of freedom talk about income inequality as if being poor is fine as long as everyone else is also poor. Colombian leftist Iván Velásquez—who famously trampled the rule of law in Guatemala as a United Nations prosecutor—denounced Chile in an Oct. 25 tweet for its income-inequality ranking. In the same tweet, he criticized income distribution in Guatemala and Colombia, two countries that have repeatedly frustrated the left at election time.

Mr Velásquez was so busy sowing envy and resentment that he didn’t mention that inequality in Chile has been falling for 20 years. More, as Chilean economist Claudio Sapelli has reported, changes in economic opportunity are more clearly visible when results are separated by generations. Because Chile has done a reasonably good job improving access to education across socioeconomic classes, younger generations now experience greater mobility and less income inequality than their parents. The percentage of the Chilean population in postsecondary education is among the highest in the world. 

Chilean public policy can be improved on many fronts. For example, though access to education is high, the quality needs improvement. In international aptitude tests, Chile ranks high in Latin America but not globally. Yet problems like this won’t be solved by socialism because it doesn’t produce wealth. That’s something for Mr Piñera to think about before he helps the left destroy a model that works.

Source: Wall Street Journal

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