SANTIAGO, Chile- The project for the new Constitution of Chile , which will be put to the vote this Sunday, directs the South American country to put a tombstone on the neoliberal economic system imposed by the dictatorship of Augusto Pinochet (1973-1990), to lay the foundations for a model with social rights.
The Constitution in force since 1980 was the first to establish a neoliberal economic system, and since the return to democracy in 1990 it had several reforms to add more regulations. However, it left essential areas such as health, education and pensions in private hands.
“Chile is one of the world examples, one of the iconic countries of what has been called neoliberalism, an economic model in which a subsidiary state operates, which means that private initiative is always the first option,” explains Aldo Madariaga. , professor at the Diego Portales University and associate researcher at the Center for the Study of Conflict and Social Cohesion (COES), in an interview with Expansión.
If the proposal is approved, Chile will go from being a subsidiary State to a Social State of Rights, that is, one that guarantees social rights claimed for years on the streets of Chile, but contains modifications whose scope generates deep divisions among economists.
The original version of the Constitution drafted during the dictatorship in 1980, did not establish bank or business regulation; it contained low tax rates and almost no environmental regulation or free competition.
“This model has left two very large liabilities. One is social, with much that has been left behind and that is reflected in the inequality figures, on how wealth is concentrated,” said Madariaga, “Environmental issues are also very important, where production has been prioritized over use. rational use of natural resources.
What is a social and rights state?
The new proposal guarantees social rights claimed for years in the streets of Chile, but contains modifications whose scope generates deep divisions among economists.
It seeks to “continue deepening the change towards a welfare state, although in these years of return to democracy there have been many changes that have pointed to that in the main,” Cristian Echeverría, director of the Center for Studies in Economics and Business Development University.
“What we are doing is looking for a text that unites us, claiming what the developed countries did a long time ago, which is the constitutional state of rights,” said Nicolás Eyzaguirre, former minister of the center-left governments and former director of the International Monetary Fund. (IMF), in statements to Radio Cooperativa.
Previous polls, vetoed from two weeks before the election, indicate an advantage of the rejection option.
The proposal, drafted over a year by a joint constitutional convention with the participation of representatives of the original peoples, establishes a “Social State of Rights”, with a state and universal system of health and education, and the end of the private administrators of pension funds, AFPs, an example of the Mexican Afores.
The new text restores the effective right to strike, decentralizes the State and establishes the payment of a “fair price” for expropriations. It maintains the autonomy of the Central Bank and ends with property rights over water granted in perpetuity in the current Constitution.
How will social rights be financed? The challenge
If the new Constitution is approved, Congress —today I divide almost 50% of the political forces of the right and left— must process laws that enable the implementation of the new social rights.
“Poetry is confused with reality. These social rights are going to give rise to a lot of frustration because obviously there are not the resources for that,” warns Joseph Ramos.
The implementation of the social rights embodied in the Constitution proposal would consist of from 8.9% additional points to the Chilean GDP, that is, about 28,500 million dollars, up to 14.2% of the GDP, about 45,000 million dollars, according to a study carried out by six economists from the Catholic University of Chile.
“Chile’s budget for 2022 is 82.5 billion dollars “that is 23.4% of GDP. According to calculations, the total additional spending for this year with the new Constitution would be 38% and 60%, and it would have to be spent every year. years, because it is annual incremental,” explained Gabriel Ugarte, an economist at the Chilean Center for Public Studies, according to a statement.
The new proposal runs parallel to the series of reforms promoted by the government of the leftist Gabriel Boric, who took office last March to replace the conservative Sebastián Piñera (2018-2022).
Boric, who calmed the waters by appointing the former president of the Central Bank, Mario Marcel, to the Treasury, promotes the introduction of a new mining royalty and a reform of the private pension system that currently grants a majority of pensions below of the minimum wage ($420).
To finance the reforms, Boric proposed a tax adjustment that seeks to collect almost 4% of GDP, at a time when the Chilean economy begins a phase of slowdown and faces high inflation (13% per year).
“In the tax reform, what we aspire to is to be able to collect more, thinking in the long term, in order to build a State that guarantees universal social rights that allow us to generate a more cohesive country, where the place where you were born does not determine so The place where you are going to die is important,” Boric said Tuesday night, speaking before mining businessmen.
With information from AFP
