michael barbaro

From The New York Times, I’m Michael Barbaro. This is “The Daily.” Today: Chile’s free-market reforms have been celebrated as an economic success story — until they weren’t. “The Daily”‘s Annie Brown speaks to our colleague Amanda Taub about why, in Chile, capitalism itself is now on trial. It’s Friday, November 15.

annie brown

So Amanda Taub, let’s start back at the beginning of last month. What was going on in Chile?

archived recording [SPEAKING SPANISH]

amanda taub

On October 6, the Chilean government announced that there was going to be an increase in the fares for the public transportation system, the metro system in Santiago.

archived recording [SPEAKING SPANISH]

amanda taub

And it was 30 pesos, which might not sound like a lot. That’s about 4 cents in U.S. dollars. But for ordinary Chileans, who were already really struggling to make ends meet, it was just too much to bear.

archived recording [CHEERING]

amanda taub

Soon after the fare was announced, it was actually high school students in the center of Santiago who first started this kind of civil disobedience protest movement —

archived recording [SPEAKING SPANISH]

amanda taub

— where they started out by jumping turnstiles or holding gates open for people so they could avoid paying the metro fares altogether.

archived recording [CHANTING]

amanda taub

That then spread to university students. And there are a lot of university students in Santiago.

archived recording [CHANTING]

amanda taub

Chile has had large protests in recent years. That part was not surprising.

archived recording [CHANTING]

amanda taub

But then, around the end of the second week of protests —

archived recording [GLASS SHATTERS]

amanda taub

— things changed.

archived recording 1 In Chile, student-led protests turned deadly this weekend. archived recording 2 A tense week in Chile after violent protests broke out. archived recording 3 According to the government, nearly 20 people have been killed in the clashes, and Chile’s human rights —

amanda taub

And protesters began to burn metro stations.

archived recording Subways, buses and high-rise buildings were set on fire.

amanda taub

They did what some have estimated to be billions of dollars of damage to the metro system in Santiago.

archived recording The demonstrations have closed schools, shut down transportation, and caused several stores and businesses to temporarily close.

amanda taub

Suddenly, there was just this general sense that things were completely out of control and really dangerous.

archived recording [CHANTING]

annie brown

Amanda, what is driving these protests? Because it seems like the magnitude of them no longer matches the thing they were originally about, which was this 30-peso fare hike.

amanda taub

So the problem is not the amount of money itself, necessarily, but the feeling that they already really needed help from the government. And instead of getting it, here they were being squeezed further. Something that I’ve heard a lot as I cover protests and revolutions around the world is that they’re often sparked by a small increase in the price of daily necessities. So food, public transportation, the price of gas is often a big one. Something like an increase in subway fares, if you’re already really worried about basic necessities and then you have to pay that multiple times a day, it makes it just feel inescapable.

annie brown

So the fact that people in Chile are upset about the subway fare, this small increase in the subway fare, is really a marker, a sign that there’s something much deeper happening in Chile.

amanda taub

Right. It’s become sort of the crucial piece of evidence for a lot of people that the government isn’t working for them, that it’s not aware of their lives and it’s not trying to solve problems for ordinary people. And on top of that, there was a series of scandals involving either corruption or tax evasion by wealthy and powerful Chileans. And that created this growing anger and a sense that the entire system might be illegitimate, that it wasn’t just about distribution of money, but about fundamental fairness and who the government was working for and who it was taking for granted.

annie brown

And what does the government do?

archived recording (sebastián piñera) [SPEAKING SPANISH]

amanda taub

The government did a few things. The Chilean president, Sebastian Piñera, he said —

archived recording (sebastián piñera) [SPEAKING SPANISH]

amanda taub

This is a state of emergency now.

archived recording (sebastián piñera) [SPEAKING SPANISH]

amanda taub

And then Piñera announced that they would cancel the subway fare increase. But then, when that didn’t quell the protests —

archived recording [CHANTING]

amanda taub

— he said —

archived recording (sebastián piñera) [SPEAKING SPANISH]

amanda taub

— we are at war. And what people heard when he said that was essentially that his government considered itself at war with the Chilean people who were protesting in the street. And then he called the military out to restore order.

archived recording [SHOUTING]

amanda taub

And what that looked like was tanks rolling down streets in the capital of Chile, in Santiago, military forces coming out fully armed, and —

archived recording [SIREN]

amanda taub

— joining the police, who were already in body armor, already driving around in armored vehicles. And so you had all of a sudden these images of tanks facing down Chilean college students in the streets and groups of protesters waving signs calling for political change. And for a lot of Chileans, particularly the ones who had lived through dictatorship, suddenly, this incredibly traumatic moment of Chilean history seemed to be recurring.

annie brown

So walk me through that history. Where does it start?

archived recording Allende! Allende! Allende!

amanda taub

So that story really begins in 1970, when Salvador Allende, who was a socialist, was elected president. But because it was 1970 and it was the Cold War, the United States was pursuing a policy of opposing socialism and communism around the world.

archived recording We all are distressed at the plight of the Chilean people and the failure, really, of the Allende government.

amanda taub

They were very much opposed to his government.

archived recording The government policies have failed. The Marxist theory does not work among a free people.

amanda taub

And so even though he was democratically elected, the United States backed a coup by the military.

archived recording [YELLING]

amanda taub

That removed him from office and installed a military government led by General Augusto Pinochet in his place.

archived recording (augusto pinochet) [SPEAKING SPANISH]

annie brown

And what happens when this new American-backed leader, Pinochet, takes over?

archived recording (augusto pinochet) [SPEAKING SPANISH]

amanda taub

The initial days of the military regime were incredibly brutal.

archived recording In the time we were there, between 400 and 500 people were shot by firing squad in groups of 10 to 33.

amanda taub

They rounded up activists, anyone who was seen as a leftist, a potential agitator, a potential threat to the military’s control and power.

archived recording (speaker 1) 33 was the largest group that was led out to be shot. archived recording (speaker 2) Inside the stadium? archived recording (speaker 1) Inside the stadium.

amanda taub

They were arrested and imprisoned in the national stadium, which gives you a sense of the scale of these roundups, that it was a stadium full of protesters.

archived recording Stampeding people physically to death to get information or because they don’t like them or whatever. We saw it.

amanda taub

The most famous of them was a man called Víctor Jara, who was a musician, but he was really more of a national cultural figure who, for a lot of people, embodied Chilean identity.

archived recording (víctor jara) [SINGING]

amanda taub

He had one popular song called “El Derecho de Vivir en Paz,” which means “the right to live in peace.” He was arrested, tortured by the military. They crushed his hands and then mocked him, saying, try to play the guitar now. Then they killed him. His body was riddled with bullets and then dumped a few days later in a poor neighborhood on the edge of Santiago, just left on the side of the road. Víctor Jara, I think, became symbolic for a lot of Chileans of the brutality of the military regime.

annie brown

And how does the U.S. respond to this, given that it had a hand in the rise of this dictator?

amanda taub

This was the Cold War, and this was one part of their Cold War foreign policy, a way to protect what they saw as U.S. interests against the potential rise of communism around the world. And the United States recognized Pinochet as the legitimate government of Chile and was very supportive of his regime. So for the United States, this was an opportunity to pursue a goal that many in the U.S. government had had for a long time, which was to get Chile to adopt more free-market, economically conservative policies. And they had been pursuing this for a while through this program that was almost like an exchange program, where they encouraged and sometimes paid for Chileans to come to the United States to study economics at the University of Chicago.

archived recording (milton friedman) The question is, which system has the greatest chance for enabling poor people to improve their lot?

amanda taub

Led by Milton Friedman, who was the most famous thinker of the movement at the time.

archived recording (milton friedman) And on that, the evidence of history speaks with a single voice. The freer the system, the better off the ordinary poor people have been.

amanda taub

And the group of Chilean economists who had come to the U.S. to study, as the U.S. had hoped, they went back to Chile, brought their policies with them and tried to influence the government’s economic policies. They started to be called the “Chicago Boys.” They were known for having adopted this really kind of laissez-faire, extreme free-market view of how things ought to work. And once Pinochet took over, their policies became the foundation of the economic plans that he pursued.

archived recording (milton friedman) That is why the operation of the free market is so essential, not only to promote productive efficiency, but even more to foster harmony and peace among the peoples of the world.

michael barbaro

We’ll be right back.

annie brown

And what exactly were those economic policies that the Chicago Boys were finally able to implement under Pinochet?

amanda taub

So they were really the basket of policies that we now know as neoliberalism. The idea was that the government was supposed to get out of the way of the free market, so state-owned enterprises were privatized, the pension system was privatized, the education system was partially privatized. There was a real reduction in regulations, cuts in taxes. It was essentially the remaking of the economy along the lines that the most influential free-market economists had imagined in their research at the time.

annie brown

So this is a kind of extreme version of a free-market economy, where you remove social safety nets and allow the market to take control.

amanda taub

Exactly. And these ideas were pretty prominent in a lot of parts of the world at the time. Margaret Thatcher was influenced by them in the U.K., Ronald Reagan in the United States. But they didn’t go nearly as far in implementing them. The United States still had Social Security. The U.K. still had the National Health System. But in Chile, instead of incremental changes or incremental reforms, they really kind of went for it. And in 1980, they wrote and imposed a new Constitution, and these ideas were really interwoven throughout the Constitution in order to lock in these reforms.

annie brown

And what effect do these policies have? Do they do what the Chilean government had hoped they would do?

amanda taub

In many ways, yes. Inflation was down, the economy grew, and Chile became a richer country than its neighbors in Latin America. And many people saw this as —

archived recording (milton friedman) Chile is, by all odds, the best success story in Latin America today.

amanda taub

— the best success story of Latin America. They called it “the miracle of Chile.” Milton Friedman was very proud of it.

archived recording (milton friedman) But I am more than willing to share in the credit for the extraordinary job that our students did down there.

amanda taub

And these policies stayed. They were maintained by the subsequent democratic governments, even those that were center-left. So from the outside, Chile looked like the Chilean miracle was continuing, but it turned out that for Chileans, all of that economic growth came with an asterisk. And that asterisk was that, as the years went on, it was true that the country’s economy was growing, but a lot of those gains were accruing to the very rich. Middle class Chileans, poor Chileans were not seeing their lives improve. And in fact, the country’s weak social safety net was making that even more difficult. So for instance, the retirement plan, after it was privatized, it took a long time before the first generation to participate in that plan started retiring in large numbers. And when they did, in the last few years, it became clear that the consequences of this plan were poverty for a lot of Chile’s elderly. And I mean that in the most literal, technical sense. The median payment under the private pension program is less than the poverty line for one person in Chile. That means that 50 percent of people are at that or less. And the minimum payment, the payment that the government will guarantee as long as you have paid into the system for 20 years, which is a big if, is even lower. Works out to about 130 U.S. dollars a month, which is just not enough money to get you very far in Chile.

annie brown

So this idea that by privatizing these systems, you’re letting the market take care of what the government cannot, that has really not panned out.

amanda taub

That’s right. And so when the current president, Sebastián Piñera, who has continued to really embrace these right-wing neoliberal economic policies, announced that they were raising the metro fares by 30 pesos, 4 cents, that felt to a lot of people like the final straw, the last thing that just confirmed to them that the government didn’t have their interests at heart.

archived recording [CHANTING]

amanda taub

It might have stopped there, had the president not taken the step of calling the military out into the streets. Because that was what really confirmed for a lot of Chileans that, as a common chant and slogan of the protest said, “it’s not 30 pesos, it’s 30 years.” That made a lot of people feel like they were not just protesting the metro hike. They were not just protesting the specifics of retirement policy. They were protesting 30 years in which they felt that they had still been trapped under the shadow of the dictatorship, because its policies were still reaching out and affecting their lives. So I flew to Santiago to find out: How much do people really think that they are out there because of 30 years of economic policy and the legacy of the dictatorship? When I got to Chile and was reporting on the ground, something that was immediately striking to me was how it was just everywhere.

archived recording [SPEAKING SPANISH]

amanda taub

The legacy of dictatorship was not subtext. It was text —

amanda taub It says —

amanda taub

— literally, text.

amanda taub — “We’re not everyone. We’re missing those who are dead.” Scrawled graffiti on buildings and written on protesters’ signs and on their T-shirts with pictures of Víctor Jara and quotes from his songs. archived recording [SPEAKING SPANISH]

amanda taub

This was something that people very consciously and very directly connected to the legacy of the Pinochet regime.

archived recording [SPEAKING SPANISH]

amanda taub

I spent a few days just going to as many protest events in as many parts of Santiago as I could. And throughout all of the protests that I attended, really they were talking about the changes that they wanted to see, including the changes to the Constitution, which was just this remarkable and extremely unusual scene, to see regular people — they brought their dogs, they brought their toddlers, they were sitting on the floor, some were eating snacks — having a very serious conversation about what elements of the Constitution would need to be changed, the mechanism that should be used to change it, and what would make it legitimate.

annie brown

And how possible would it be for Chile to rewrite its Constitution? How much of this is just a pipe dream of these protests?

amanda taub

It’s seeming more possible than ever. So President Piñera, in the last couple of days, has said that he would be willing to start the process of coming up with a new Constitution. But that hasn’t satisfied the protesters, because one core demand that they have is that the Constitution come from civil society groups and individuals and regular people, rather than just the politicians. And President Piñera has said that he wants Congress to be the ones to come up with the new Constitution.

annie brown

So the people are saying, we want to be involved in this rewriting of the Constitution that is actually left over from the dictatorship. And the president is saying, O.K., yeah we’ll rewrite the Constitution, but you can’t be involved.

amanda taub

And they’re saying that they think that the government institutions don’t have enough legitimacy to be the ones that come up with the new Constitution. That if they do it, that won’t solve the problem of its illegitimacy, in their eyes. I think the broader context here that we really need to pay attention to is that Chile’s system was essentially an export from the United States. These were ideas that were embraced in the U.S. so much that our government encouraged and exported them all over the world. And Chile took those ideas and ran with them. In some ways, it worked. But now, decades later, we’re starting to see the results of that experiment. And so what’s happening in Chile goes to this question that countries all over the world are asking, which is, basically, is more capitalism always better? Or is there a point when capitalism goes too far? And what’s happening in Chile is one answer to that question.

[music]

annie brown

Amanda, thank you so much.

amanda taub

Thank you.

archived recording (víctor jara) [SINGING]

michael barbaro

We’ll be right back. Here’s what else you need to know today.

archived recording (nancy pelosi) On the investigation front, yesterday was a very somber, prayerful day. I thought it was a successful day for truth, truth coming from the president’s men, people he appointed.

michael barbaro

During a news conference in the Capitol, House Speaker Nancy Pelosi said that the first two witnesses to publicly testify in the impeachment inquiry, George Kent and Bill Taylor, had, quote, “corroborated evidence of bribery” by President Trump.

archived recording So what was the bribe here? archived recording (nancy pelosi) The bribe is to grant or withhold military assistance in return for a public statement of a fake investigation into the elections. That’s bribery.

michael barbaro

Democrats are eager to establish that the president committed bribery, an impeachable offense that is specifically mentioned in the Constitution.

archived recording (nancy pelosi) But I am saying that what the president has admitted to and says it’s perfect, I said it’s perfectly wrong. It’s bribery.

michael barbaro