New actors’ preferences shape the Government Agenda. Replacing top-down for bottom-up policies

By Soledad Soza

Source:  https://www.academia.edu/22153397/TOP_5_RISKS_AND_OPPORTUNITIES_CHILE_2016

A vibrant democracy and  the empowered middle classes

The level of pragmatism displayed by Democratic leaders to combine open economy, growth targets, and FDI began showing symptoms of attrition against a new generation of Chilean citizens who increasingly began denouncing inequality and disparities in the wake of a 25-30-year political cycle run by top-down policy-making.  As poverty lines since Pinochet's demise dramatically shrank, more educated citizens had greater access to more educational bodies, albeit privately owned, particularly at the tertiary level. This provided the "cognitive leap" students made. They felt they could not wait anymore and took to the streets to protest against an economic model that promoted growth but neglected the necessary regulation of its educational system, perceived as a driver for equal opportunity. The insufficient regulation of quality standards and provision to secure universities’ financial standing paved the way for some private universities to file for bankruptcy, leaving hundreds of university students stranded.  The burden of bank loans for college education took a toll on students and their families.  While Chile had been advancing positions in macroeconomics, PISA and TIMMS examinations proved that Chile was lagging in educational performance. Top-down policies that gave Chile stability by aligning all actors (politicians, entrepreneurs, and citizens) over the legacy of an economic model were key in maintaining governance.  Disparities in the level and efficiency of education to promote equal opportunity and narrow the gap between elite and non-elite classes were not properly corrected and produced a segmented population; discrimination was strongly felt and voiced by the middle classes.  New social actors and student leaders from “the street” became fierce critics of the model.  A widespread sense of disillusionment towards the model began to surface. 

A vibrant democracy surfaced on the rallies and protests, new leaders, and an inquisitive press pointed to the shortcomings of a hegemonic economic view in social policies, highlighting severe signs of attrition from the elites. 

By 2007 and 2011, Chile witnessed civil society and students mobilizing to press the state to narrow those gaps.  The public sphere brought future actors to the political scene.  Their relentless mobilization saw a window of opportunity to advance their demands to the top of the Government’s Agenda in a new electoral cycle.  That way, Chile is one of the last countries to “turn left” in Latin America in a post-Cold War era. The students’ protests peaked in 2007 and again in 2011 to voice their demands over gratuity in higher education and an end to profit in the educational system.  Protests brought a period of instability and lack of governance, polarization, and political divide due to new social leaders influencing the public sphere, shaping priorities, and shifting the focus to micro-level issues rather than macroeconomic concerns. The role of the media was key to voicing the anger and discontent. Student leaders such as Camila Vallejo eventually joined Parliament, and her views coincided more with the left wing of the political spectrum.  In a new electoral cycle (presidential voting 2013), new actors shape the new state’s social and economic preferences, which rise to the top of the Government Agenda.

Before the elections that took Bachelet to the government in 2014, civil society and elite classes (entrepreneurs and politicians) clashed over the convergence or divergence of ideas to deal with social demands.  Then, electoral promises to tackle disparities were made.  These promises helped bring back to power the traditional center-left coalition that had ruled since the 90’s.  With the only exception of Piñera’s center-right administration (2010 - 2013), the Concertación came back with Michelle Bachelet’s second office, who was at that time leading the UN Women affairs.  By then, and in the wake of bitter recrimination from losing power in the hands of Piñera’s center-right electoral campaign, the Concertación changed names.  Now, Bachelet’s center-left “Nueva Mayoría” (NM) coalition called for second-generation reforms on education, tax evasion, labor, and even a new Constitution. These announcements were deemed as “woeful” by investors, and global contestation to keep the economic model was waged in the international media (The Economist, Wall Street Journal).  A new formulation for a second tax reform aimed to pay for free education, particularly at the University level, ignited a hot debate amidst ideological controversy, vilification, and passionate discourse testing the level of institutional resilience to live up to democratic expectations.

As social change moves faster than the institutional capacity to respond in time and well, the complexity that the NM government was facing was significant. Since any normal political cycle is usually smooth for 30 years, disparities and the necessity for inclusive growth crawled to the top of Bachelet’s agenda. NM’s second-generation reforms align with political change and the beginning of a new era: the challenge of democratic consolidation.

The end of the super commodity cycle and the turn to moderation:

2014 and 2015 were marked by hot debate, ideological views on reforms, a retreat of investment, and the approval of a much controversial second tax reform to support education as a social right.  The agenda and the center-left coalition turned to the left in policymaking.  The atmosphere was tense, and the press helped to aggravate those tensions. Social actors and their views on the welfare state were gaining support.  But not quite so.

By the end of 2015, however, Bachelet’s NM government acknowledged the end of the commodities boom and the necessity to readapt the government’s priorities.  The state was pressed to sit at a crossroads over economic concerns. Pressure came from the center-right opposition and local entrepreneurs.   There were 2 choices:  either maintain the path of progress seen in Chile for the last 25 years or “go south” by falling into the trap of populist decisions. The former materialized in appointing a moderate new Finance Minister from the center of the political spectrum of the NM coalition. Bachelet’s new slogan became: “Pragmatism without renouncement” on reforms, and it was well received by local and international investors with a hint of moderation in reforms.  

However, the hastiness with which members of parliament, government ministers, and party advisors continued promoting and devising reform policies prevented the necessary deliberation and care for detail to advise robust legislation.  The lack of consensus within the NM governing coalition on how bills were drafted became apparent.   Critical voices came from the center parties of the NM coalition, calling for more serious deliberation and an end to sloppiness. 

The beginning of 20marksars the end of left-wing hegemony on reforms and the beginning of moderation from the center of the NM.