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Perishable Pundit: Chile sits at political precipice

Jim Prevor

When we launched The Global Trade Symposium as a sister event to The New York Produce Show and Conference, we knew for sure who we wanted to get to keynote that event. Mary Anastasia O’Grady, an Opinion Columnist for The Wall Street Journal, who writes The Americas column:

Mary Anastasia O’Grady writes “The Americas,” a weekly column on politics, economics and business in Latin America and Canada that appears every Monday in the Journal. Ms. O’Grady joined the paper in August 1995 and became a senior editorial page writer in December 1999. She was appointed an editorial board member in November 2005. She is also a member of the board of directors of the Indianapolis-based Liberty Fund.

In 2012, Ms. O’Grady won the Walter Judd Freedom Award from The Fund for American Studies. In 2009, Ms. O’Grady received the Thomas Jefferson Award from The Association of Private Enterprise Education. In 2005, Ms. O’Grady won the Bastiat Prize for Journalism, awarded by the International Policy Network for her articles on the World Bank, the underground economy in Brazil and the bad economic advice the U.S. often gives to Latin American countries. In 1997, Ms. O’Grady won the Inter American Press Association’s Daily Gleaner Award for editorial commentary.

Ms. O’Grady received a bachelor’s degree in English from Assumption College and an M.B.A. in financial management from Pace University.

Her Keynote Presentation for us was titled this way:

What we know about the prerequisites for prosperity and how liberty and property rights lay the foundation for mobility, commerce and success.
Presenter: Mary Anastasia O’Grady/THE WALL STREET JOURNAL

In the course of her brilliant presentation, Ms. O’Grady expressed doubts about the future for Chile.

Chile had become the most prosperous country in Latin America — the evolution, known as the Miracle of Chile was credited to the Chicago Boys, a group of young economists who studied under Milton Friedman at the University of Chicago and set about to liberalize the economy of Chile. Last year, a documentary came out called Chicago Boys.

Tom Tjerandsen, then President of McLure & Tjerandsen and longtime managing director for North America for the Chilean Fresh Fruit Association, was irate at her skepticism about Chile. He rose and pointed out the enormous success that Chile had achieved.

She questioned whether the culture in Chile would sustain those victories. Recent history has made Ms. O’Grady seem prophetic.

Now Ms. O’Grady writes about Chile’s Do-or-Die Referendum:

Chileans will cast ballots Sept. 4 in what is arguably the most consequential vote for the nation since it returned to democracy in 1989. But the political-science tutorial from this exercise goes well beyond the country’s boundaries.

In an October 2020 referendum, 78% of Chileans voted in favor of drafting a new constitution. A specially elected assembly spent the better part of a year writing the document, which was presented to the nation in its final form this July 4. Now the electorate is being asked to “approve” or “reject” it in another referendum set for next week.

Since April, surveys have consistently shown that more voters plan on voting against adoption than for it. That ‘spread’ is now running at about 10 percentage points, but the final tally could be much closer. In a poll released Aug. 19 by Pulso Ciudadano, 45.8% of those surveyed said they would vote against ratification of the document versus 32.9% who plan to approve it. But in the same survey, 15.7% said they were undecided. That’s the wild card.

Odds are that the final spread between the two sides will be narrow. If so, what was once billed, by both the right and the left, as a new national charter of rights to make Chile “a house for all,” instead made around half the electorate—or more—feel left out.

Parts of the column remind US citizens of the burning, looting and vandalizing that took place in the George Floyd riots in cities such as Minneapolis:

One lesson for any country seeking to build a free and just society is that terrorism can’t produce national unity. It is true that the Communist Party and the radical left, including its representatives in the indigenous community, gained control of the constituent assembly in the May 2021 elections. But the constitutional project was introduced only because militants, anarchists and criminals were burning, looting and vandalizing the country in a rampage, begun in October 2019, that the government was at a loss to contain.

As part of the rules Congress set for electing the assembly, independent, special-interest candidates, competing in local districts, were allowed to skip the onerous process of organizing political parties but still coalesce to get on the proportional-representation ballot. Even the Socialist Party admits this was “a big mistake.” Plus, 17 seats were reserved for indigenous activists. These antidemocratic provisions distorted the outcome in favor of fringe radicals who mistook their victory for broad popular support.

Chile’s center-right objects to the draft because it undermines property rights, free speech and the rule of law and expands the role of the state in the economy. But republican opposition isn’t enough to explain the unpopularity of the assembly’s work. Extreme-left President Gabriel Boric’s support doesn’t help. His tenure is best known for high rates of violent crime, economic malaise and inflation topping 13% annually. Yet it may be the objections of the country’s social democrats that best demonstrate why backing for the draft constitution has collapsed.

Former President Eduardo Frei, a Christian Democrat, favors a new constitution. But in July he announced he will vote to reject the draft. Among his stated concerns is an inadequate “balance and division of powers,” such that an elected majority in control of the executive and legislature could move the country “towards a dictatorial regime” similar to “those in the world that are becoming frequent.”

Translation: Let’s not go the way of Venezuela, Bolivia and Nicaragua.

Mr. Frei also worried that the proposal runs the risk that judges will become “politically controlled.” He again cited the experience of the neighbors: “The independence and non-politicization of [the judicial branch] is crucial because more and more dictatorships are started and then consolidated through the capture of the judiciary.” Other prominent left-of-center opponents include Chilean economists René Cortázar, Rodrigo Valdés and José De Gregorio.

Perhaps more than any other aspect of the draft, it is the establishment of a plurinational Chile—creating nations within the country and a variety of legal systems applying to different groups—that most rankles the electorate. From elites in Santiago to humble working-class Chileans in far-flung areas of the country, plurinationalism is seen as an assault on the very idea of Chile. Mr. Frei called it a potential “threat” to the “unitary state and equal rights for the country’s inhabitants.” As Mr. Cortázar explained, “instead of contributing to a more united nation, [the draft constitution] proposes to divide us into several nations.”

Chile’s indigenous don’t seem to be fans either. In a survey of Chileans who self-identify as Mapuche—conducted earlier this year by the Santiago-based Center for Public Studies—70% opposed independence for their community and only 12% favored a plurinational state.

Thanks to the survival of institutions like free speech and debate in the public square, there is a chance to defeat this proposal. Less certain is Mr. Boric’s commitment to modern liberal democracy and to stamping out the terrorism that spawned this disastrous constitutional experiment.

The new proposed constitution for Chile is 54,000 words. The United States Constitution, including the signatures of the 39 delegates that signed, is 4,543 words. In other words what has happened is that the writing of a new constitution lost the idea of being a framework within which a people can govern themselves.

Instead it became a moment to try and ram through a bunch of specific desires. The Economist put it this way:

Voters should reject Chile’s new draft constitution. It is a fiscally irresponsible left-wing wish list. But overall the draft is a confusing mess, full of woolly language that more or less guarantees decades of squabbling about what it actually means. “Nature” would be given rights. The draft mentions “gender” 39 times. Court rulings, the police and a national health system will have to operate with a “gender perspective”, which it does not define.

The document is far less business- or growth-friendly than the current constitution. It gives trade unions the sole right to represent workers, guarantees them a say in corporate decision-making and allows them to strike for any reason, not just those relating to work. It says that everyone has the “right to work” and that “all forms of job insecurity are prohibited”. That could make it rather hard to fire anyone. Landowners, such as farmers, could potentially lose the property rights to water on their land. Compensation for expropriated land would not be at a market price but at whatever Congress deems a “just” one.

The draft creates a portfolio of socioeconomic rights that could blow up the budget. It requires the establishment of several new bodies, such as an integrated national health system, and cradle-to-grave care, without giving much thought to how they would be funded. The state would oversee the provision of housing, to which it says every person has a right. Property speculation would be banned. So would for-profit education.

Legal checks and balances on the government would be watered down. A new council would have power over all judicial nominations; previously the Supreme Court, the president, the court of appeals and the Senate all had a role. The draft upends the budget process by giving Congress new powers to propose spending bills, although the president can veto them.

The document is ridiculously broad. It says the state should “promote the culinary and gastronomic heritage” of Chile and recognise “spirituality as an essential element of the human being”. Everyone has a “right to sports”. Non-humans get a look in, too: the state will promote “education based on empathy and respect for animals”.

The Pundit’s family has a long history in Chile. We were selling onions from Chile before the country even started shipping grapes. We have many good friends in the country.

Let us hope that the people of the country take a step back from the precipice and act to reject this plan.



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