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addition, the economists took par–
ticular aim at Chile's 40-year-old
policy of import substitution, per–
haps the single most important
barrier impeding the country's
future progress. Under the rules
of import substitution, high tariff
walls kept out nearly all foreign
products except food items and
capital machinery.
1
ntended to protect domestic
industry and jobs, this policy
only fueled greater inflation
since Chile provided simply too
small a market for the country
to produce everything itself. The
result was that Chile's consum–
ers had been forced to accept
h igher-cost, often inferior
domestic goods in place of bet–
ter-made, less expensive foreign–
made merchandise.
The economists have now
brought tariffs down in stages
from an average of 100 percent in
1973 toa uniform 10 percent. A
Chilean can buy an automobile
for $6,500 that under Allende
would have cost $20,000.
Sorne previously protected in–
dustries have gone under, or have
been forced to shape up to meet
the new market. But Chile's busi–
nessmen have so far proved to be
remarkably resilient.
And the stores in downtown
Santiago, chock-full with afford–
able imported merchandise from
around the world, attest to the
country's remarkable turnabout.
Exports Up, Unemployment
Down
Money and effort have been
diverted into developing new
industries. Success has been
attained, for example, in diversi–
fying exports. Copper sales now
provide less than half of export
earnings.
Chile's abundant fruit harvests
have carved out a respected role
in markets around the world. The
forestry industry has shot up
from nowhere to become the
leading export sector after cop–
per. (One particular variety of
pine tree grows ata rate six to ten
times as fast as in the Northern
Hemisphere.)
Naturally, such a radical trans–
formation of an entire nation's
42
economy was not accomplished
without transitional problems.
A particularly difficult chal–
lenge has been unemployment,
which shot up to 20 percent in
March, 1976, and hovered in the
12 to 15 percent range for years
afterward.
Under Allende, unemployment
was low, as little as 3 percent in
1971. But the figure was a facade.
For political reasons, the govern–
ment hired nearly everyone want–
ing a job into state-run enter–
prises whether the enterprises
needed the help or not. "lnter–
vened" banks and businesses were
grossly overstaffed by "politically
qualified personnel." A shake-out
was inevitable.
Significantly, as of March of
this year, unemployment dipped
to 8.3 percent, the last major neg–
ative economic indicator, aside
from inflation, to show real
improvement.
Social Services Overhaul
The broad-spectrum reforms,
contrary to charges levied by
politically motivated critics, have
not been carried out "on the
backs of the poor." But .neither is
welfarism encouraged.
The government now spends
more on education and social ser–
vices than the Allende government
did, since resources no longer have
to be diverted into subsidizing
unprofitable nationalized indus–
tries. (Chile is still a "mixed econo–
my" however, with the 1
O
largest
companies state-owned. These are
generally profitable, however–
even the railroads!)
The latest reform that has
raised eyebrows around the world
is the institution of a
privately
funded social security system. As
in the United States, the govern–
ment's social security fund is
essentially insolvent.
Finally, a new climate of trade
unionism has been created. As in
other segments of Chilean socie–
ty, the labor federations have
been decentralized and depoliti–
cized. Contract negotiations are
now permitted on the enterprise
leve! only, not industrywide. This
way, crippling national strikes are
avoided. Unions also cannot
impose settlements above the
inflation rate.
The upshot of the thorough–
going economic reforms program
has been success in
giving
more
to all the people, especially oppor–
tunities. Chilean citizens, for
example, are free to enter any line
of business they please without a
government permit.
The foreign investor enjoys the
same rights and obligations as a
Chilean investor- putting into
practice the biblical principie of
treating the stranger as one's self.
There are virtually no restríctions
on remitting either capital or
earnings. This policy, quite natu–
rally, has led to a remarkable
upsurge in foreign investment.
Chile is, of course, not a per–
fect society- no government of
this.
world is, regardless of its phi–
losophy or ideology. But the sta–
tistics bear out that Chile is doing
a few things right in a world gen–
erally going haywire. A country
should be judged not by its ideol–
ogy, but by the fruits produced
by and for its citizens.
Breathing Spe ll From Po li tics
By 1973, Chile had become a lib–
eral democracy that had ex–
hausted its institutions. Over a
50-year period, the entire socie–
ty- political parties, business,
labor unions, education- had be–
come so divided into self-serving
interest groups that the country
finally collapsed in on itself.
Because of this experience, pol–
itics has simply been put on hold
while the transitíonal leadership
attempts to inculcate new ways of
thinking on the part of the public
and its future leadership.
The public as a whole approves
of this breathing spell from the
feverish world of politics as usual.
The mood of the majority of Chi–
leans is perhaps best expressed by
a young educated
chilena,
in–
censed by criticism of her coun–
try: "What we Chileans want is
peace and tranquility and order.
We've had it with politics."
Gallup polls reveal that the
government, headed by General
(and President) Augusto Pino–
chet, enjoys wide popular favor.
A fairly common assessment is
The
PLAIN TRUTH