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It’s January….Back to Chile

Chileans are obsessed with the issue of “equality”.

While the past two decades of sustained economic growth have brought the number of Chileans in extreme poverty and the number of unemployed down to fairly respectable levels, the distribution of the fruits of the country’s development has remained at an unacceptably low level, constant for at least the last three decades.

Concern for this inequality was the basis upon which Michelle Bachelet ran her successful campaign in 2013 for the Chilean presidency, and the promotion of laws and programs to create a more equitable society has been the driving force behind everything she has done for the past year since she became President of Chile (for the second time).

So when I arrived in Chile this past week, I was not surprised to find “inequality” front and center in political and popular discourse. The president and her coalition of left and center-left parties have successfully produced several important legislative packages which are designed to attack Chile’s inequality.

The first was the tax reform package which, simply put, increased taxes on corporations and reduced income taxes on the middle class, with the result of increasing revenue available to the government to be applied to the increased costs associated with the second legislative package, Education Reform. This package of tax reforms seems to have been pretty much accepted, and the different interest groups are adjusting to the changes. As we all know, lower income taxes for the middle and lower class, many of whom do not pay any income tax at all, results in some additional revenue that ends up in the retail and housing markets, paying the IVA (value added tax) into the government coffers along the way. We also know that higher taxes on private corporations to a great extent end up being passed on to the consumer. So at present, from what I can tell, the really important doubt about the tax reform package is if it will produce the projected amount of revenue.

The Education reform package, the first part of a more extensive set of reforms that will continue to be developed and presented to Congress over the next year or two, attempts to eliminate several characteristics of the highly privatized primary and secondary school system put in place during the dictatorship but sustained during the last 20 plus years of democratic governments. It will require private schools that receive government funding to be “non-profit”, to be fully funded by public funding (eliminating the co-payment approach that presently sustains a large portion of the private schools in Chile), and greatly limit how schools “select” the students to be admitted. The whole package is meant to begin to deconstruct a system many analysts believe perpetuates the already highly segregated Chilean society. Opposition to this reform argues that the “freedom” parents now have to choose the school they want their children to attend, and the “freedom” schools now have to select the students they want to attend their school, will be lost, resulting in a less diverse, lower quality system.

Reforms to the private school systems will be phased in over several years, and most believe that while it will be pushed through the Congress in which the President has the majority required to pass this type of legislation, the process has been hurried, the issues are so complex, and the social costs of bad legislation so high there will surely be reconsiderations and changes to the program as it evolves.

The next phase of education reform is to address the public school system. Public schools that were historically run by the Ministry of Education were reassigned to the municipalities during the dictatorship. Some argued that this change was a way to support decentralization and would give local communities more control over their schools. Well, that may be valid, but the different Municipalities have very different resource bases and operational capabilities, so the quality of education in these public schools is seen broadly by Chilean parents as inferior to the private schools. The quality of public education is questioned, so those parents who can pay extra for what they believe is a better education (or sometimes a better “place” or “environment” for their children), and those who are willing to take on sometimes onerous debt, are sending their children to the private schools.

The objective of the entire package of primary and secondary level educational reform is to provide free, high quality public education and eliminate the socio-economic segregation that results from the profit-taking, market-driven, highly selective private schools. This of course has been highly controversial, and has brought out for discussion the degree to which Chile’s classist social structure is perpetuated by the increasingly privatized education system, a discussion many would rather ignore, while others anxiously use it to attack everything “capitalist”, “for profit”, and “private”.

Imagine, to get an idea of the tenor of the on-going debate as this reform package goes through the legislative process, what would happen in the US if President Obama were suggesting that as a way to address inequality in the US, private schools like Charter Schools, if they were to receive public funds, could not receive additional funding from students (parents), or use any criteria like aptitude, maturity discovered through personal interviews, etc.; just a lottery system process.

A good Chilean friend often responds to my interpretation of things Chilean with the suggestion that “…these issues are complicated, and don’t lend themselves easily to bold, general characterizations (to which, I guess, I am inclined). But, while I may miss some complex subtleties I offer the following:

President Bachelet is leading her country through a very difficult process of change. Her decision to combat gross societal inequality through education reform is a shot at the heart of what is important  to most Chileans, young and old. If she is correct that this will make a difference, and if she and her government can get it right and then implement efficiently, she will need to do very little more during her four year term to reserve a high grade for her presidency. However, if they get it wrong, and in an ideological tantrum against capitalism, private initiative, and freedom of choice eliminate the innovation and diversity that exists in the current Chilean education system, it will be in great part because she did not learn the lessons of her earlier calamitous startup of the Santiago public transport system, “TranSantiago” (a term now synonymous with big disasters), and take all the time she needs to make sure they get it right.

I must admit, though, that it is refreshing to observe a country with a president captured by the issue of socio-economic equality, bothered by the political and institutional processes that contribute to increased inequality, a general population that is willing to address these problems, and a legislative body that is willing to consider bold, significant reforms to make their society a fairer and more cohesive place. And while it appears now that these issues are tearing Chilean society apart, and there are multiple signs of this stress compounded by the economic slowdown affecting Chile, President Bachelet has had a pretty successful first year. She heads off for her February summer vacation, along with most other Chileans, to recharge her battery, probably consider making some changes to her cabinet, and plan her next assault on Chilean inequality.

Posted in Santiago, Chile, on January 26, 2015.

 

 

 

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David Joslyn
David Joslyn, after a 45-year career in international development with USAID, Peace Corps, The Inter-American Institute for Cooperation on Agriculture (IICA), The Chicago Council on Global Affairs, and private sector consulting firms, divides his time between his homes in Virginia and Chile. Since 2010, David has been writing about Chile and Chileans, often based upon his experience with the Peace Corps in Chile and his many travels throughout the country with family and friends.
David Joslyn

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4 thoughts on “It’s January….Back to Chile”

  1. Mack Storrs says:

    Dave,

    Great analysis of the critical issues facing Chile. Like the causes of inequality in the U.S., many are tied to education — brain development in quality child care/pre-K classes, and continues throughout the educational system. Nearly all schools in areas of poverty have poor quality education, primarily due to an inadequate resource base. It’s exacerbated in Chile by the perception (and probably the reality) that a good education can only be found in the private schools. It sounds like President Bachelet is at least making an attempt to try to reduce the barriers and improve the odds for Chile’s poor. Like you, we can only hope they get it at least mostly right in this attempt.

    Mack

  2. Paul Belanga says:

    Man! I consider myself well left of center in the US but on the Bachelet school reform program, I would surely be right of center in Chile. The program sounds to me like a path to mediocrity which will result in needless back and forth educational reforms over the years. On a lesser scale we have this situation going on in the US with the backing and forthing on federally mandated testing and the resultant disruption to the education processes.

  3. Bruce
    Bruce says:

    Hi Jos: Enjoyed your piece.

    Wealth discrepancy is the result of freedom restriction. The underlying
    reason for the United State’s history of prosperity, compared to the rest of
    the world, is the US constitution which provides for economic freedom and
    one’s right to personal property. The freer a country is, the greater the
    size and richness of the middle class and smaller the poverty class.

    Taken to extremes, in a dictatorship,there is no middle class and the
    country’s wealth is in the hands of a very few.

    In the US, we have seen a greater divergence between rich and poor as we
    have tried to control the economy with state regulations and restrictions
    as well as manipulation of the currency by the central bank. It will
    continue and no amount of intervention by the state will make it better. In fact,
    the more they try to insure “equality” the more diverse it will become.

    As difficult and contrary to “gut feelings” as it is, the solution to any
    country’s problems is to leave them alone and let people be free to work,
    trade,invest, invent, start new business, etc. You, and every other human
    on the planet, can control their own life activities, better than someone
    else controlling them for you. Market forces will optimally merge supply and
    demand. “Adam’s Smith’s invisible hand”

    We see some of the former Soviet Republics, succeeding, while others fail,
    because of differences in freedom.

    Sadly, I see no prospect for another resurgence in true economic freedom
    (rights of personal property) in the world or the US for that matter. I have
    copied two paragraphs from your piece below, which indicate Chile’s
    solution is more “programs for an equitable society”. I hope I am wrong, but I
    fear Chile will have no more success with their actions than any other
    county has had with similar programs for the last 1000 years.

    Bruce

  4. John Preissing says:

    Dear David, I have a question if you can write me at my address

    John

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