By Mary Anastasia O’Grady
Chile continued its search on Sunday for a new constitution, allegedly the cure to the unrest that rocked the country four years ago. In a national referendum, in which voting was obligatory, the electorate was asked to approve or reject the latest proposal written by an elected constituent assembly.
With 99% of the vote tallied, the proposal failed 56%-44%. This means that Chile will keep the 1980 constitution drafted during the military government of Gen. Augusto Pinochet but amended many times over by center-left governments to guarantee democracy.
It also means that the constitutional underpinnings of Chile’s free-market model, which extremists sought to destroy, are safe for the foreseeable future. To paraphrase Mark Twain, reports of its death have been greatly exaggerated.
Now maybe policy makers will address the actual source of popular discontent, namely sluggish economic growth. Other problems on voters’ minds are high crime rates, difficulty accessing high-quality education and corruption.
In many ways the Sunday vote was anticlimactic. The extremists who rampaged through the country in October 2019—blowing up subway cars, vandalizing businesses and burning down churches—had hoped to upend a modern liberal democracy. But their effort to turn Chile into a soviet paradise was stymied in May when right and center-right parties won three-fifths control of the constituent assembly.
As expected, that assembly produced a draft constitution heavy on individual freedom and civil liberties. It would have modernized the Chilean state and improved governability by reducing the political fragmentation that has occurred since a 2015 political reform. The Republican Party and the Let’s Go Chile coalition (both on the right) campaigned to approve the draft. So too did the center-left Democrats and the centrist Yellows for Chile, both hoping to close the book on the Pinochet era. But for the hard left, the ghost of Pinochet is a weapon. Surrendering it in exchange for an economically liberal document was unthinkable.
In March 2022, the leftist President Gabriel Boric said that any new constitution “will be better than a constitution written by four generals.” But in a delicious irony, his Broad Front coalition, the Communist Party, the Socialist Party and the former urban guerrilla party MIR all campaigned ahead of Sunday’s vote to keep the amended 1980 constitution. They may have been helped by rising antigovernment sentiment, producing an appetite to vote “against” anything official, and by public-sector unions that stood to lose privileges. On the right there was opposition from Pinochet loyalists and those who saw the process as illegitimate.
This was Chile’s second recent try at a new constitution. The first draft, written by an assembly elected in a nonobligatory process, would have weakened property rights, empowered the state, and made Chile into a country of multiple “nations.” It was rejected in an obligatory referendum, 62% to 38%, in September 2022. That ought to have been the end of the mental gymnastics. But both sides insisted on trying again.
A lot of trouble might have been saved if the problem hadn’t been misdiagnosed from the start. Peaceful marches by hundreds of thousands of Chileans weren’t a national outcry against economic freedom. They were the opposite.
The Chilean economy grew at an average annual rate of 7.2% from the mid-1980s until the 1997 Asian financial crisis, according to former Finance Minister Hernán Büchi, who wrote about the country’s transformation for the Heritage Foundation in 2006. That was followed by “an average annual rate of 3.5 percent between 1998 and 2005.” After that, with the exception of 2009, when the financial crisis hit, annual Chilean growth was 3.3% or better until 2014. In the three years 2010-12 Chile turned in growth rates of 5.9%, 6.2% and 6.2%.
Center-right President Sebastián Piñera pushed through a 2013 corporate tax hike to 20% from 17%—retroactive to 2012—as a concession to militant university students who went to the streets. When Socialist President Michelle Bachelet began a second (nonconsecutive) term in 2014 she initiated a process of raising the corporate tax to 27% and eliminated an incentive to reinvest distributed income in Chile. Capital ran away. During her four-year term the economy grew at an average annual rate of 1.8%.
By the time Mr. Piñera returned as president in March 2018, the high expectations set over so many years of fast growth were already colliding with economic stagnation. The economy grew 4% that year but it was too late. Nineteen months into his second term the country exploded. Mr. Piñera gave in to the constitutional project.
In November, at a conference of business leaders in San Francisco, Mr. Boric acknowledged the cost of the “uncertainty” of the past four years and the need to restore stability. “I can assure you that after the [December] plebiscite,” he told the audience, “whatever result the people choose, that process will come to an end.” It would be nice if that were true—and even after he leaves office. But it doesn’t seem to be what his fellow travelers have in mind.
Write to O’Grady@wsj.com.
Mary Anastasia O’Grady is an Opinion Columnist, writes «The Americas,» a weekly column on politics, economics and business in Latin America and Canada that appears every Monday in the Journal. Ms. O’Grady joined the paper in August 1995 and became a senior editorial page writer in December 1999. She was appointed an editorial board member in November 2005. She is also a member of the board of directors of the Indianapolis-based Liberty Fund. EnergiesNet.com does not necessarily share these views.
Editor’s Note: This article was originally published by The Wall Street Journal (WSJ), on December 17, 2023. All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld.
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EnergiesNet.com 12 17 2023