In Chile this year’s International Women’s Day was marked by president Michelle Bachelet’s announcement of a new Ministry of Women and Gender Equality to be installed this year. Aimed at ending gender inequality and violence and discrimination towards women, the ministry will propose and implement public policies to combat the perceived gender gap as part of a National Program of Equality. Other measures that have been passed recently include the obligation for political parties to have at least 40 percent of their candidates be female. Female participation in the Chilean labor force has historically been below that of comparable countries, although it has been on the rise in the last decade. On the surface Bachelet may seem like a brave crusader for justice on this issue, and perhaps she even perceives herself as such. Yet it is worth examining what she is really advocating for. After all, no matter how noble one’s goals, the specific actions taken to achieve that end should themselves stand up to ethical scrutiny, even aside from the question of their effectiveness. In fact the nobler the goals the more important choosing the right steps toward them becomes. What is that old saying about the road to hell? Being a Socialist Party president it is easy to identify the ideological bias upon which Bachelet’s actions are based. At the root of this ideology lies the utopian idea that society can be molded and formed into perfection from the top down. This basic premise has many ramifications, all founded on the idea that paradise can simply be legislated into existence by the stroke of a pen. In short it is the sort of thinking that leads to 40,000 new laws taking effect in a single country in a single year. After any initiatives aimed at the aforementioned …
What Cues Can South America Take From Europe?
Over the past few years Greece has probably made the news more than ever before. Whether it be protesters in the streets, election results, or the announcement of some new government policy, whatever happens in Greece seems to be written about in all corners of the world. Just recently the fierce rhetoric of a relatively obscure populist left-wing party made international headlines and fueled new speculations about the future of one of the world’s major currencies, if not the world economy and financial markets. The eventual ascent of that same party, Syriza, to Parliament has all eyes both on the Old Continent and across the world focused on its plan of action. Mind you, we are talking here about a country whose GDP represents less than 0.4% of the world economy. In the meantime, incessant government intervention into the economy has caused major upheaval in several countries in South America. Venezuela is currently experiencing the worst depression in decades, Argentina’s economy is in shambles once again on the heels of its most recent default, and since the World Cup bubble popped Brazil has equally dipped into recession. These countries dwarf Greece in terms of population as well as contribution to world GDP, and some of their resources make them important players in global commodity markets. Yet aside from some news outlets reporting on Venezuelans having to stand in line for hours for even the most rudimentary items or the mysterious death of a federal prosecutor in Argentina, major media are hardly paying attention. The latter, far from being the result of a massive media cover-up, reflects a general sentiment in South America. Here in Chile, for instance, nobody in their right mind would dream up some theory about the aforementioned woes causing a spillover effect that might bring the entire …
How Does Healthcare Reform Impact Liberty in Chile?
For more than three decades Chile has had a dual healthcare system consisting of both state-run and private health services, which has provided more Chileans with greater choice and better access to such services. Initially funded by way of a 4 percent tax on income, by the late nineties the public Fondo Nacional de Salud (FONASA) started running deficits as one in four Chileans opted for private insurance instead. Consequently the obligatory contribution was raised to 7 percent, helping force a significant chunk of people back into the old system. Unfortunately government meddling did not stop there. In 2005 a fresh round of regulations listed 56 priority health problems that all insurers must cover. Unsurprisingly, premiums spiked across the board that year as well as the following years. Unfazed, the first Bachelet administration expanded the list to cover a total of 80 medical conditions. The result is as predictable as it is inevitable, and the unfortunate thing is it usually leads to more demonization of the market and increased calls for more heavy-handed government intervention. Considering the aforementioned developments it seems as though that process is already playing out. Needless to say, the selfless crusaders for more equity – be it in healthcare or whatever other area of life – make no mention of inflation, currently estimated at 4.5 percent, that is stealthily yet ceaselessly robbing all Chileans of their purchasing power. Nor is there any mention of the fact that patent laws are artificially propping up drug prices, or that compulsory medical licensing is keeping competition out of the market. Experiences with “free” state-run healthcare and the resulting long waiting lines and other unintended consequences such as in Canada and the UK are equally overlooked if not purposely left out of the debate. To point the finger to the …
The State of Freedom in Chile
Perhaps one would not know it for some of the articles that have appeared on this website, but libertarians have plenty of reason to be optimistic about Chile. The country’s economy consistently ranks as by far the freest in Latin America, reaching tenth place in the world in the most recent ranking. Free market type policies have lifted millions of Chileans out of poverty over a time span of mere decades while making its capital city a major hub for international business. And despite recent allegations of large-scale corruption regarding political campaign contributions, on the whole corruption is virtually unheard of. Such a success story literally sets Chile apart from every other nation on the continent, as evidenced by the fact that it is set to become its first developed country by the end of this decade. Yet its unrivaled success has all but silenced critics. On the contrary, it seems like the very prosperity that made Chile the envy of Latin America has lulled some would-be free market advocates to sleep, while proponents of state intervention are running on all cylinders. “Free” education and healthcare and Keynesian economic stimulus – read: more wealth confiscation – are just some of the talking points among those aiming to perfect society by way of scribbling words on pieces of paper. Last March an OECD report made the headlines in Chile for categorizing the country as among the most unequal in terms of income distribution. Such reports provide the kind of ammunition used by interventionists to beat the drum for all manner of reforms, including the recently approved educational reforms. Given the relative lack of government meddling in daily Chilean life – at least on the scale people in most developed nations have become accustomed to – some are eager to seize every …
Lessons Unlearned From Brazil’s Recession
As she was sworn in for her second term last week Dilma Rousseff publicly stated government spending would have to be cut. Yes, you read that right; the leader of the Workers’ Party just said her own administration is spending too much taxpayer money. It might be a day late and a few billion dollars short, but could it be Brazil’s president just had her Eureka moment? Years of spending billions of dollars on stadiums and infrastructure for a 4-week event has left the Brazilian government with little to brag about. While the world has moved on to other things the World Cup’s relics lie mostly unoccupied in a land of poverty, police corruption and gang violence. After the artificial boom created by said event the bubble has definitively burst. Yet to hear one of South America’s most adamant cheerleaders of government intervention admit to it is remarkable to say the least. Government figures show Brazil’s economy had already fallen into a recession before the World Cup even got underway. This year the central bank expects the economy to grow by a dismal 0.38 percent while inflation hovers north of 6.5 percent, well above the 4.5 percent target rate. Industrial production is forecast to expand by no more than 0.7 percent, with the country’s current account deficit widening to $78 billion. Predictable though the downturn may be, its sheer magnitude is forcing the Dilma administration to consider some rather uncharacteristic measures. Or is it? The budgets of a few dozen ministries and some secretariats may be cut by one-third, reportedly amounting to some $700 million in savings, the new Finance Minister Joaquim Levy was quick to add expenses listed in the constitution will be unaffected – a constitution about as thick as Ayn Rand’s novel Atlas Shrugged, by the way. …
Pentagate Corruption Scandal Rocks Chile
According to Transparency International´s Corruption Perceptions Index Chile ranks as one of the least corrupt countries in the world, ahead of the likes of Austria and France and similar to the United States and Ireland. The World Bank’s governance indicators suggest corruption in 2013 was under better control in Chile than in the U.S. and neared that of the United Kingdom and Canada. Quite the achievement on a continent whose governments are not exactly known for their incorruptible politicians, which Chileans have consistent free-market policies to thank for. However, a major political scandal that broke last week represents a blow to the country’s status. Known as Pentagate, the campaign finance scandal currently making headlines in Chile allegedly involved dozens of politicians from across the political spectrum, although the majority are said to be members of the Independent Democratic Union (UDI) party. Some of the more prominent individuals being investigated include former Finance Minister Andrés Velasco, who served one term under current president Michelle Bachelet during her first four years in office, officials of the previous Sebastián Piñera administration, as well as several former presidential candidates. The privatization of state corporations after the fall of the Pinochet military dictatorship in 1989 gave birth to the Penta Group. Formerly known as the Instituto de Seguros del Estado the insurance company was acquired by two investors – Carlos Alberto Délano y Carlos Eugenio Lavín – who incidentally both used to work for the government during the regime. The former is known as a big political donor and a friend of former president Piñera, while the latter tends to keep a lower profile. Last August their holding company came under investigation by Chilean authorities for tax fraud, which besides several arrests lead to the laying off of the Group’s director. And while many a …
The New Libertarian Movement in Brazil
Currently, Brazil is not exactly a bastion of freedom. The Economic Freedom of the World Index, put out by the Fraser Institute, ranks Brazil way down at number 103, with high taxes and over-regulation to blame. However, many people are beginning to question the role of government, especially after the riots in June 2013 in Brazil. Protesters upset about the growing government, and poor civil services are beginning to look for alternatives to the majority parties. Many are finding a glimmer of hope in a new libertarian party that is beginning to emerge. The “Novo” party is about as freedom loving as it gets, said Isabela Christo and Gustavo Torres, members of the new party. According to Isabela, although there are 30 political parties in Brazil, politics generally revolves around the two major parties, the Brazilian Social Democracy Party, and the Labour Party, known as PSDB and PT respectively. From a libertarian perspective, both parties look the same. “Neither parties are very fond of liberty,” said Isabela, “and there’s no big difference between both parties when it comes to the usual libertarian agenda.” Isabela went on to say that both parties advocate for a bigger government in banking, monetary policy, drug wars, and abortion. “Actually, all those subjects are commonly ignored by the major parties in Brazilian politics, since mentioning them usually has no political benefits at all.” The Novo Party, on the other hand, does offer a fresh alternative. According to their website, the party advocates for individual freedom over state control. The website lists other principles: – Free-market – Individual as sole creator of wealth – Reduce the role of the state – Defend personal liberties – All are equal before the law When asked if the Novo party is the only libertarian party in Brazil, Isabela said, “This may sound a …
For School Choice, in Chile and Elsewhere!
In her second term as president of Chile Michelle Bachelet is set to impose significant educational reforms to further her socialist agenda. An estimated increase of 1.5-2 percent of GDP on top of existing spending is supposed to improve the quality of and access to (higher) education and thereby reduce the problems of inequality and segregation. Bachelet’s plan to provide “free” college education to all Chileans exposes her ignorance of the effect of such policies in other countries. It is a statist’s’ knee-jerk reaction: once we’ve identified a problem naturally all we need to do is throw a bunch of money at it and have the government point guns at people, and the rest will take care of itself! After all, the Danish taxpayer is forced to pay for everyone’s college tuition, and they are prospering! This sort of simplistic stance on education completely ignores historical and empirical evidence that shows that the voluntary system in existence before the dawn of compulsory schooling already met the existing needs for education, or that modern public schooling is a lot more likely to increase social segregation. The latter is confirmed by Chilean figures correlating people’s addresses, incomes and test scores. Besides, we already know that putting more power into the hands of bureaucrats in faraway government buildings, where we can be sure their views and policies will be heavily influenced by special interest groups, will invariably reduce transparency, accountability and quality. In the United States, for instance, this has lead to a ballooning student loan debt that now stands at $1.2 trillion or some $30,000 per student. In three decades tuition fees have risen by 1,120 percent, meaning that the same college degree today costs 12 times as much as in 1978. The total bill ranked up on behalf of the American …
Who Will Be Hurt Most by Chile’s Carbon Tax?
As part of the tax reform put into law last month, Chile now has the “honor” of calling itself the first South American country to impose a carbon tax. Starting in 2018 Michelle Bachelet’s center-left government will attach a price tag of $5 to every ton of carbon emissions produced by the country’s large electricity generators. The law will apply to any thermal generators with a capacity of at least 50 megawatts – though biomass plants are exempt – and will reportedly extract $160 million out of the economy. Coincidentally the year the new carbon tax takes effect is the same year Chile is expected to officially become the first developed nation on the continent. The adoption of free market policies in recent decades – the Fraser Institute now ranks the Chilean economy as the 10th freest in the world – has made Chile a model for other South American nations to emulate. Squarely in line with her socialist philosophy, though, Bachelet aims to mold Chilean society according to her wishes. Unfortunately for Chilean citizens, especially the poor whose lots Bachelet claims to want to improve, this includes taxing electricity. Considering that some 30 percent of the country’s energy production stands to be affected, the carbon tax will likely have a serious impact on prices. Naturally those hit hardest by such price hikes are those spending the highest share of their income on energy, i.e. the poor. Enter the schizophrenia of left-environmentalism: advocating for forced wealth transfers to help the needy while simultaneously adopting policies that raise the prices those same people pay for some of the most basic necessities. Besides the obvious truth that a tax levied on any product or service raises its price, there is empirical evidence on environmental taxes we can point to and learn lessons …
Keynesianism in Chile
Last week Chilean president Michelle Bachelet announced an “especially anti-cyclical” government budget for 2015. Utilizing the usual rhetoric of creating jobs and stimulating the economy, the first budget in her second term is set to increase by a whopping 9.8 percent. The new budget’s “historical increase in public investment” – mind you, these are the words of a Socialist Party president – will be directed mostly toward social reforms. The increase in spending is supposedly covered by a landmark tax reform passed last month raising corporate taxes and closing tax exemptions. These funds, confiscated from those who could make actual investments to meet market needs, will be used to ramp up spending on health care by 85 percent and education by 10.2 percent. In addition, Bachelet pledged to pump more money into developing certain remote regions and consolidate social welfare schemes, stating her administration’s goal to have 1,700 of the poorest families on the dole by next year. The latter, of course, is typical of the redistributionist ideology; the fundamental difference between giving a man a fish to feed him once and teaching him how to fish so that he may become more self-reliant. As always the irony of striving first and foremost to make the poor and destitute more dependent on others for their sustenance seems to be lost on most people. Growing up, children are expected to become better able to take care of themselves and take on more responsibility as they get older – I personally recall a story or two about my older sister looking after me when we were kids. Yet when government takes this inherent human instinct and turns it on its head, nobody bats an eye. In her press conference president Bachelet claimed the stimulus will create 139,000 jobs. What she left out, …