(Bloomberg Opinion) -- Chile has for decades been Latin America’s most stable nation and one of its most prosperous. Its pro-business outlook has drawn foreign direct investment and fueled economic growth, and its record in reducing poverty has been impressive. Much of that is now thrown into question. After the recent first round of elections, the two front-runners for the presidency are extremists — an ultraconservative who seems nostalgic for the dictatorial rule of Augusto Pinochet, and a leftist who promises not merely to reform but to dismantle Chile’s economic model. It’s hard to say which of these agendas might prove more toxic.
The candidate of the far right, José Antonio Kast, emerged with a narrow lead heading into the runoff vote on Dec. 19. His platform is thin on economics and heavy on social conservatism and authoritarian messaging. His counterpart on the left, Gabriel Boric, promises radical change to combat inequality, rein in capitalism and dethrone market forces. “If Chile was the birthplace of neoliberalism,” he explains, “it will also be its grave.”
Chile has been perceived as shifting left in recent years. Yet Kast, with 28% of the vote, did better than expected in the first round, surpassing Boric’s 26%. This might hint at a desire for stability after two years of social and political turbulence, and anxiety about the radical left’s alternative. Nonetheless, the centrist candidates one might have expected to offer a blend of social progress and pragmatic moderation were soundly beaten. The collapse of Chile’s center thus yields a choice between extremes that nearly half the country’s voters don’t want.
By itself, this portends further instability and unrest. Compounding the danger is an ongoing effort to rewrite the constitution, which exposes the country’s basic law to these worsening ideological animosities.
It's true that Chile has work to do in better balancing relatively free markets and a fairer distribution of income. The establishment parties paid too little attention to widespread unease, and forfeited the voters’ trust. The country is deeply unequal — not so much by Latin American standards, but certainly by those of the wealthier nations it compares itself to. The tax base is too narrow to support adequate social spending and public services. The country’s private pension system has fallen short and has been further undermined by successive rounds of emergency withdrawals — the latest in response to the pandemic. University education is proving a bad deal for too many, and private health insurance is too expensive.
Confronting these problems is urgent — but will be vastly harder and perhaps impossible without the political stability that only a viable political center can provide.
Despite everything, might this somehow emerge in the coming weeks and months? Might the extremists, even now, tack toward moderation? To some degree, that’s likely. There are reasons for hope. Between now and the runoff, Kast and Boric might each see advantage in softening their positions to appeal to the disenfranchised center. In office, hard realities would impose constraints on either man. Kast could find himself contained by a left-leaning constitution, a divided Congress and by constant protests on the street. Boric, meanwhile, would find his bolder plans hard to execute and impossible to fund. In office, compromise might look more appealing than it does when stirring passionate supporters to get out and vote.
The situation might not be hopeless. It is nonetheless dire. Right now, the country appears to have dug itself into a very deep hole.
The consequences of Chile's tilt reach beyond its borders. The collapse of the country's economic model could cast a cloud over the region, calling into question democracy’s ability to deliver economic and social progress. Against the odds, and not just for Chile's sake, one must hope that a moderate signal lives beneath the extremist noise.
Editorials are written by the Bloomberg Opinion editorial board.
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