Capitalism Is Alive In Chile, But Beware Creeping Populism

By back of the envelope estimates of economic prosperity when visiting a country for the first time, high-rise construction crane counting, Chile appears to be doing well. The Chilean peso to USE exchange rate is about 780 pesos to the dollar and bid/ask spreads at the cambios are wide. Businesses have calculators at the ready and know the daily rate for dollars. The peso has lost value to the dollar over the past year due to political unrest, but inflation within the country is stable.

The finance industry is affected with the Central/South American cliché of manana. Banks are open until 2pm and then closed to "balance the books." This practice fell out of favor 30 years ago in North America for any bank desiring to keep its customers. I was surprised to see Scotiabank continuing the practice.

The people on the streets exhibit an industry that is admirable and enviable. The poor perform as buskers or sell useful items like travel packs of tissue instead of begging. Even in the slums there are hand painted signs for businesses. Capitalism is alive at a very stratum in Chile.

One of my tour guides was Chris (whose name I've changed and Anglicized to protect his privacy), 33, college educated, trilingual by my count, married, 8 dogs, 5 cats. He bought the land his house stands on as well as the materials to build it on his own. He built the house himself because he wanted to save money on contractors. His primary job is writing scripts for video games. Tour guide is a secondary gig. He's a capitalist at heart whether he will admit it freely or not. Chris is friendly and professional but meets the world on his terms. The middle child of five to parents with respected professions as an engineer and a nurse. He reads a group or crowd well and develops relationships easily.

"Is it too much to ask that the government do the jobs they are supposed to do?"

Such sentiment is hardly the epitome of a left wing radical fomenting an anti-government revolution. From Chris's view, the Chilean government is rife with nepotism promoting the incompetent, self-dealing, and a system rigged to protect the interests of the 10 families that effectively rule Chile.

Graffiti is everywhere in Santiago. You can see there was a vibrant culture of street art that has devolved into a cacophony of messages and pleas. On a tour through Santiago, two messages on the same wall captured what initially appeared to be an irreconcilable dichotomy among protesters (from a rather rough translation):

1) The people don't want war, they want justice. 
2) The people will have their revenge.

I asked Chris which was the real message: "It's complicated. They both are."

Underpinning these two themes was a visceral loathing of the carabinieri. Spray painted epithets such as "Paco/Yuta (cops) are assassins" and "ACAB (All Cops Are Bastards)," or variations thereof could be found on every flat vertical surface.  This wasn't the occasional anti-police screed you see in inner city America but a widespread and visceral loathing that permeated every message. The carabinieri are largely recruited from the poor, but they end up being ordered to suppress, oppress, and silence, to the point of murder, those very same people who were their neighbors in times past.

For a discrete example of government incompetence, Chris explained the human traffic directors that the previous day's guide glossed over. The government can't keep the traffic lights working in Central Santiago, blaming the protesters. Stepping in to that vacuum were the homeless living in the parks near the area. These homeless, much as in the US, are largely afflicted with mental issues and addictions, but they saw a market and capitalized on it, directing traffic by hand with startling efficiency in green reflective vests, generally in teams of three or so, and providing this vital service for spare change from the drivers. The astonishing thing was that the drivers were happy to pay for this service without qualms or derisive comment.

Water rights are just another more abstract example Chris gave of the reasons underlying the protests. Real change in Chile requires a 2/3 vote in the legislature. Recently there was a vote to nationalize Chile's water, or at least make water a public utility instead of a private resource. Considering the minister for agriculture owns the rights to 29,000 liters of water per second in all of Chile, and can presumably use it for his own crops or sell to those who can afford it, you can see how this type of self-dealing galls Chris and his like.

Chris has built relationships with successful wineries making excellent wine. While not mega producers, these wineries and their attached vineyards are providing good paying jobs to the locals and if the owners are not upper class, they create an income that puts them firmly in the upper middle class. These businesses are dependent on reliable and sustainable access to water in an historically parched country.

The point is that the unrest and demonstrations in Chile are not the work of a misguided few, demonstrating and creating unrest for its own sake or to sate some late teenage ennui, but rather what people in all walks of life view as a last resort to get the government to listen to them and do their jobs - to create conditions for businesses at all levels, politically connected or not, to thrive and rise or fall on their own diligence and merits. Not an unreasonable request.

The government has blamed the demonstrations and riots on an ever changing litany of reasons. The most common is that the protesters are communists, a watchword sure to garner sympathy for the Chilean government from other Western governments, or the latest (and you can't make this stuff up) that Korean pop music fans are leaders of the rebellion - revolution - Gangnam Style.

For good or, more likely, ill, the demonstrators, especially the younger ones, have adopted the label of "communist" as a badge of honor, not fully or even tangentially recognizing what kind of dog whistle this is to outside governments or foreign capital, not even understanding the basic premises of communism. The justification seems to be that “if they call us communists for demanding the government listen to us, then ‘communists’ we will be.” Business leaders within the protesters need to get a handle on this messaging before all international goodwill for the protesters evaporates or the movement is, in fact, co-opted by real communists.

Western media have glommed on to the drivers of the riots as the failure of a mismanaged pension plan (which according to Chris and those like him is a product of incompetent nepotism, a situation I find entire plausible whether factually accurate or not) and greater access to affordable healthcare, which, as in the northern hemisphere, to some, means free. Those reasons have resonated with existing media narratives, especially in the US with the upcoming dogfight that will be the 2020 elections.

However, to stop there with those reasons alone tells such an incomplete story as to be nearly a lie. Again, according to Chris, the unrest and uprising is a culmination of many different but interconnected reasons, all of which stem from a government designed for protecting the elites rather than adhering to the rule of law and allowing industries and individuals to find their place and level of success within society.

Demonstrators, with some exceptions, are people who go to work every day and protest at night and on weekends. This brings to mind the tongue in cheek exit poll forecasts for the 2016 U.S. elections, where Clinton was expected to lead in early polling as Democrats voted when they felt like it and Trump supporters waited until they got off work and then voted.

Chris and his winemaker friend John agree that right now the "movement" is headless, and they prefer that to the movement being co-opted by a demagogue, especially one more interested in power than free market reform. Their hope is that the government (and the families of the elites) recognize the righteousness of their grievances and make true reforms before it is too late. In a sober moment during an afternoon of tasting some excellent wine, an historical correlation was made regarding France and its interregnum from the storming of the Bastille to the rise of Napoleon. The comment was made, by whom I will not say, that, "We know how to make guillotines, but we don't want to have to use them."

This strident, but in close examination, reasonable, populism, immediately brought to mind the utter disdain for the ruling class exhibited both in the US and the UK. In the US, this was manifested in the election of Donald Trump as President and in the UK first as the Brexit referendum followed by the election of Boris Johnson as Prime Minister.

During my brief time in Chile, I became convinced of two things. One, Chile is at a crossroads to effect systemic change that will make it an outsized economic force to be both welcomed and reckoned with if only the government and the elite families controlling the government redress the reasonable grievances of those they govern, truly becoming a government of the puebla, by the puebla, and for the puebla.

Second, while things are generally sedate, if the elites fail to see the graffiti everywhere, they risk a revolution that could find them headless or exiled. The sentiment of "Drain the Swamp!" is 100 times more urgent and heartfelt in Chile than it could possibly be at any Keep America Great rally. If Secretary Pompeo is hearing otherwise, he needs to tell the Charge d'Affaires in Chile to get his FSOs out of the country clubs and into the streets and shops.

While the appetite for nation building among the American electorate is nil, all Americans can rally behind the idea that when a government no longer represents the interests of its people, the governed have an inalienable right to petition for redress and demonstrate without fear of loss of life and liberty. A strong statement of support and a dispassionate but watchful humanitarian eye on the situation will go a long way with the people of Chile, and they've got the better hand in the long run.