Saturday, 12 May 2012

Hollande-Latin America Line

What Francois Hollande's victory means for social democracy in Latin America, and vice versa. A comment by yours truly and Francisco Javier Díaz.

Tuesday, 1 May 2012

WSJ on Chile: Not Bullish, but it sounds similiar

The Wall Street Journal published a column this week by someone by the name of Mary Anastasia O'Grady. They could have splurged on plane fare, because clearly she doesn't know much about Chile. That has not stopped El Mercurio from hanging on to every misinformed, distorted word, or from Camila Vallejo from falling into the trap and responding with equally vigorous ideology.

According to Ms. O'Grady, the social movements that have taken to the streets over the last year demand “free university education, nationalization of the copper industry, and the end of the liberal economic model”. Well, yes, there are some who stick to those slogans, but they are a minority, even amongst the demonstrators. For the most part, students want to pay reasonable fees with low interest on student loans, and receive a quality education that will serve them in the workplace. The copper industry is already partially nationalized – something which was not only not rescinded by the military regime, but was used, and continues to be used, to fund military spending and just about everything else. This enables Chile to maintain ridiculously low tax rates. And nobody really expects a radical shift from the neoliberal model, although people do expect some degree of protection from its more negative effects.

O’Grady berates President Piñera for not defending liberty – if what is meant by liberty is low taxes. She is aghast that the flat corporate tax was raised to 20%. In the US the average corporate tax rate is in the mid 30. In all, the total tax take as a percentage of GDP in Chile is about 18%, roughly half of what it is in neoliberal Britain.

But the Wall Street Journal makes it sound like the heyday of neoliberalism is over in Chile, thanks to populist demands and a weak president. I suppose they yearn for the days of the Concertación, when higher education expanded exponentially (although with minimal regulation, leading to the problems of quality control we see today), when industries like salmon helped to diversify the economy (although lack of environmental oversight almost led to its collapse), and when mining was opened up to the private sector (again, with the lack of regulation that led to the miners’ saga in 2010).

The WSJ should just come out with it and declare itself in favour of a Concertación government for 2013.