Some Thoughts on Bachelet and Business
A friend of mine in the business world is currently working in Chile, and has now spent several years there. He said he had been thinking about the feedback he’s been getting from Chilean business people about President Bachelet, namely that they don’t like her economic strategies, and believe that with Piñera the current economic boom could have led to 8-9% growth, whereas Bachelet will be unable to achieve the same.
My first reaction is that we should not be surprised that conservative business people would grumble after seeing a socialist elected instead of one of their own. When has business anywhere ever rejoiced about such an outcome?
But I also wonder about the power of perception and conventional wisdom. I tend to agree with Matthew Shugart’s appraisal of Bachelet, that she really has no record of being “leftist” and therefore somehow unfriendly to business. It may well be that business people will either a) change their minds, as many have with Lula in Brazil; or b) keep complaining even while making very nice profits.
What also struck me was that even if the Chilean business right is so concerned, it has clearly been unable to convince the rest of the country. President Lagos left office with a 70+% approval rating. Bachelet’s, meanwhile, is not as high but still over 50% in her first several weeks. It also may well be that people in business are among the few who look back with nostalgia on the economic policies of the Pinochet years, while many Chileans—especially women and the young—are more skeptical.
2 comments:
The bottom line is that the Chilean left are much better marketers than the Chilean right, which is why Lagos left office with a 70% rating. The current health of the Chilean economy has a lot to do with high copper prices and very little to do with any policies put in place by Lagos. In fact, I would argue that the current economic health of the country is still almost exclusively thanks to the sound economic policies put in place during the Pinochet years. For example, the privatized pension system has had a dramatic impact on the national economy, in terms of funds available to invest in new highways, ports, subways, as well as injecting capital into the local stock market. All of this has had a lasting impact on the overall health of Chile. We should all be worried if Bachelet makes wholesale changes to the system, as she has threatened.
Now, with all that said, if Bachelet is successful in including more of the poorer classes in Chile into the Chilean economic system, thereby growing the middle class even further, then this election could end up being a blessing in disguise for the Chilean business community, since a bigger middle class equals more consumer spending.
Looking at Bachelet’s campaign website, I don’t see the "wholesale" changes you’re talking about. A quick look (I have to admit I am not following the debate closely at all) at El Mercurio--certainly no socialist newspaper--suggests that the commission studying pensions has three main issues:
“La posibilidad de aumentar la edad de jubilación de las mujeres; la competencia y costos en la industria de AFP y el reforzamiento del apoyo estatal a los sectores más desposeídos.”
None of these sound very radical--the last actually suggests including more of the poor into the economic system, which you argue is positive. I would have to ask again—is Bachelet really so “leftist” as people claim? I would need to see evidence.
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