Democratic Chile:
The Politics and Policies of a Historic Coalition
Kirsten Sehnbruch
and
Peter Siavelis
11th February, 2013
Table of Content, Part 1
Politics and Policymaking
• From a Necessary to Permanent Coalition,
Peter M. Siavelis
• The Alianza’s Quest to Win Power Democratically
Patricio Navia and Oscar Godoy
• Democratizing Chile through Constitutional Reforms
Claudio Fuentes
• The Military and Twenty Years of the Concertación
Greg Weeks
• Political Reform and Gender Equality
Merike Blofield and Liesl Haas
• Human Rights under the Concertación
Cath Collins
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Table of Content, Part 2
Economics and Social Development
• Economic Policy and the Ideology of Stability
Oscar Landerretche
• Fiscal Policy: Promoting Faustian Growth?
Ramón López
• Reducing Poverty: Real or Rhetorical Success?
Silvia Borzutzky, Claudia Sanhueza and Kirsten Sehnbruch
• Social Policies: From Social Debt to Welfare State?
Dante Contreras and Kirsten Sehnbruch
• A Precarious Labor Market
Kirsten Sehnbruch
• Education: Freedom of Choice or Enterprise?
Gregory Elacqua and Pablo González
• Conclusion: The Future of the Rainbow Coalition
Peter M. Siavelis and Kirsten Sehnbruch
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A view from future
Interpretations of History
• Given political constraints, to what extent did
Concertacion governments achieve what was
possible?
• How was Chile transformed politically, socially
and economically during the four Concertación
governments?
• How did the coalition maintain itself in power for
twenty years?
• Is the Concertación indeed a political and
economic "model"?
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From authoritarian to
transitional enclaves
• A consensus model of politics established by
the transition
• But the authoritarian enclaves became
transitional enclaves
• In each area of government, there is a
(different) transition point when this occurred
• A permanent interplay of political constraints
on development and vice versa
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The Pinera Government
• The transitional enclaves are no longer associated
just with the Concertacion: the Alianza had to
operate under them, too
• The Alianza has not attempted to institute
policies that it has advocated for 20 years or
implemented policies it had advocated against:
eg. labour reform, “asistencialismo”, increase in
taxes, regulation of education, etc.
 Nicknamed 5th government of the Concertacion
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Distinguishing
comparative democratic features
• Authoritarian and transitional enclaves
• Elite domination: more extensive power
concentrated in hands of elites that are more
entrenched than elsewhere
• A remarkably homogeneous intellectual elite:
Washington Consensus vs neoliberalism
 Disillusion with politics, declining political
participation, loss of “mistica” or “proyecto pais”,
which makes formulating an alternative
development model problematic
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Transitional Enclaves
• Binomial election system and constitutional
enclaves
• Informal political institutions
• Cuoteo, elite control of candidate selection
and electoral politics
• Party dominated politics
• Elitist and extra-institutional policy-making
• Untouchability of the economic model
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The Fault Lines of
the Concetacion
• Parties (PS & PPD vs PDC)
• Technocrats vs “the Left” (which never had a
strong technocratic base)
• Business interests vs “the Left”
• Traditional transitionists vs “latecomers”
• Intra-generational differences
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Unintended
Consequences
•
•
•
•
Social security dilemma
Productivity dilemma
Inequality dilemma
Some “neoliberal” reforms have taken on a life of
their own: natural resource dependency,
environmental degradation, LM flexibilisation,
privatisation and the business of education, etc.
• A failure to shift from quantity to quality
• Growth sustainability dilemma
 A failure to close the development gap
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Chapter contents
• Each chapter analyses Concertacion policies
on a particular subject from the perspective of
a research question
• We have attempted to combine political and
development analysis throughout
• Each chapter relates to the transitional
enclaves argument and identifies its
respective “transition point”
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Myths of the Model
• A neoliberal economic model
• The Concertacion successfully lowered poverty rates
thanks to its social spending efforts
• The Concertacion invested in paying off the “social debt”
inherited by the dictatorship
• “flagship” social programmes of each Concertacion
government illustrate their commitment to social equity
(eg. Chile Joven, Chile Barrio, Chile Solididario, Chile
Crece Contigo)
• Labour market problems will be resolved through growth
• Social programmes (later universal benefits) can
compensate for labour market weaknesses
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The Economic Model
(Oscar Landerretche)
• Imperative of stabilisation turned into an ideology:
exhausted from utopian experiments
• Economic stability was seen as redistributive
• Model was not neoliberal in the macroecon sense:
soft landing during 1990s, Keynesian anti-cyclical
spending, financial market stability
• Irony: model was more neoliberal in other policy
areas, esp social policies
• “Redefinition” of economic model through
pressure from the Left…discolos
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Problems with the
Model
• One of the world’s most open economies but
unable to diversify its exports sufficiently
• Chile has not closed the development gap despite
being the best economic performer in LA: 1960:
23% of US GDP in PPP, 32% in 2012, 38% in 2020
• Dutch disease
• Failure to close inequality gaps on all levels
(income, health, employment, less so education
and housing)
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Poverty and
Income Distribution
Table 10.1: Poverty Rates and Income Distribution, 1990 - 2009
Poverty
Rate, %
Extreme
Poverty
Rate, %
Poverty Rate
without
Fiscal
Subsidies, %
Extreme
Poverty Rate
without
Fiscal
Subsidies, %
Social
Expenditure
as a % of
GDP
Poverty
Rate based
on 60% of
Median
Income, %
1990
38.6
13.0
39.4
14.2
11.9
27.9
1992
32.9
9.0
33.8
10.2
12.2
27.9
1994
27.6
7.6
28.5
8.7
12.5
28.5
1996
23.2
5.8
24.8
7.1
12.8
28.7
1998
21.7
5.6
23.5
7.1
13.7
28.6
2000
20.2
5.6
21.8
6.6
15.0
28.9
2003
18.7
4.7
20.6
6.1
14.4
27.7
2006
13.7
3.2
15.8
4.5
12.1
26.4
2009
15.1
3.7
19.3
6.3
16.5
25.4
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Gini
Coeff.
0.57
0.56
0.57
0.57
0.58
0.58
0.57
0.54
0.55
Reality beyond
the Rhetoric
• Economic growth, not social policies lowered
poverty, but not as much as in other countries
• Social investment has not been significant
enough to redistribute
• Multidimensional poverty: investment in health,
housing and education has paid off. LMs are still
very problematic
• A focus on absolute poverty rates has led to
complete neglect of income distribution, which
was considered less important
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Chilean Labour
Market Problems
• Informality and precarious employment conditions in
the formal sector
• High job rotation, sub-contracting, multiple tax IDs,
Freelance contracts for salaried workers, etc.
• Labour market segmentation with little mobility (esp
for older workers)
• Antiquated legislation that segments labour market
further (esp. severance pay)
• Labour reform stalled since Pres Aylwin
• Weak unions, unconstructive in development process
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Employment Duration
Type of Contract, % of
total contributors
0-13 m
+13 m 2 yrs
+2 - 3
yrs
Per centages of total workforce
Open-ended contracts
19.8
Atypical contracts
38.6
Total labour force
58.4
10.0
5.1
15.1
7.5
1.7
9.2
5.4
0.6
6.1
4.2
0.3
4.5
3.4
0.2
3.6
3.0
0.1
3.2
53.3
46.7
100.0
Vertical Per centages, by duration of employment
Open-ended contracts
33.9
66.2
81.5
Atypical contracts
66.1
33.8
18.5
Total labour force
100.0
100.0
100.0
88.5
9.8
98.4
93.3
6.7
100.0
94.4
5.6
100.0
93.8
3.1
96.9
53.3
46.7
100.0
Horizontal Per centages, by type of contract
Open-ended contracts
37.1
18.8
Atypical contracts
82.7
10.9
Total labour force
58.4
15.1
10.1
1.3
6.1
7.9
0.6
4.5
6.4
0.4
3.6
5.6
0.2
3.2
100.0
99.8
100.1
14.1
3.6
9.2
+3 - 4
yrs
Source: Superintendencia de AFP.
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+4 - 5
yrs
+5 - 6
yrs
+6 - 7
yrs
Total
Social Security
• Objective: pay “social debt” and shift towards universal
entitlements ….and by implication lay foundation for a
welfare state (“sistema de proteccion social”)
• With low fiscal revenues
• Little political will to undertake structural reform (“Fondos
Solidarios”)
• A tendency to institute elaborate programmes with
minimal funding
• Focus on coverage (quantity) not quality
• Existing social benefits cannot compensate for deficiencies
in employment conditions
 Rhetoric has been more successful than fact
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Transition points:
Lagos presidency failed to
take advantage of his statemanship
• Lagos felt restricted by being the first socialist president of the
Concertacion, cautious by nature:
• Auge negotiation under Lagos
• Lagos was a “big picture” president without a political
mayority, view to future history of his presidency
• Management of economic crisis missed opportunity for anticyclical spending
• Lagos pushed back against political constraints, but probably
not hard enough from hindsight
• Intellectual exhaustion of Concertacion set in + alienation of
PDC
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Transition points:
Bachelet presidency
• First political majority
• Constrained by being the first female president
• An attempt to break out of politics as usual: gender parity,
gobierno ciudadano, new faces, but no big push for pol. reform
• Illustrates strength of status quo; by 2007 Bachelet government
ressembled previous ones
• Social protection rhetoric constructed after the fact, not presented
as an alternative: “next step” policy
• Management of crisis broke economic molds
• Lack of genuinely new political ideas and “mistica”
• Concertacion exhaustion and fragmentation
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Political Conclusions
• Normalization of politics typical of posttransitional societies
• But entrenched elites continue to shape
politics: no significant push for strengthening
of democracy
• Contradictory normalisation: elites vs citizens
• Disenchantment of electorate with politics
• Transitional enclaves became accepted as
“normal” until students demonstrated
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Development
Conclusions
• Gradualist approach to change and
development
• No big ideas, no development strategy after
2000, no risky political decisions
• Gradual increase in concern over sustainability
of the economic model among the centre-left
• Student protests put new issues on the
agenda
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