Will Gabriel Boric’s Leftist Plan for Chile Succeed?

January 7, 2022 Topic: Gabriel Boric Region: Latin America Tags: ChileGabriel BoricLeftismSocialism

Will Gabriel Boric’s Leftist Plan for Chile Succeed?

Chileans have decisively said that “slow and steady,” regardless of its successes, is not good enough.

His top campaign promises were to sharply increase taxes on upper-income individuals and businesses, including the mining sector, and to replace Chile’s private pension system with a state-run one. He has already spoken about slowing down the pace of tax increases and allowing those enrolled in private pension systems to keep their contributions. But he clearly wants big changes. For example, Boric also announced his opposition to a $2.5 billion copper mining project.

The ongoing constitutional convention, which is dominated by leftists, may give Boric an ace up his sleeve if he struggles to make deals with congress. If Boric fails to gain congressional support, the convention may write its preferences on the environment, economy, social welfare, and the role of the security forces into a document—though it would have to be submitted to the Chilean people for final approval.

Whether through legislation or a new constitution, how far will Chile’s new government go? Its goals—increased social protection for the poor, greater access to education, more attention to the environment—all speak to genuine needs. The new focus on gender equity, indigenous rights, and human rights performance reflect concerns of the more educated and urbanized Chile.

But at the same time, this vision raises risks. Chilean voters may want a Western European-style social democratic welfare state. However, Chile is at best an upper-middle-income country. Its GDP per capita is among the best in South America, but even adjusting for the lower cost of living, is less than half that of Germany or Sweden.

Is there some room for higher taxes, greater social protection, and more concern for the environment? The answer is probably yes, especially as Chile remains a country where inequality is high and the overall tax burden is low. But if taxes rise too quickly, and if mining royalties are dramatically raised and projects are shelved, capital will look elsewhere. Boric and his coalition have said little on how they will create the jobs the country needs.

How far and how fast to go may be the difference between success and failure. But Chileans have decisively said that “slow and steady,” regardless of its successes, is not good enough.

Richard M. Sanders is a Global Fellow of the Woodrow Wilson International Center for Scholars. Formerly a member of the Senior Foreign Service of the U.S. Department of State, he served at the U.S. Embassy in Chile from 1991 to 1994 and as Director of the Department’s Office of Brazilian and Southern Cone Affairs from 2010 to 2013.

Image: Reuters.