Commentary. ‘The brick’ economic plan was a war against the people, waged with the instruments of sharp economic oppression. It has never been seriously reformed, and the effects are now evident in the streets.

The ‘Chicago Boys’ attack on Chilean welfare ripples through history

After nearly 30 years from the return to the parliamentary system after the Pinochet dictatorship, just a few days after President Piñera was boasting of the “oasis-like” tranquility of his country compared to the rest of Latin America, Chile is witnessing scenes that are eerily reminiscent of the dark times of the ‘70s: soldiers in the streets, a curfew, a state of emergency.

There have been no such tangible and bloody signs of discontent in the country ever since the series of student demonstrations which took place during Piñera’s first term (2010-14).

Why now? And what is driving them? All the media are reporting that an increase in subway fares was what set off the protests, with some commentators stressing that it was only a small price hike, as if to suggest the unreasonableness of the protesters’ reaction.

However, the question must be put into its proper context. The return to the parliamentary system cannot be considered a full-fledged return to democracy, at least not as regards the economy. The Chilean Republic has inherited a number of stubborn features of its economic system from the Pinochet regime, which was the result of a disastrous war against the democratic institutions, but also against an approach to managing the economy that refused to be completely subordinate to the market (i.e. Allende’s approach).

This was a war against the people, waged both through the physical torture of dissidents as well as with the instruments of sharp economic oppression via the enactment of the economic program imposed by the coup-installed junta: the infamous program nicknamed “the brick,” the work of 10 economists, of whom eight had studied at the University of Chicago (the notorious Chicago Boys).

The core of that economic plan was never put into question, and remained at the center of the debate between the right and the milquetoast center-left of the Concertatiòn coalition. Despite some clearly positive piecemeal reforms, it has so far evaded a serious questioning of its fundamental model.

Because of it, Chile is now a deeply unequal country: the Gini index—which calculates the measure of social inequality in the world, with all its political implications—classifies Chile as more unequal than Mexico, Turkey, the United States and the UK, all countries which are infamous for their levels of social inequality. The education system remains profoundly privatized, and forces young people to get into heavy debt to study at North American levels: a study published a few years ago estimated the number of young people in debt as on the order of magnitude of around a million, out of a population of just 17.6 million, out of which only 2.8 million people are aged 20-29. In effect, they are forced to take out a heavy mortgage on their future.

Similarly, allowing the market to freely set the prices for medicine, medical bills and health insurance is also causing widespread discontent.

The reform that led to such levels of student debt was enacted by the Lagos government in 2005, the same which passed the law regulating the setting of public transport fares, which the current government has not done much to change: it provides for a steady increase which is to be decided by a technical committee made up of independent experts (an approach that sounds very familiar by now), pricing in the increases in fuel costs and other factors.

Too bad that the same system doesn’t apply to wages, which are not rising on pace with inflation. Taking these factors into account, it is understandable how even a modest increase in subway fares has led to serious discontent: it was the straw that broke the camel’s back. However, this situation of oppression is not caused (only) by the current right-wing government—although it has chosen to proudly embody it—but rather from a structural system that has been established long ago, and which must be openly challenged in order to bring greater equality and social justice to the country.

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