Chile’s Voters Open Pandora’s Box on New Charter
(Bloomberg Opinion) -- Chile surprises again. When voters went to the polls on May 15-16 to say who will rewrite the national constitution, many analysts prophesied a victory for ideological equilibrium and moderate policy. Instead, Chile got an earthquake.
Legacy political parties and their reliable governing pact buckled. Contenders from the conservative ruling coalition captured just over a fifth (37 of 155 seats) of the constituent assembly seats. Center leftists, who have played tag team governing with the right for decades, fared even worse. While branded politicians tumbled, Chileans careened hard against the old guard, voting in radicals and anti-establishmentarians for the constituent assembly, mayor and, for the first time, for provincial governors formerly appointed by the president.
True, the framers of the new charter begin their works with a thin mandate: Only some 6.4 million voters, around 42% of the electorate, turned out on Sunday. And yet this eclectic montage of leftists, freelance independents and indigenous representatives, who share little more than their rejection of the status quo, controls 70% of the Constituent Assembly seats, and will drive the recasting of Chile’s future.
For Chileans, the challenge is how to overturn the privileges and dysfunctions of the ancient regime without razing the country’s enviable record of prosperity and democratic coexistence. “Governments everywhere are rethinking the way they do business to make public goods more responsive to citizens,” Armando Barrientos, a Chilean-born social policy scholar at the University of Manchester, told me. But as he also cautioned, “It’s better to realign existing institutions and solutions rather than imagining the country 50 years from now.”
Clearly, Chile’s vote was a temblor foretold. In 2019, protestors swarmed in a revolt triggered by a modest public transport fare increase but, in scenes that would replay across the region, the fury spread. President Sebastian Pinera, a conservative touted for his managerial nous, was cornered. The result was a plebiscite on whether Chileans should rewrite the constitution, a hoary document drafted under former generalissimo Augusto Pinochet (1973 to 1990) that, despite a number tweaks and amendments since, still carries the stink of dictatorship.
Chile has much worth preserving. On paper, the country’s vital statistics — steady growth, robust foreign investment, rising per capita income, plunging poverty and a swelling middle class — seemed unassailable. Even during the pandemic that has ravaged the hemisphere and taken some 28,000 Chilean lives, the Andean nation stood out, thanks to the Pinera government’s pacesetting vaccine rollout.
Don’t bother waving those laurels at the Chileans left behind, however. While nearly two-thirds of households had climbed into the middle class by last year, up from just 36% in 2009, most of them (60%) stalled just over the poverty line. Many are relegated to the informal economy, where a third of the labor force toils, or to unstable contract work (employing 40%), both of which have been slammed by pandemic shutdowns. At the glacial pace of social Chilean social mobility, poor families would need six generations to join the average wage earners, the OECD calculated in February.
The health emergency dragged an estimated two million middle class Chileans back into poverty and left one million people unable to buy even basic necessities, the World Bank reported. The government’s move to extend loans instead of aid to struggling middle-income earners only worsened their mood.
Little wonder most Chileans regard sitting authorities as a claque that has overstayed its welcome. “Traditional parties have lost a lot of representative capacity,” the Economist Intelligence Unit’s Nicolas Saldias told me. Hence the excitement — and the angst — over an impending national reset at the hands of political newcomers and rebels. “They have the power to reshape Chilean society, but little idea of the way it works, what it means to structure a budget or how to decide on mining royalties,” said Saldias. “They want a simple answer.”
Latin Americans know the script. When familiar political compacts fail or turn toxic, the reflex is to shred and rewrite the constitution, which quickly become wishing wells. The Dominican Republic has written 38 of them. Brazil’s 1988 constitution runs to more than 240 chapters and 70,000 words. Each rewrite risks adding to the illusion. “In Latin America we want German highways with Scandinavian safety nets but Latin American taxes,” said economist Juan Nagel, who teaches at the University of the Andes, in Santiago.
Fevered times raise the stakes. The danger in Chile’s impending overhaul is not to the country’s purported devotion to unshackled capitalism, but the rule of law. “Chile’s biggest achievement isn’t neoliberalism,” said Amherst College political scientist Javier Corrales. “It’s the transition to democracy through a system of checks and balances, and mechanisms for containing extremism and avoiding non prudential economic management. Those writing a new constitution have the opportunity to lock in new rights and obligations, but loosening up these filters and guides is a risk.”
In theory, the 9 to 12-month process of casting a new charter could have a moderating influence, as partisan passions give way to puzzling out the complex business of reinventing the rules governing the state and private interests. The targeted creation of citizen councils, a mostly European initiative, could allow policymakers to tap the public zeitgeist without teargas or water cannons.
Chileans should also resist the temptation of stuffing the new constitution with entitlements and guarantees that sound grand on parchment but are vexing to implement and devilish to reform. Compare Brazil’s profligate pension system that was hardwired in the constitution and took decades to reform with the efficient and fiscally-lean Bolsa Familia cash transfer system, created by ordinary legislation.
Chileans will have a chance to weigh in on the finished document, a year from now, in an exit referendum, this time by obligatory voting. Whatever the outcome, Latin America’s outlier nation will be charting new but hardly unfamiliar territory. “Chile is no longer the stable country it used to be. It’s becoming Latin American again,” said Saldias. Given the Chilean peso’s sharp fall this week, the accompanying blood on the bourse in Santiago, and one billionaire miner putting a major Chilean play on hold, apparently investors have taken note.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mac Margolis is a Bloomberg Opinion columnist covering Latin and South America. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”
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