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Long and narrow, Chile clings to the western edge of South America's South­ern Cone. Hugging - page 42 / 46





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Chile                                    477

In addition to market-friendliness, renovated socialism also affirmed a concern for social equity. To that end, the Lagos administration revived efforts to reform that labor code in an effort to remove its worst pro-business biases. It has also introduced a mild tax reform bill that primar­ily affects business to raise revenue for proposed increases in spending for education and health. Business groups and conservative political parties have bitterly opposed the Lagos administration's bills, as well as its in­tention to put some teeth into environmental policy. They have threatened the government with investment strikes that would stymie economic re­covery. The Lagos administration has countered citing evidence that in­vestment rates have not been adversely affected by the proposed reforms. It then accused the private sector of deliberately misleading the public over the consequences of those bills, strongly implying that business had over­reacted to mild and just reforms by raising the specter of the shadow of the past.

Despite these tensions between the private sector and the Lagos admin­istration, on balance, recent events suggest that by 2001 Chile had less to fear from the conflicts of the past than many Chileans thought when the transition to democracy began in 1989. Conflicts over potentially destabiliz­ing issues such as human rights, constitutional reform, economic develop­ment, and social policy were institutionally channeled. For example, human rights and constitutional questions wound their way through the legal and legislative systems or were settled in executive branch-sponsored negotia­tions between the parties involved. The debate over economic development and social equity did not, by and large, exceed the normal political differ­ences over levels of taxation and regulation common in developed demo­cratic countries. The venue for such debates was the proper one: the legis­lature, rather than rule by presidential decree.

However, these positive steps fell short of advancing the cause of social justice in Chile, of helping Chile to become a more egalitarian society, of ameliorating its environmental degradation, and of restoring full political democracy. Chile's income distribution remained one of the most unequal in Latin America; its labor code was one of the most regressive; and access to decent health, education, and housing were restricted to 25 percent of the population that could afford it. On many of these measures, Chile had not recovered to standards that existed before military rule, although the fig­ures were an improvement over those prevalent during the dictatorship. Chile achieved political and economic stability, but at the cost of undemo­cratic institutions and of making a fetish of economic growth. Restoring Chile to full political democracy and achieving a more equitable distribution of the fruits of economic growth depend, in no small measure, on more flexi­bility among conservatives. They must lose their fear that normal debates and give and take over taxes, regulation, labor relations, and mild limits to property rights are somehow threats to the basic socio-economic order. To the contrary—as is the case in advanced capitalist democracies—they are ways of preserving it.

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