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Chilean Protesters Claim Inequality Made Them Do It

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Tags Global Economy

10/31/2019

A car stops its march in front of the red light. At the wheel, a 40-year-old lawyer looks at her cell phone to check the time. She is hoping to get home and see her children.

Suddenly, a rumble is heard.

In a matter of seconds, the thief enters the vehicle through the window and snatches her purse, which was lying on the floor of the passenger's seat.

Terrified, she looks at the damage to her car. The window is crashed and the wallet is gone. Also gone are her money, the credit card and some pictures of her family.

However, she is happy to be alive and unharmed.

Observers look dumbfounded, in fear ... outraged. In any normal country, if the robber is arrested, he’ll go to court. In that instance, he could try to justify himself by saying that he stole because he “had nothing,” while she “had a lot.”

Again, in a country where institutions work properly, the thief would serve a sentence. So regardless of his motive, the man will be sanctioned.

Finally, this would seem fine to everyone. At the “micro” level, theft is a crime, and beyond justifications, violence must be punished. This is a basic pillar of any civilized society.

Interestingly, when some similar situations occur at the “macro” level, reactions are not the same. Why do we say this? Because what is happening in Chile now is often explained using the mantra of “inequality.”

Chile and Inequality

In the South American country next to Argentina, a protest that began as a rejection of the increase in the Santiago Metro ticket, became in recent days a matter of urban chaos, with mass demonstrations, vandalism, detainees, and even fatalities.

Faced with clear instances of crime and looting (which included the burning of several trains and even the building of a newspaper), the government of Sebastián Piñera decreed a “state of emergency”.

Obviously, the issue is not just the subway ticket, as there are several groups of protestors that place the origin of violence in economic inequality. It is often said, in fact, that Chile is a country that “grows a lot economically,” but that it is not enough to grow “if growth is unevenly distributed.” This argument deserves to be analyzed in depth.

Firstly, it must be said that Chile is not a “paradise of social equality”, but neither is it a hell.

According to World Bank data, Chile is the eighth country in the Americas in terms of equality. It ranks below Canada, Argentina, Uruguay, and the United States.

However, it also ranks better than Mexico, Paraguay, Colombia or Brazil. So why does inequality only burn newspapers and subway stations in Chile, but not in Paraguay or Colombia?

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Another relevant issue is not only that inequality has been falling in recent decades (especially since the late 1990s), but that Chile has the greatest social mobility of the entire OECD.

That is, in Chile it is much easier to leave poverty behind than in, say, Mexico or even Germany. This may have to do with the great record of economic growth with low inflation and low unemployment over the past 30 years.

Illegitimate Violence

The most fundamental point, however, is different. Because even if Chile was the most unequal country in America, that should not justify violence. Doing so, in fact, would mean giving in to blackmail.

Unfortunately, those who ask for more equality in the world do just that. They tell us the state must fight inequality (charging the rich more taxes and giving the poor more benefits), to maintain certain levels of “social peace.” Then they take the case of Chile, or any other which serves their purposes, to justify their proposals.

Now is this not the same as saying that the state must take part of the wallet from the lawyer and give it to the thief of our opening case so that he does not break the car window? Wouldn't the government, in this case, be doing the “dirty work” of the burglar?

On the other hand, once the redistributive state effectively deepens its forced redistribution, when will it be enough? How many more taxes should you collect? How much more money should you spend?

How much more will have to be taken from the most productive citizens of society in order to give to the least productive ones in order to prevent them from terminating “social peace”?

And what if those who claim are never satisfied?

Inequality is no excuse for violence. Neither should it be the excuse for states to redistribute even more income. (I say “even more,” of course, because all of these countries facing protests already have extensive social programs.) In fact, deepening the path to that scheme would not only lead to an unfair situation, but economic impoverishment.

Chile, with a small state and only a subsidiary role for it, was able to generate a stable macroeconomy that allowed it to triple GDP per capita since 1980 and reduce poverty from 53% in 1987 to 6.4% in 2017.

But be careful: giving in to blackmail can buy some “social peace” in the short term, but in the long term it will undermine the foundations of Chilean prosperity, as it already did in Venezuela, Argentina and also Ecuador.

Iván Carrino director of Iván Carrino y Asociados and Deputy Director of the Master's Degree in Economics and Political Science of ESEADE in Buenos Aires.

Image source:
Getty

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