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.