“Protests in Chile are a warning to any country that wants even more neo-liberalism”
Itis late in the evening when I arrive in the Chilean capital Santiago and the taxi takes me to a hotel. The darkness surrounding Avenida O’Higgins and the Alameda in the heart of the capital is unusual. The street lights have fallen out and the traffic lights are dead dead. Bus shelters are short and small and set on fire.
Pensions, health care and education, pillars of the neoliberal model in Chile, are the firewood of the protests today.
The entire environment in the center bears traces of the violence in the demonstrations of 18 and 19 October. The toll booths, a symbol of the privatization of roads, have been destroyed on the car routes. Near the Plaza Italia – renamed the Square of Dignity – many buildings are blackened and half burned.
One of the targets of the arson in this neighborhood was the office of Isapre, the private health insurance.
Together with the pension system, health care is in the eye of the storm in the uprisings. On walls and lighting posts , graffiti has been applied everywhere with the slogan No más AFPs , ‘no more AFPs’. The abbreviation stands for Pension Fund Managers.
In various places I see very old people actively working: at the cash desks or serving the customers in the supermarket, in newspaper kiosks or informal sales booths. With a pension of 150 to 300 euros per month, it is also difficult to make ends meet in Chile, so retirees remain active in the labor market at an old age.
And then there is the education system: in the run-up to the explosion, the discontent was already boiling among the students, who had been on strike for several days.
The education system has also been largely privatized. Studying costs a fortune. In the family where I am staying in Santiago, the man of the house paid 18,000 euros (15 million pesos) of tuition per child per year. Fortunately, the youngest of the three children just graduated last December.
Pensions, health care and education: these are three controversial pillars of the neoliberal model in Chile, and they are the firewood of the protests today.
When occupying the Square of the Tribunals, Hugo Gerter , national president of the College of Professors , summarizes the climate as follows:
‘This revolt is the expression of an existential insight: people no longer want this kind of life, they no longer want to be squeezed that way. We want to change this system, that’s what it’s all about. People are tired of it, tired of it! ”
Extremely neoliberal model
On the San Joaquín campus of the Catholic University of Chile (Pontifica Universidad Catolica de Chile, Santiago) it is clear that the school year is coming to an end.
The new, stylish buildings and the beautiful green surroundings immediately make it clear that this is a private university, a institution of standing. There is little activity around this time of year (in December the summer holidays start). Some students look for shade along the wide avenues, young couples enjoy the grass.
I have an appointment here with Manuel Gárate , historian and professor of political science. He researched the Chilean Chicagoboys and wrote a voluminous work about it: La revolución capitalista de Chile .
They are a household name in Chile and are linked to the Catholic University of Chile: the Chicagoboys . In the years 1950-1954, this educational institution signed an agreement with the University of Chicago, which was also supported by the United States Department of Foreign Affairs. It was to help spread the liberal ideology in the Americas.
As a result of the agreement, many Chileans went to Chicago to study. Those who were formed in Chicago were regarded by economic circles in Chile. The students were bathed in the liberal vision of Milton Friedman, in which the economy lays the foundation of society and politics becomes fully at the service of the economic model.
The Chicagoboys were at that time unorthodox and daring towards the other Chilean economists. The candidate from the right who took on Salvador Allende, Jorge Alessandri, in the 1970 elections, was offered an economic program by the Chilean Chicagoboys. But he thanked because he thought it was too radical. It was dictator Pinochet who, a few years later, incorporated the model into his policy, mainly driven by the navy, who had strong ties with the Chilean business world.
The Chicagoboys are also a generation of economists who also grew up in the era of communism, the Cold War and the arms race.
Hundreds of Chileans went during those years to Chicago and returned with a doctorate in economics or a M a star in Bussiness Administration (MBAs) . These MBAs modeled the business world in Chile based on the latest insights from Friedman, as they had learned in Chicago.
Current President Piñera, who had just turned 70 during this October revolution, belonged to the opposition to the Pinochet dictatorship. But he has always shared the vision of the Chicagoboys. His family is deeply rooted in the Chilean business world that serves politics and is served by politics, as corruption scandals have shown.
“Here in Chile, the neo-liberal model has been brought to its most extreme realization,” says Gárate. ‘It is a model in which the state is viewed as a company, el estado subsidiario . ‘It means that state intervention is minimal, only when it is not interesting for the private sector to do business. No one in the middle class or the upper class makes use of state education or health care. ”
The neoliberal model has ensured that extreme poverty has fallen from 40 to 10 percent.
That also means that the social classes in Chile do not mix, and that you get a very segregated society. This has been the case since colonization, but dictatorship (van Pinochet, 1973-1990, ed.) Has reinforced that pattern.
This model has led to strong economic growth, especially in the 1990s. A growth to eight percent per year and excellent macroeconomic figures. But that wealth was unevenly distributed: more than 50 percent of the gross national product goes to the 10 percent richest.
The model has ensured that extreme poverty has fallen from 40 percent to 10 percent. More crumbs fell off the table.
A large group has therefore become part of the middle class, but in a very precarious status. The wages of these people are not high enough to buy good services. And when they lose their job or get sick, they fall into poverty again. They have learned to consume, but that consumption drives 50 percent on a mountain of debt.
It is mainly that group that protests today and believes that this is not life.
Forty percent of your last salary
Why the protests just broke out now, according to Gárate, has a lot to do with the pension system. The system of the Pension Fund Managers (AFP) was introduced in 1981. The first generation that retires according to this system now presents itself and feels cheated by the system.
Gárate: ‘Every employee saves his pension on an individual account. It is a kind of savings account, managed by the private company AFP. The employee / saver pays ten percent of his wages to the AFP, who purchases one percent for administration costs there. ‘
‘The promise was that the amount saved, once arrived at retirement age, would suffice for the remaining twenty years of your life. And that you could count on a pension payment as high as your last salary. But today it appears that this is by no means the case. It is often less than forty percent of that salary. ‘
“As long as people have work, they can survive, albeit on a debt basis,” says Manuel Gárate. ‘But once they retire, they run into problems, because then the higher healthcare costs also start. Even as a professor at the university, I will have a low pension in this AFP system. ”
‘The people with a reasonable wage try to acquire a property or save in another way. But that means constant stress during your active career, because in the beginning you may first have to pay off your studies ‘debts.’
The capital of the pension funds is intended to finance the Chilean business world.
In the reign of Michelle Bachelet (2008-2009), a small adjustment to the pension system was introduced, for more solidarity, because the problems were coming. The government then approved a solidarity contribution to the pensioners, but that contribution is financed by the state, so by the taxpayer.
This pension system is completely intertwined with the business world. The capital of the AFP pension funds is intended to finance the Chilean business world. The large public limited companies of Chile do not seek financing from the banks, but are financed by the pension funds.
Gárate: ‘This is disastrous as a social security system, because no solidarity principle has been built in. This system is designed to provide benefits for the business world, not for pensioners. ”
Women are a risk
I hear a debate about healthcare on the radio. “Health is a right, and that must be the point when we prepare a new constitution,” argues a woman in a fervent plea.
Today, health care in Chile is anything but a right. It is cold merchandise, managed by the Isapre’s, private health insurance. They take seven percent of the wages for themselves.
These institutions work more or less like car insurance: the Isapre’s do not take on ‘risk customers’, people who previously had a serious illness, because that is not financially interesting. Someone with cancer cannot become a customer of the Isapre.
Women also have to pay a much higher contribution because they run the risk of becoming pregnant and need more medical care. Seen from the market logic, they are a greater risk factor. Gárate: “And after that politicians ask themselves:” How is it possible that the birth rate is going down? ”
The alternative to an Isapre is Fonasa, the government health insurance fund. But then the concern is correspondingly, with long waiting lists. Often the patient has already died by the time it is finally his turn for surgery.
On top of that comes a kind of cartel formation: the Isapre’s also own clinics and health insurance policies. They also have financial interests in the pharmaceutical industry and the entire chain of pharmacies. In Chile it is called “vertical integration.”
Gárate: ‘Medications are very expensive. The state has no control over the price, which is determined by supply and demand. All international laboratories know that they can earn a lot of money in Chile. ”
And to fully anchor the model, the AFPs and the Isapres also check the major media and present all this as a fantastic system.
Enough is enough
“With the return to democracy, people have been given the opportunity to vote and consume, but they have not been given social rights.”
With the return to democracy in 1990, the Chilean economic model remained unchanged, because the military power was still very large. But also because it was believed that this was the best model for achieving growth. The Wall had only fallen in 1989, and neoliberal capitalism was triumphing all over the world.
“It was not possible to change this either, because the model was anchored in the constitution,” Gárate explains. “A two-thirds majority would have been needed, and neither did the center-left governments of Bachelet and (Ricardo, ed.) Lagos. And if they did, the right could still appeal to the Constitutional Court. ”
‘This is a society in which all domains of social life have been privatized and in which the social web has fallen apart completely. It is a system that squeezes people across the board, “analyzes Manuel Gárate.
“With the return to democracy, people have been given the opportunity to vote and to consume, but they have not been given social rights. Elsewhere in the world there are protests against the demolition of social rights, here people come to the streets to obtain social rights. ”
Has the explosion of popular anger shaken the beliefs of the Chicagoboys, including the president? Gárate: ‘Maybe so, although it will be very difficult to change the system. The philosophy of the Chicagoboys has translated into common sense in Chile . Thomas Piketty and Joseph Stiglitz are considered socialists or communists here. ”
“Although this crisis has changed that perspective somewhat. There are managers who realize that they might lose everything if they do not make adjustments. Moreover, economic growth is also declining. That has fallen to three percent and could fall further this year to two percent. ”
A crisis of the future
In the eyes of sitting President Sebastián Piñera and of the Chicagoboys, Chile seemed to be on its way to becoming a “First World” country. It would join the Organization for Economic Cooperation and Development (OECD) this year.
‘Chile is an anti-example for society, for what happens when everything changes in market value.
Chile is more likely to suffer from a problem of obesity and aging than of malnutrition and illiteracy. “But we do have hunger pensions and a pension system that produces poor people,” Gárate notes. “Chile also has a high suicide rate among the elderly, covering up the cause of death. People call it “euthanasia.”
‘Chile is an anti-example for society, for what happens when everything changes in market value. This must be a warning to the world, wherever people want to privatize even more. ”
Gárate himself studied in Paris for a number of years and warns: “French President Macron must also think carefully before he wants to restrict the rights of the citizens even more and make the state fully at the service of capital and the financial world.”
According to Gárate, the anger of the protests is also about the lack of perspective. “The debt crisis is a crisis of lack of future prospects. This crisis makes it clear that many Chileans realize that it is not just an economic problem but an institutional problem, anchored in the constitution. Hence that requirement for a new constitution. This is the first time that there is a real opportunity to review this system. ”
Nihilistic and lawless young people
There is a need for a positive signal from the government, says Gárate. “President Piñera should do a symbolic act. For example, canceling the debts to the students. It cannot be that one has to get into debt to meet basic needs? ”
“This is a state at the service of the free market and capital, which sets no limit.”
At the moment, the government seems only inclined to further restrict personal liberties.
A positive signal is extremely important because the current situation is not without risks. For the first time, Chile has to deal with a headless movement and without a clear project. It is a moment of anger and aversion, the bucket has overflowed.
1.5 million young people in Chile (out of a population of 18 million) do not study because they could not afford it, and do not work because they do not have a diploma. Many young people no longer believe in the system. They also do not believe that this crisis can be solved through institutional means.
The violence of the past weeks can partly be explained by that, according to Gárate. “I’m afraid that young people who don’t like it will one day take up arms. Without ideology, just from nihilism, because it is no longer enough to throw stones. ”
“Then we end up in lawlessness, and that is what produces neo-liberalism. Capitalism is a good system for producing wealth, but it is completely anti-social unless you have a strong state that requires it to be social. Here we have a state at the service of the free market and capital, which sets no limit. “