An economy in great shape, but not leaking

February 26, 1996|By Richard Reeves

SANTIAGO, Chile -- How are things in Chile? Depends on whom you ask. Just like back home.

The answers I hear traveling through this beautiful and energetic country sound like an eerie echo of the current political debate in the United States.

Big people who care about big numbers, like gross national product and government reserves, say things are in very good shape, the best in South America. But little people (and now their wives and children) are running in place, just trying to keep up or keep what they have.

''The economy is in great shape,'' said the patriarch of a large family that helped create this isolated country he still sees as a European enclave in a Latin continent. ''Look at the numbers. Productivity gets higher and higher every year, savings rates are five times yours, and we are growing every year, 5 percent, 6 percent, 7 percent.''

''It's not leaking,'' said a schoolteacher moonlighting as a tour guide, leaving me baffled for a moment until I realized he was talking about what an American would call ''trickle-down.'' (He earns the equivalent of $400 a month as a teacher.)

A familiar complaint

''If you believe the government's good numbers -- and most of us do not -- all this 'growth' they talk about is not leaking down to the rest of us,'' he said. ''It is hard to maintain a living standard even with everyone in the family working all the time.''

Sound familiar? Sound like Pat Buchanan?

It should. Chile, a country more determined than rich, began experimenting with the free markets and trickle-down or supply-side economics in the 1970s, before the United States did the same under Ronald Reagan. The economy was being run by ''Chicago boys,'' bright young Chileans who learned new conservative free-market economics at the University of Chicago.

In 1988, voters rejected the military regime of Gen. Augusto Pinochet, who had overthrown the elected socialist government of Salvador Allende in 1973 -- with the backing of the U.S. Central Intelligence Agency and American companies whose businesses were being taken and nationalized in the helter-skelter manner of Marxist revolution.

General Pinochet's army ruled by killing or exiling anyone who got in its way and then refused to restore the government to politicians -- liberal, conservative or radical.

But the military did restore order and a measure of prosperity to the country, and General Pinochet came to believe old oligarchs who told him he was respected and loved. So, he tried to legitimize his rule in a national referendum and was defeated. Chileans love order -- it is said General Pinochet's tanks stopped for red lights on their way to the presidential palace during the coup -- but they loved freedom and democracy more.

What is an economy for?'

Now that is history, or so Chileans hope. The question on the political table here now is the same as in the United States: What is an economy for?

Ordinary people can't eat numbers, even if they believe the encouraging statistics of economists and politicians. Is economic policy supposed to produce big numbers and big opportunity for a few? Or is to make life comfortable, or tolerable, or secure for the many?

Whichever numbers one believes, life in Chile today is certainly tolerable. It is a likable country that seems to believe many of its own myths, beginning with the idea that it is European -- northern European at that.

Although most Chileans are dark-haired and dark-eyed, which would be expected in a country populated by native Indian tribes when the Spanish came almost 500 years ago, the school uniform catalog published last week in the country's dominant newspaper, El Mercurio, featured so many blue-eyed blonds it looked as if it had been photographed in Sweden.

The nation is conceited, perhaps because it was isolated by the geography of the Pacific Ocean and the Andes mountains until recent years. Chileans often dismiss other Latin American societies as ''lazy'' or ''show-offs.'' Darker Chileans, mestizos of mixed Spanish and Indian heritage, are scorned as ''short people.''

Officials and the well-to-do have their own anecdotes and statistics to show that they are more productive than Americans, working more hours, harvesting more bushels, making better widgets.

More power to them. It may be tough over time to be a small country of 13 million people in a world economy the Chileans are eager to become part of after all the years, centuries even, of isolation and protectionism.

With luck, they may figure out how to create and secure a prosperous middle class in a world of big numbers, increasingly savage capitalism producing fabulous wealth and wealthy -- and huge numbers of people terrified of being left behind with little or nothing.


Richard Reeves is a syndicated columnist.

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