Chileans’ Love for Economic Goodies Provided by the State

     In general, Chileans love the “free” economic goodies they can get from the state. They almost always (or so it seems) errantly believe that such delicious policies do them good. Accordingly, politicians from both the Left and the Right offer these goodies to the populace in order to have a chance in national elections. For example, presidential candidate Evelyn Matthei (Chilean Right) has been promising thousands of jobs for women with a minimum salary of US$600 per month, a very harmful “treat” for them in the labor market. With more populism, she is also willing to hurt everyone by imposing a 1% tax on the amount invested in entrepreneurial activities, thus facilitating free choice of hospitals for Fonasa (state-run medical insurance) affiliates with the booty. Let us not criticize her pragmatic strategy too harshly. She wants to be elected and thus is imitating the success of current President Sebastian Pinera (center-left), who has learned the value of pleasing people who are addicted to the unreal. Most Chileans mistakenly believe that more intervention brings a better quality of life. The “fabulous” Santa Claus state gives us better health care, more educational opportunities and higher salaries [image source]. Public school brainwashing in Chile has apparently worked well, and it seems that private schools likewise have not avoided the interventionist scourge.

      The truth is that these sorts of benefits have never been well-achieved by intervention. Chile’s prosperity is due to the free functioning of the market and a lot of patience. The market is not perfect, but it is better than the state. A great gulf separates the present reality in Chile and that of 1973. There are now far better urban transport systems and roads that reach the most remote parts of Chilean mainland territory; the number of paved roads has increased 3.2 times. There are 22.3 times more tourists visiting the country each year, and 6.5 times more Chileans have cars. There are more imports, more exports and greater amounts of foreign investment flowing into the country. There are more college students, too, signifying that there is greater educational opportunity than before. Inflation (1.3%) and unemployment (5.4%) are low and economic (GDP) growth is high (probably over 5% this year). All this progress is the result of market-based policies, not state interventionism. Unfortunately, many (if not most) Chileans show a preference for policies and politicians that are of little use. In her “fabulous” role, socialist front-running presidential candidate (and former president, 2006-2010) Michelle Bachelet will have no greater ability to improve economic conditions than Santa Claus. Yet Chileans do not seem to “get it” still, and tend to believe that same tall tales and vain promises all over again. Likewise, the populism of Matthei, disguised as one of Santa’s elves, will be of little help to us. She is merely calculating the optimal level of populist policies that she can thrust upon Chile at the lowest cost and social harm, which by doing so will yield the maximum increase in votes from (generally ignorant and unprincipled) centrist or center-left women. Moreover, she is shrewdly pursuing a net vote gain strategy by raising taxes on relatively few entrepreneurs (representing few votes) while pleasing many more voters by lowering fuel taxes. She is intelligent, perhaps knowing that in Chile the only way to win a national election is through populism. In order to attain the presidency she must compromise her otherwise libertarian principles. Should we be happy with a libertarian who is willing to compromise his principles? Let us not forget that compared to overtly socialist Bachelet, Matthei is marvelous. That fact alone may be enough for her to earn our votes. However, we all must know (as Matthei herself must know), that populism will not increase our quality of life nearly as much as simpler policies like lowering barriers to entry (to create more competition), further lowering taxes in general, maintaining strong property rights, encouraging high-quality immigration and fomenting greater foreign investment. Therefore, the correct option is always to say “no” to Santa Claus fables and the misguided efforts of his statist elves! Let’s hope that more Chileans begin to lear this lesson, and that more libertarians from the northern hemisphere will come to Chile that can help show them why.
     Your place of refuge in Chile is in Freedom Orchard. Be sure to tune in to Dr. Cobin’s radio program: “Red Hot Chile” at noon (ET) on Fridays on the Overseas Radio Network (ORN). You can login at www.overseasradio.com. You can also join the thousands of other people who download the shows each month via the link provided on the ORN website (recorded show updated every Monday morning).