This is a mural in Rengo, portraying an incident in which members of the Chilean army murdered impoverished farmers who had been vocal in their support of Allende. They lived in the countryside surrounding Rengo.
President Patricio Aylwin, the leader of El Concertacion was inaugurated in 1990 after Pinochet's rule ended. While Pinochet's programs grew Chile's economy, 8% annually, 44% of Chileans still lived in extreme poverty by the end of Pinochet's rule, twice as high as it had been when Pinochet initally took power. This is largely because Pinochet lowered social spending and privatized social programs. He more or less caused the many important social programs that should be run by the central government for their citizens to become dependent on the highly undependable free market economy that he created. This is the structure that Aylwin unfortunately inherited. Aylwin thought that Chile not only needed economic growth, but also social programs to support the many impoverished sectors of Chilean society. He felt that it was important to distribute the wealth more evenly in order to stabalize a very new and unstable democracy. He did attempt this daunting task by first implementing tax reform, using international loans and grants to increase spending by 17%. They used this money mostly targeting the lower class by expanding health care, rasing the minimum wage, and creating basic education programs. This entire effort was largely decentralized, placing most of the responsibility in the hands of local towns through Solidarity and Social Investment Fund(FOSIS)
whose primary objective was to fund local social programs. It didn't actually fund programs on it's own. Unfortunately, FOSIS was more connected to NGO's than the local government industries. Because of this, many of the programs that FOSIS started were short and made little impact on many impoverished communities. However, the new government was succesful when it created a labor reform law, allowing unions, protection against lay-offs, and strikes, all of which had been forbidden under Pinochet.
For the first three years of Aylwin's presidency, life in Chile became better, as the level of extreme poverty decreased from 44% in 1990 to 23% in 1994. However, after those first three years nothing more had changed. In fact, after the first three successful years of the Aylwin presidency, the disparity between the rich and poor began to increase again, and many other of his social programs proved to be ineffective. Eduardo Frei, Alwyin's succesor,(and recent losing candidate in this year's election,) attempted to create more social programs but was met with opposition from businesses and right wing groups, and ultimately many of his ideas failed. FOSIS did not help the most impoverished people. The middle class, which had suffered economically under the Pinochet regime, did not find any help with La Concertacion's programs, either. This is because when Pinochet reduced taxes, privatized the social sector, and lowered state spending, he transfered most of Chile's investments into the private sector. Thus, businesses and the most wealthy benefited from this arrangement. However, those that most needed social aid only could resort to government funded programs because they could not afford those offered from the private sector. Unfortunately, there was so little aid given to those that needed it because there was so little money in the government. Lamentably, the government of La Concertacion had been too hesitant to change the inneficient setup of social programs that Pinochet had created with his neoliberal policies. Neither Aylwin nor Frei ever attempted to change it, by giving more power to the central government. Lesson Learned: Free Market Economy and Social Programs should not mix. If they do, social programs will become another agent of the free market economy. Thus, their purpose as a safety net for those who need help is eliminated.
In Pursuit of "Growth With Equity": The Limits of Chile's Free Market Social Reforms
By Pilar Vergara
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