As Compared to What?

In April, Chile will vote on how to go about changing its Constitution. This is in response to widespread rioting. The present Constitution is the work of the Military Dictator Augusto José Ramón Pinochet. (1973-90). With inflation running over 150%, the country has no foreign reserves, and GDP is rapidly falling. The Government has confiscated over 600 businesses. No wonder people want a massive change. Oh wait, those were the conditions under the Government of the elected Socialist President Salvador Allende, Pinochet overthrew. Today’s protests began over a raise in subway fares. They evolved into demands for cheaper medical care and education, more substantial retirement funds, and an end to income inequality. One might think Chile is still suffering from economic failures dooming it to trail all the other Latin American countries. Fortunately, since the adoption of the Pinochet constitution in the 1980s, as the chart shows, Chile has, in fact, separated itself from the pack in a positive way.

Under the influence of the “Chicago Boys,” a group of Free Market economists from the University of Chicago, Pinochet reversed and/or liberalized the policies of the previous Socialist regime. This resulted in “More” for Chileans at every economic level. This trend, as we can see in the chart above, accelerated after Pinochet retired, and Chile returned to full democracy in 1990. How fortunate are the Chileans? They had a dictator who walked away after losing a referendum leaving a prosperous, democratic, free-market economy. If only we could convince other dictators to follow his path. It’s revealing the country Chile replaced as Latin America’s economic leader was Venezuela. That nation now at the bottom.

So why the big push for change? Who wants to toss this successful structure? The culprits appear to be a coalition of the educational establishment, students, and civil servants. These have been joined by unions, much of the press, and left-leaning politicians. Together they are convincing the populace the nation and economy aren’t working for everyone. Even though everybody has gained, many have been convinced some aren’t “paying their fair share,” resulting in severe income inequality. It is well to remember this was Hugo Chavez’s message to Venezuelans. The result was one of the swiftest transitions from people having “More” to a people not having just “Less’ but next to nothing, in history.

Now you might be asking, why point out the foolishness of some faraway country changing willy-nilly from a successful system to something potentially much worse. Sometimes it’s easier to see the folly in the actions of others at a distance than noticing the same thing happening right under your own nose. If you haven’t noticed, the clamor for significant structural change is occurring right here in the good old USA. The same general groups, as in Chile, are pushing the same themes here

At a time when our people at every level are enjoying “More,” why are so many disaffected? Why do many well-educated elites obscure evident progress in favor of sowing discord and division? The same groups favoring discarding the present Chilean Constitution are propagating the myths of extreme income inequality and the nation’s tainted past resulting in an unfair society. We see this not only here but all over the world.

The answer is in the history of elitism through the ages. Before the 15th century, the world’s mainly agrarian-based societies were sharply divided between the small minority educated elite and the illiterate living at subsistence masses. Stuck in the middle where the relatively small number engaged in commercial interests. These entrepreneurs depended on the goodwill and protection of the elites. The elites tolerated those in commerce as the providers of the better things in life. More importantly, they were a great source of revenue. The elites provided organization and some degree of protection at a price having most everything above what was needed for subsistence. They were the “Betters” in any society.

With the advent of higher carrying capacity and efficiency of ships and far more full literacy, trade and innovation brought ever-increasing change. The change wasn’t the friend of educated elites at the top. Where commerce served them in the past, commerce demanded of Government serve the wider society. Change threatened them. Instead, elites deride capitalism. We don’t even do much teaching of our economic system. We see a revival of socialism and mercantilism among many of our leaders and potential leaders. These are top-down systems, with elites making the decisions. No wonder they’re favored by the self-described “best and brightest.” No matter the fact these systems fail to deliver for society at large, it works for them. Their main job is convincing people to toss out what actually works and put them in charge. What is terrifying, they might succeed not only in Chile but in our own country. Maybe it’s time to ask “Compared to what ?” before turning away from real success and embracing the siren songs of the would-be controlling elites.