Thursday, March 27, 2008

Chile Part 5 - More Failures of Neoliberalism

I have already touched on the problem of rapid economic growth coupled with price inflation and wage stagnation. (With the exception of the 1998 Asian Tigers Crisis, GDP growth has averaged betweeen 5 and 10% annually. (1) ) I also referred to the grotesque level of inequality, one of the worst in the world (2), and the refusal of the government to create proper social welfare and education systems in an attempt to rectify this. But there are more problems than these facing Chile.

An export-dependent economy. What happens when the global economy goes into the toilet? What will happen to Chile in the coming years when the rising oil prices make it uneconomic to export fruit?

The central part of the country where most of the population lives and most of the fruit growing occurs is drying up and may well become desert in the coming decade. Due to global warming, the Andes get less snow, lowering the water table and river flow. Furthermore, clear-cutting and poor water usage are contributing factors, Chileans have told me.(Yet, you read not a word about global warming in the Chilean press.)

Chile has almost no oil and natural gas. This at a time when prices for these resources are sky-rocketing. Power brown-outs are blamed upon Argentina's refusal to renew its natural gas export contract, as it seems that country needs its gas for its own use. And since there is less water, hydro projects don't seem to be the answer. The electricity problem is a fine example of the failure of neo-liberalism. Central and North Chile get sun 365 days a year. The coastline gets wind off the Pacific. You would think solar and wind power would have been introduced. But no, Chile is 30 years behind other countries in this technology. Utlities were corporatized under Pinocho and thus cannot see any further than this years profit margins.

Meanwhile, the authorities have applied the US model of suburban sprawl and vast shopping malls everywhere. (It was never so evident as this trip, and the disease was only beginning in 1996.) At a time of water and power shortages and rising oil prices, the most energy-inefficient way of living in the world is being actively promoted.

Agribusiness is driving campesinos off the land. They crowd into the cities and exacerbate the problems there. The remaining campesinos are being forced into mono-crop sub-contracting for the corporations. This further undermines campesino life and threatens the farmer's markets, the one source of cheaper food for the populace.

The inability of the Peruvian state to deal with its economic problems is forcing many Peruvians to immigrate (legally and illegally) into Chile, a country that is wealthy by comparison with theirs. The Peruvians add to the number of poor in the cities and due to racism are blamed for "stealing jobs." and a rising crime rate.

I am left with the feeling that these problems will tear the country apart in the coming years.

One final point that I didn't know where to fit in. Chile used to be one of the most socially progressive countries in Latin America. Thanks to the Pinochet dictatorship, this is no longer the case. It was a deliberate policy of the dictatorship to stamp out socially progressive ideas and it shows. Chile is in many ways like stepping back 40 years. "White" Chileans will cheerfully tell you that People of Color are inferior and that Indians are stupid, the sort of talk that went out of style among middle class Canadians a good while ago. Even though blonds only make up maybe 15% of the population, most women in advertisements are rubias. There are no women bus, taxi or truck drivers and no women tradespeople or contruction workers. Only 30% of Chilean women are engaged in wage work, the lowest in Latin America and the same as Canada in 1960. This dependence upon one income is a contributing aspect of the poverty in the country and is a direct and long-term expression of the social reaction of the Pinochet regime.

1.) Average GDP growth between 1990 and 2001 was 4.7% Average growth, 2002-2007 was 4.71% (2007 at 5.2%) Sources, CIA Fact Book

2.) The GINI Index. Zero would equal absolute equality and 100 absolute inequality. Chile stands at 58.3, Costa Rica 48.9, Brazil, 56.7, and by way of comparison, Canada at 33.1, France at 32.3 and Norway at 25.7. Sources CIA Fact Book


Blogger Graeme said...

Countries that adopt these policies, and are dependent on trade with a certain superpower and its allies, pretty much lose sovereignty.

"Developed" countries certainly built up their infrastructure by protectionist policies. Wonderful reporting.

12:43 AM  
Blogger Renegade Eye said...

No country became a major player, whether industrial, military etc. by following neoliberalism.

Really good analysis.

12:01 AM  
Blogger Zhu said...

Good analysis...

On Chile adapting US model... so true. I went there in 2002, before I even set foot in North America, and I was shocked. We were coming from Mexico, having traveled all the way by bus. Only El Salvador had this kind of US malls and endless strips of roads with US franchises along the way. Definitely not a good side of Chile.

7:56 PM  
Anonymous Anonymous said...

Hi Larry!

Do you have e-mail? I want to talk with you about traslate to Spanish the Kevin Carson's book Studies in Mutualist Political Economics.

I'm from mutualist spanish team:


1:02 PM  
Blogger Renegade Eye said...

The venezuela discussion on my blog has been fun.

The Republican convention will be in St.Paul. the first day will be a mass legal march. The politics is bad, only against the "Bush Agenda," led by the idiot Maoists. The other days another coalition of anarchists having an event.

We are at best as of now, have a leaflet with our program.

Scary event.

1:15 PM  
Blogger Naj said...

Sigh ...
I can't believe i say this, but retrospectively I am happy that the 1979 revolution put Iran in stark opposition to the US and isolated it "globally"!

Although, we have got our "mullah" neoliberals too!

5:43 AM  

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