The Economist USA - 26.10.2019

The EconomistOctober 26th 2019 The Americas 31

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For governments eager to reduce it, go-

ing easy on gangs, as amlowas doing be-

fore the shootout, can seem the easiest tac-

tic. In El Salvador the government secretly

brokered a truce between gangs in 2012 that

halved the murder rate. Even as the govern-

ment of Mr Calderón waged a war on organ-

ised crime, it disproportionately locked up

the rivals of the Sinaloa gang, raising suspi-

cions that it was merely seeking to give Mr

Guzmán senior a peaceful monopoly. The

strategy of presidents before amloof re-

moving kingpins caused infighting, as

would-be heirs killed each other to seize

vacant thrones. Splintering gangs found

new lines of work, such as fuel theft, and

spread across the country.

amlomay be betting on an implicit deal

in which the state and the crime groups

treat each other gently, buying time for

poverty-eradication to work its pacifying

magic. On that theory, the Culiacán opera-

tion was a departure from his strategy rath-

er than an expression of it. But pacts can go

wrong. When the truce in El Salvador fell

apart, the murder rate rose to a higher level

than it had been before.

The worry is that the debacle in Culia-

cán signals to gangs that if they threaten

enough bloodshed the state will bend to

their will. amlohas given them the incen-

tive to be more violent and unreasonable

when threatened, not less.

Even if the murder rate falls because the

government attacks gangs less aggressive-

ly, there is little reason to expect success

from amlo’s plan to undermine their pow-

er. Mexico’s spending on security is far be-

low that of other Latin American countries

as a share of gdp. The president’s silver bul-

let against recruitment—rapid economic

growth—is proving tricky to discharge. His

Bello Days and nights of rage

W

ith sixlines, modern trains and 136

stations, the Santiago metro is in

many ways a model public service in a

region where such things are lacking. It

carries 2.7m passengers a day in a city of

7m, and has persuaded part of the middle

class to leave their cars at home. But in a

paroxysm of rage that began on October

18th protesters set fire to stations and

trains, leaving only one line operating.

This arson was part of a collective ner-

vous breakdown in Chile, ranging from

peaceful protests demanding a fairer and

less unequal society, to nightly looting of

supermarkets and feral criminality, with

marauding delinquents robbing homes.

Sebastián Piñera, the centre-right presi-

dent, declared a state of emergency and

curfew and sent the army onto the streets

for the first time since General Augusto

Pinochet’s dictatorship. At least 18 people

died, most of them looters.

These events have shaken what was

Latin America’s most stable and success-

ful country. They come as the region is

convulsed by turmoil. Rioting forced

Ecuador’s government to reinstate fuel

subsidies. Peru’s president has dissolved

the country’s congress. Protests hit Boliv-

ia, where the president may be trying to

steal an election. Populists are in power

in Brazil and Mexico and will be soon,

perhaps, in Argentina.

The details vary. But there are some

common threads. They include the sense

of frustrated expectation among the

region’s middle classes. Six years of

economic stagnation have made Latin

America’s deep inequalities less toler-

able. Corruption scandals have discredit-

ed politics and politicians. Weak politi-

cal parties no longer channel

discontents. There is a copycat element:

arsonists have smart phones, and watch

events in Barcelona, Paris or Quito.

The immediate trigger in Chile was a

modest 3.7% rise in the metro’s peak-hour

fares, but discontent has been growing

there for more than a decade. Since 1989

the country’s restored democracy has

maintained the broad outline of the free-

market policies installed by Pinochet’s

dictatorship. Those policies have brought

economic success. The poverty rate has

fallen from over 40% in 1990 to under 10%

today. The middle classes now form a

majority. Income inequality is below the

Latin American average. Still, many Chil-

eans struggle to make ends meet.

Polls show that many Chileans think

the country’s democracy is rigged in favour

of a small elite, and they have a point.

Economic and political power is concen-

trated. Some years ago your columnist

attended a drinks party of about 60 people

in Santiago. A friend whispered in his ear:

“You realise that half of Chile’s gdpis in

this room.”

The rich pay less tax as a share of in-

come in Chile than in other countries in

the oecd, a club of mainly developed

economies. Most Chileans worry about

“low pensions, lack of access to decent

housing, health care and medicine, and

of again falling into the poverty from

which they escaped”, the rector of the

Catholic University, whose economists

dreamed up the Chilean “model”, wrote

this week.

Mr Piñera, a billionaire who was

president from 2010 to 2014, is part of

that elite. He was re-elected in 2017 be-

cause in his first term the economy

(helped by high copper prices) grew

faster than under his successor, Michelle

Bachelet, a Socialist. “Better times are

coming,” he promised. Voters are still

waiting, partly because Chile’s open

economy is harmed by President Donald

Trump’s trade war with China. Though

lacking in spontaneous empathy, Mr

Piñera was trying to inject a little more

fairness into Chile’s system, as Ms Bache-

let did. He promised a bigger public

top-up for a private pension system that

offers an average benefit of just $340 a

month.

But the improvements have been slow

to come. Take the health system. Much

care is provided by private insurers. A

middle-class woman pays around $300 a

month (and extra for medicines and

operations). Insurers refuse to cover

pre-existing conditions, making it hard

to switch providers. Many pensioners

cannot afford the premium, just when

they need care most.

Mr Piñera seems to have got the mes-

sage. After cross-party talks, he an-

nounced an immediate boost to pen-

sions and health-care coverage by the

state. Left-wing opponents have been

rejoicing at his travails. But that may be

premature. The Chilean model can be

improved with more social provision

and a crackdown on oligopolies. It does

not need reinvention.

Chile’s model needs fixing, not overturning