Chile a country with a growing disappointed middle class, says Financial Times
The influential business newspaper Financial Times dedicated a special edition to the Chilean economic and social situation and concludes that given the massive demonstrations against energy projects and in favour of education reform, “doing business” in the country has become difficult plus there is growing disappointment in the middle class.
According to FT promoting energy or power projects has become difficult because companies are facing severe environmental hurdles and paralysis in Congress. There are ongoing protests and demonstration in cities and in rural areas against electricity power plants which are essential if the country is to retain its leading position in the exploitation of several minerals.
“Chile has been a role model for Latin America for the past 20 years” with the country standing out for rapid economic growth, social progress and political stability, but lately however “the shining image has taken a battering”, points out FT.
“The discontent has caught many by surprise and some have wondered if it is symptomatic of a citizen revolt against “the model” – a set of free-market and pro-business policies bequeathed by dictator Augusto Pinochet and that have been carried on ever since”.
But “the odd thing is that Chile is thriving: poverty has fallen from 40% in 1990 to about 14% now; real wages are rising and unemployment is at a record low. In 2010, Chile joined the OECD, a group of mostly rich nations and the fast growing economy has, so far, resisted the global slowdown” underlines FT.
Nonetheless Chileans are unhappy and the biggest problem seems to be that despite economic growth, Chile remains the most unequal in the OECD and among the most unequal in Latin America. The feeling is that “most of the country’s wealth remains controlled by a small clique of insiders who set the rules of the game”.
FT points to education with over a million university students, compared with just 200,000 in 1990 (and 70% of today’s crop is the first in a generation to go to college). The problem is that, unlike other OECD countries in which about 70% of education spending is publicly funded, in Chile only about 15% is. The rest is paid for privately by students and their families, many of whom are still relatively poor.
“Universities typically charge about 3.400 dollars a year (rising to 10.000 at the best colleges), versus an average Chilean salary of 8.500 dollars. Although the returns on education can be high, many universities are mere diploma mills of dubious quality”.
FT also indicates that another reason for disappointment is President Piñera: he is articulate, energetic and intelligent and in common with his closest regional ally, the Colombian president Juan Manuel Santos, he marries centrist policies with strong liberal instincts. Yet, unlike Santos, “even Piñera own supporters admit that he lacks a sure political touch”.
Finance Minister Felipe Larraín tried to explain “Chile’s disquiet as a sign of frustrated expectations”. The country, he suggests, may be “struggling to get out of the middle income trap”. This is a kind of Sargasso Sea of economic development. Over the past 50 years, only a few countries have got out – mostly by focusing on incremental improvements, such as higher productivity and better education”.
It is a hard slog. Yet, in many ways, it is also a problem of success. Over the past 20 years, Chile has vastly expanded its middle class. Now they have more sophisticated demands, and are not afraid to voice them.
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27 comments Feed
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If Argentines are so “white” and therefore—in your view—“superior” to the rest of Latin Americans, why do you have the very same problems that abound in all the countries in the region: poverty, inequality, underdevelopment?
Well it's simple really, they look around and see an almost developed country, but life's still so damned hard. There's the bills, mortgage payments, the car, fuel prices always going up, credit cards etc. Many long for the promise of a fully developed economy, where they'll all be like the Brady bunch.... SORRY!! They don't have a clue do they.. The developed world is full of the same problems sure your salary is higher but your expenses are higher too. They are going to have to wake up and realize it's all sweat and hard work if you want to get ahead in life, whether it's in Canada, Sweden or little Chile. There's no such thing as a free lunch.
Piensan que en el mundo desarrollado todo es jamón, pero no es asi.
Chile can be the first to join,
followed by patagonia .Uruguay, paraguay ,bolivia ,
the possabilties are endless.
The problem for us is one of public expectation. If public expectation forces bad policy, we will slip back to where we were. People need to think about record low unemployment, their own job and then look to foolish debt levels in Europe, then ask: how did we keep growing through the credit crash? Why weren’t we floored by an earthquake that shook 20% of GDP to rubble? how do we keep growing through the global recession? The answer is: intelligent macroeconomic policy, tight fiscal control and ample counter-cyclical measures for a rainy day.
Keep the faith compatriotas, no whining until we are out of the “Sargasso Sea”, three sheets to the wind, steady as she goes.
2 BK
Yes Massa, yes massa. Massa BK has put his pith helmet on over his red star beret and is telling us funny southern folk what is good for us again.
4 TCP
I agree.
5 + 6
The commonwealth is open to any nation to join (subject to vote). There are even ex-French colonies in the British Commonwealth.
Chile is developing slowly but surely and it is natural for the middle classes to aspire to more. When I talk to Chileans I can see some similarities with the British, we tend to complain but forget to count our blessings. They need only hop over the Andes to see how much better off they are.
You'll get kicked so badly, your clothes will again be fashion when you come to senses :)))
There are ongoing protests and demonstration in cities and in rural areas against electricity power plants which are essential if the country is to retain its leading position in the exploitation of several minerals.
Will the Mapuche benefit from Chile's growth in electricity generation,mineral and forest resources.Is it just the deprived 'middle class' that are in pain and anguish.
Another great annalisis by you bro. I've got my back to the wind and I'm not turning back.
What is the MATTER with you?
Threats now, and you don't even live in the sinkhole that AG is fast becoming.
You had a go at me; several in fact, are you unhappy with your life?
If so, do something positive about changing it rather than bleat on and on and on.
Just get a grip!
QFT
A problem similar to the one in the US, where money earned on speculation is taxed at 11% while money earned from labour is taxed at 36% or even more.
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@ 3 JP
Argentina etnically clensed the country about a century ago, it was called the “blancheado”. She encouraged European immigration, preferably from Northern Europe, but the immigrants arrived mainly from Italy and Spain, bringing with them mediterranian mentality, which is good because it emphasises living a pleasant life, but also caring little about the distant future. In my experience long time planning in Argentina means a plan for the next few weeks or months.
Go check your post on the topic with I don't Think' about me being a 'nutcase, (the biggest liar on MercoPress's remark) and THEN tell me you did not abuse me, if only by agreeing and association with him.
Still holding on to those dreams that Argentina single-handedly put the kibosh over?
These Brits, they love humiliation. Try invading Buenos Aires or Patagonia again... hahahahaha
I don't think you are a nutcase, it doesn't matter whom I'm posting to.
I do agree with him that those comments he referred to were quite amusing though, and you DID choose the land of the nicknames yourself, after all ;)
but of course i did not mention the british commonwealth,
after all, what have you argies got in common with us,
lol.
It will still grow and be successful, but it has to temper its expectations, due to its geographical location.
A bit like you with your expectations of morals (or lack of), for similar reasons...
More, please :)
I've read about the 'plateau effect' of development but it sounds so beautiful when you say it.
ONWARDS!!
¡Por la razon o la fuerza!
@ 26 Ayayay,
From the land of poets, you are welcome.
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