Chile: protest for the “promised land”

The student movement convulsing Chile is aiming for social inclusion and reform of the model that improved the lives of millions in the 1990s. It should be seen in its own terms and not as a mere outpost of a global trend, says Patricio Navia.
Patricio Navia
9 September 2011

A wave of student protests in Chile since May 2011 have propelled the country into the international limelight, a year after the successful rescue of thirty-three miners after their sixty-seven-day entrapment underground shone intense (and favourable) attention on Chile.

The global media coverage of the large demonstrations of as many as half a million people in Santiago and other cities, however, have tended to an interpretative consensus that is in two respects misleading. First, the street-protests have been viewed as a manifestation of social discontent caused by Chile’s market-friendly economic model, which has been in place since the end of the Augusto Pinochet dictatorship in 1990. Second, they have been branded as an outpost of social movements in other parts of the world (anti-authoritarians in Tunisia and Egypt, indignados in Spain, workers in Greece and Italy, even rioters in London) to suggest that they embody a similar demand for radical change.    

A closer look at the reasons for the protests in Chile shows a different - and much more optimistic - reality. The student movement is less about opposition to the market-friendly economic model than about inclusion within it, and expanding the range and structure of opportunities it affords. The protesters seek to improve the model with a host of measures: more protection for consumers, more rights for citizens, and a more level playing-field so that the middle class can realistically aspire to upward social mobility.  

The promised land

This aspect of Chile’s current mobilisation belongs to a precise historical and political context. The period of military rule (1973-90) saw the brutal imposition of draconian neo-liberal economic reforms. The centre-left Concertación coalition then led the transition to democracy and, during its successful governance of the country for twenty years (1990-2010, developed what was variously called a “social-market economy” or “neo-liberalism with a human face” (see "The Chilean way: after the spotlight", 27 October 2010).

During the two decades after the restoration of democracy, Chile more than tripled its GDP; reduced poverty from 40% to 15%; brought inflation under control; and targeted social spending at the lowest 40% of the population. The government’s policies over these years also facilitated the emergence of a growing middle class.

The market-friendly and export-oriented economic model fine-tuned by Concertación governments produced remarkable economic growth and development. A combination of policies in the 1990s - socially-oriented government programmes, pro-competition regulation, universal access to secondary education and rapidly expanding access to higher education - became the bridge that allowed millions of Chileans to cross the river into the “promised land” of the middle-class.

Many crossed right away and many others waited for their turn. In a normal and familiar routine, as long as the queue keeps on moving, people wait for their turn. And even if they themselves won’t be able to make it to the other side, they hoped and believed that their children would. Access to education was the bridge that would bring them to the land of milk and honey that was within their sight and that many others were already enjoying.

The inequality trap

Yet overall, Chile has remained a highly unequal society. The tax-take is only around 20% and social policies do not reach the middle class. The tax structure is regressive -with a 19% value-added tax bringing more money than income tax-on individuals; so the middle class ends up paying the highest tax-rates, as they consume all of their income.

The top 10%, because they take advantage of tax-incentives on savings and investment, end up paying a lower tax-rate than the middle class. This helps to explain why today, in more straitened economic conditions, the middle class is more afraid of falling back than hopeful of leaping forward in the socio-economic ladder.

Moreover, the reality of unequal access (and high access-barriers) to education - especially higher education - meant that the queue was not moving at the same speed for all. The poor and lower-middle class (the lowest 40% in the income ladder) have access only to public schools that offer low-quality education. The middle class send their children to government-subsidised schools. However, these voucher-schools charge an additional fee, so segregation is high.

The top 10% send their children to fully private schools, which on average charge about six times the government subsidy for students in municipal and voucher-schools. As a result, the quality of education children get is based on their parents’ income. That perpetuates inequality and undermines social mobility. Even worse, the unleveled playing-field discourages the kind of innovation, intelligence and creativity among lower-income Chileans that could contribute to Chile’s development.  

The situation worsens in higher education. Although Chile has impressively expanded its coverage of tertiary education - more than 50% of college-aged youth are in higher education, of whom 70% are first-generation college students - the access-structure reproduces existing inequality. The better funded and higher-quality traditional universities - most of which are public - are highly selective and tend to train mostly people from the higher-income brackets.

Private universities, created after a Pinochet-sponsored reform in the 1980s, account for most of the expansion in higher education in recent years. More than half of university students attend private institutions. A few of them are high-quality institutions run by religious, or other non-confessional, not-for-profit foundations. Most private universities, however, use legal loopholes to be for-profit. The quality of education they offer is simply not worth the money. Yet as Chileans know that higher education is the best way to social mobility, many low-income families fall into the trap.

Insufficient regulation to assure quality and enforce the not-for-profit requirement and unequal access to student loans, with students in public universities having access to low-interest loans (2% annually) and students in private universities only having access to higher-interest loans (6% plus inflation, annually) worsens the problem. The state has failed to appropriately regulate the market and protect students’ rights. Moreover, as low-income and first-generation college students suffer from information asymmetries about the quality of higher education, the system undermines the dream of crossing over to the promised land of a stable middle-class condition.    

In protesting against “for-profit” education, students have voiced their dissatisfaction with the high inequality that exists in the educational system. In demanding the expansion of public education, they underline the goal of expanding access and strengthening protection of their rights. They march because they too want to realise the dream of crossing over to the promised land without a heavy debt burden and with the tools to succeed in a growing competitive and globalised environment. They protest against for-profit educational institutions that offer bridges to middle-class status but take students nowhere. They want the government effectively to force educational institutions to respect their non-for-profit condition and respect the rules of the game.  

A roadmap to change

A centre-right government and president, Sebastian Piñera, came to power in January 2010. So far, the Piñera government has disappointed Chileans (current opinion-polls show only 27% approval for the president) and its response to the protest has been inept. Moreover, the fact that several ministers - including the sacked educational minister - have participated in for-profit universities has further weakened the negotiating position of the government.

The centre-left Concertación opposition has disavowed the moderate policies it formerly advocated and has embraced impracticable and polarised positions that, if implemented, will further increase inequality and prevent social mobility. Some student leaders have also expanded their demands - which now include a wide array of topics, from the nationalisation of the copper-mining industry to a new constitutional assembly. Moreover some entrenched opponents of educational reform, such as the teachers’ union, have joined the movement with the claim that they support equal access to quality public education.

It is not certain that the government and the student movement will be able finally to agree on a roadmap to reforms that will improve the quality of education and level the playing-field. Yet the fact that those marching in the streets are demanding access and inclusion makes the student movement in Chile a different kind of protest than those in other parts of the world.

Chileans have been promised that a socially-oriented market-friendly economic model can deliver the dream of a middle-class condition. Many have tasted the gratification of escaping poverty. Many others can see the promised land but fear that there are not sufficient crossing-gates; that other bridges won’t take them there; or that if they get there, they will have to carry an excessively heavy burden of debt.

The same political elite that successfully completed the transition to democracy is now in charge of bringing it to the next level. It might be time for it to step aside and let others lead Chileans towards the promised land. The enthusiasm and energy of the protesting students, and the creativity and commitment of those marching in the streets of Chile, are a reason to be optimistic.


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