Democratic Chile: The Politics and Policies of a Historic Coalition Kirsten Sehnbruch and Peter...

Democratic Chile: The Politics and Policies of a Historic Coalition

Kirsten Sehnbruchand

Peter Siavelis

11th February, 2013

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Table of Content, Part 1Politics 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


Table of Content, Part 2Economics 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


A view from futureInterpretations 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"?


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


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


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


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


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


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


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”


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


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


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)


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, %

Gini

Coeff.

1990 38.6 13.0 39.4 14.2 11.9 27.9 0.57 1992 32.9 9.0 33.8 10.2 12.2 27.9 0.56 1994 27.6 7.6 28.5 8.7 12.5 28.5 0.57 1996 23.2 5.8 24.8 7.1 12.8 28.7 0.57 1998 21.7 5.6 23.5 7.1 13.7 28.6 0.58 2000 20.2 5.6 21.8 6.6 15.0 28.9 0.58 2003 18.7 4.7 20.6 6.1 14.4 27.7 0.57 2006 13.7 3.2 15.8 4.5 12.1 26.4 0.54 2009 15.1 3.7 19.3 6.3 16.5 25.4 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


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


Employment Duration

Type of Contract, % of total contributors 0-13 m

+13 m - 2 yrs

+ 2 - 3 yrs

+3 - 4 yrs

+4 - 5 yrs

+5 - 6 yrs

+6 - 7 yrs Total

Per centages of total workforce Open-ended contracts 19.8 10.0 7.5 5.4 4.2 3.4 3.0 53.3 Atypical contracts 38.6 5.1 1.7 0.6 0.3 0.2 0.1 46.7 Total labour force 58.4 15.1 9.2 6.1 4.5 3.6 3.2 100.0

Vertical Per centages, by duration of employment Open-ended contracts 33.9 66.2 81.5 88.5 93.3 94.4 93.8 53.3 Atypical contracts 66.1 33.8 18.5 9.8 6.7 5.6 3.1 46.7 Total labour force 100.0 100.0 100.0 98.4 100.0 100.0 96.9 100.0

Horizontal Per centages, by type of contract Open-ended contracts 37.1 18.8 14.1 10.1 7.9 6.4 5.6 100.0 Atypical contracts 82.7 10.9 3.6 1.3 0.6 0.4 0.2 99.8 Total labour force 58.4 15.1 9.2 6.1 4.5 3.6 3.2 100.1

Source: Superintendencia de AFP .


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


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 anti-

cyclical spending• Lagos pushed back against political constraints, but probably not

hard enough from hindsight• Intellectual exhaustion of Concertacion set in + alienation of PDC


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


Political Conclusions• Normalization of politics typical of post-

transitional 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


DevelopmentConclusions• 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

Democratic Chile: The Politics and Policies of a Historic Coalition Kirsten Sehnbruch and Peter...

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