How to think about the Chilean (and other) protests

That is the topic of my latest Bloomberg column, here is one excerpt:

Second, a protest against poor conditions is not the same as a protest against inequality. Many Chilean complaints revolve around the pension system, health care, water rights, public transportation, schools and corruption. Are Chileans upset that their transport options aren’t better? That’s a complaint in absolute terms. Or are they upset that they are riding the subway while many of the wealthy have private cars with drivers? That’s a relative complaint.

The answer will depend on the protester, and in virtually all protests around the world there will be those with both motives. But some North American commentators try to equate these two grudges and subsume them all under the heading of inequality. That just won’t wash.

And don’t forget this:

In the case of Chile, it has the highest real wages in Latin America, income inequality has mostly been falling, and life expectancy is above average for the region. By Latin American standards Chile has a low rate of crime and a high degree of public order. Chile has had open and honest elections, and peaceful transfers of power, since 1990.

So high expectations may be more relevant than either “inequality” or “neo-liberalism” per se, at least for many of the protestors.  There is much more of interest at the link, including some speculations as to why Chile may be different:

Another observation: Income inequality is often more galling when different economic classes encounter each other on a regular basis. So much Chilean economic and social activity is concentrated in Santiago, just as in South Korea it is in Seoul and in Singapore it is in … Singapore. In all three countries, I believe, feelings of inequality and envy are worse for that reason. By contrast, if you are a lower-middle-class person in, say, Mississippi, you may view the mansion and private plane of Bill Gates as if from a different universe.

I’ve also found Chile to have a relatively tough set of social expectations in terms of class, dress and educational background, and a relatively narrow set of expectations for women. These pressures for conformity may contribute to discontent.



My Chilean friend tells me that some upper middle class private schools were attacked and this was a huge shock - these are not super rich families.

Well, the petit bourgeoisie are at least visible.

*accessible (might be a better word choice).

A German friend who liked Santiago couldn't enroll his son into a good private school because he's not Catholic so he moved back to Germany.

So why no riots in Singapore?

What Tyler doesn't mention is the growth was 0% in Chile from 2014 to 2017 - a very long recession.

Possibly certain other Latin American countries' and Singapore's elites are lesser failures.

Also, Tyler doesn't mention the Chile riots, like the French yellow vests' riots, erupted, in part, due to high energy costs forced on them by climate cultists, aka, elites.

Carbon taxes and increased public transit costs for to switching to renewable energy, to be precise.

This is a similarity with the yellow vests and the Dutch farmers.

Interesting observation. The one thing that ticked Singaporeans off the most in recent years was when incompetents from the elite were appointed to run the MRT (Mass Rapid Transit) system. There were breakdowns and crowded carriages. This was incompetence that was very visible and personal - every day you suffered from it.

How so? Most “climate cultists” are pro-public transport and do not want to raise prices on it as that could encourage driving on the margin.

Singapore has socialized housing, universal healthcare, low taxes, and most important of all low corruption. This is what it is like to have competent bureaucrats who have million dollar government salaries. Everything I wrote in the previous two sentences is mostly the opposite in the US.

Perception is reality.

Is Singapore a "unicorn?"

From 28 Oct 2019 Barron's interview with Ian Bremmer: Institutions increasingly don't work. Governments are unable to perform for their people - the rise of populism.

Maybe the perception is political elites are failing to meet the needs of the people and the people have had enough.

Richard Fernandez, “The real crisis of American governance isn’t that Trump is some evil genius. It is what a bunch of mediocrities the elite have turned out to be.”

Paul Craig Roberts, "Nowhere in the West, except possibly Hungary and Austria, does government serve the people. The American working class, betrayed by the Democrats and Republicans who sent their jobs to Asia, elected Donald Trump and were promptly dismissed by the Democratic candidate Hillary Clinton as 'the Trump deplorables.'

"The American working class, betrayed by the Democrats and Republicans who sent their jobs to Asia, elected Donald Trump"

So problem solved?

It will require at least five more years.

In the past 3 years, working class salaries are up 3x more than Obama and Bush's 16 years

Trading souls and our Democracy for bread and water.

Better -3% GDP growth, 10% unemployment and no health insurance than a President who uses his office to look into corruption of a Presidential candidate’s coke-addicted and dishonorably discharged son earning $5 million from a Ukrainian gas company and $50 million from a Chinese state sponsored hedge fund while said candidate oversaw foreign policy for the respective country.

Trump’s behavior necessitates impeachment and imprisonment. After all, every failson has the right to use government connections to earn millions.

"a protest against poor conditions is not the same as a protest against inequality"

This is the strongest point and makes the most sense to me. But I don't think calling it a problem of "high expectations" fits that description. Either you have poor conditions or you have high expectations. There is little overlap between the two and I'm just not seeing it here as a protest over a four cent fare increase is anything but high expectation and could be taken as unfairly blaming the people. More likely, given the overreaction of the President to roll in tanks in under a week, declare war on his own people, only to have the top general walk back such rhetoric tells me that political leadership is to blame. The bodycount is already higher in Santiago than Hong Kong. Santiago has a population of 5M and over 1M took to the streets. That's a bigger percentage of the population than Hong Kong. Chile is an economist's dream but if those amazing numbers don't translate into quality of everyday life then calling it inequality rather than high expectations might be closer to the mark.

Interesting... I read the article

ctrl+F “Pinochet” 0 matches

A measly 2%. I still am a fan.

Anybody know if the conditions in Chile are related to the global Chilean theft rings that are burglarizing and stealing from the US, Canada, UK, and Australia. They tend to target rich people's homes, businesses, and vehicles in the nice zip codes of Sydney, Laguna Niguel, Toronto, South Florida, Simi Valley, etc. Apparently there's a visa waiver program that they took advantage of to get in. They are also very sophisticated making their own jammers to break into luxury cars.

" By Latin American standards Chile has a low rate of crime and a high degree of public order. "

Smart to export your criminal activities to make the numbers look good.

didn't Chile go communist in the past?

The Chilean protesters learned how to neutralize tear gas by swapping tips online with their peers in Hong Kong. We have a global, generational crisis at hand. The youth of the world are rewriting the social contract to something they hope will be a little less lopsided as they feel the Boomer gerontocracy is stifling their ambitions. The millennials are the children of the Boomers who themselves were the 60s generation so in a sense this can be seen as a generation flexing its demographic muscle the way their parents once did.

It won't exactly be an easy match as the incumbent elites have claim to every legitimate above-the-board power and will take full advantage of their positional strength and structural advantage but never underestimate the power of networked knowledge transfer using the combination of social media, global English, and the smartphone.

People are tired of being treated like they don't matter.

Living in Chile and living in Hong Kong under Chinese rule aren’t the same thing.

Chileans are relatively free by South American standards. Anyone under Chinese rule isn’t.

Yes, Chileans live relatively free by SA standards but Hong Kongers live relatively free by Chinese standards. They have censorship-free internet, a free press, and they can't get extradited to China!

Middle-class people in my wife's small southern Indiana town of origin say they have everything they need. These are not the poor, they are employed at modest wages, own homes and cars, and have savings. They don't care about Bill Gates.

The super-rich do live in another universe compared to most of us.

Besides the monarchical families in Europe I don't think there are people there that live in another universe.

In Brazil we have people who live in another universe: basically we have 65% of the population made up of very poor people and 35% made up of the "middle class and up" and they are two separate universes.

“The rich were dull and they drank too much, or they played too much backgammon. They were dull and they were repetitious. He remembered poor Scott Fitzgerald and his romantic awe of them and how he had started a story once that began, ‘The very rich are different from you and me.’ And how some one had said to Scott, Yes, they have more money. But that was not humorous to Scott. He thought they were a special glamorous race and when he found they weren't it wrecked him as much as any other thing that wrecked him.”

By nature, men are nearly alike; by practice, they get to be wide apart.

Capitalism brings economic progress? Ok, but I think he's rude, so I am quitting the Republican Party.

Since 1990...that's 30 years.

I think the austerity narrative for the sake of economic development hit a wall in Chile. Yes, austerity worked, they rose from poverty to middle/high income.

Now what? Keep saving for the sake of saving?

"Now what? Keep saving for the sake of saving?"
That's been the German way. A country largely saved over the past few decades by the rise of China as an importer of industrial inputs and cars. Just as Chile has had a good run due to Chinese imports of metals.

The German welfare state allows people with low income expectations to life only working a part time job and still have kids, a roof, access to health, food and clothing. It may be a decrepit and cold flat, bad food and shitty clothing but....they're there.

Yeah you're right about that. It's a far tougher life in Chile. Still, Chile is the world as Tyler would like to have it, more-or-less.

Does anyone actually have any data on why the protesters are doing what they are doing? It seems to me that a lot of projection on the motives of the protesters is being made. Also, Chile is a democracy which is very different to Hong Kong, so parallels between the two countries are not really valid. Revolutionary as opposed to democratic change has been pretty bad deal overall for South American countries.

Chile may be a democracy but Pinera resorted to military force even faster than Lam who never went further than police force in Hong Kong. Shouldn't it be the opposite? Iraq too is a democracy and the death toll there already over 100 and rising.

Iraq is a democracy? name only any reckoning America's activities in the Middle East have been a me one success....Trump is's a cesspool of sectarianism, tribalism, corruption...sooner America gets out the better

From La Nacion (former century old newspaper in Chile, now only digital):

1 - The demands were reforms to the current education, health and pension systems. President Piñeira assumed the protesters where only the young and dumb generation with no memories from the past. Then, decided to use the military to confront the young vandals. It was "found" later than the discontent is shared by other generations. Of course, people with kids is busy to participate in a protest, but it does not means they don't support the young people on the streets.

2 - Using the military. What started as street demonstrations, escalated into a humans rights crisis in 1 day (12-20 dead depending on the source). People that may have not cared about policy reforms, started to care about the military killing citizens.

3 - The president is trying to de-escalate the conflict with a minister cabinet change and other reforms. In any other free country, an independent inquiry on the violence by the justice system would have been started, the president might have resigned, there may be anticipated elections, or something. In authoritarian Chile, a few dead only means asking a minister of X to resign.

2.- Axa, please don't lie. You are implying the killing of 12 to 20 people by the military without any sources. At least 9 people have died during fires which were the product of looting (factories and supermarkets) .

Did you read the link you provide?
1 - A 21-year-old protester was shot dead by soldiers in La Serena.
2 - A 23-year-old protester was shot dead inside a La Polar store by soldiers in Coquimbo.
3 - A 25-year-old man was shot and killed by armed forces in Curicó.
4 - In the city of Talcahuano during a looting, the military forces ran over and killed a 23-year-old man.
5 - A 39-year-old man died in a hospital from injuries sustained in a beating carried out by Carabineros in Maipú.

5 or 20? It's a crisis, therefore it's complicate to have accurate numbers. If they ever come, it's after a detailed investigation. 20 may be wrong, but there's no point in arguing the number if the rebuttal also includes dead protesters.

So, does the situation changes because only 5 people have been killed by the military and police during 3 days?

Also hundreds of injured policemen from molotov cocktails, etc., hundreds of destroyed businesses... If you're throwing bombs at policemen, you might die. If it was the U.S., I would expect nothing different.

Is my understanding correct that the protestors, something like 20% of the population of Santiago, are attacking police officers, looting and destroying businesses, because the elected government is not giving them enough free stuff?

This is the only one I have seen so far:

Toque de queda means curfew.

Lebanon has a 37% youth unemployment rate. They just got their PM to resign. The world seems to be short on opportunities for the young.

Chile has the highest inequality in the OECD. Between 2006 and 2017 the level of inequality actually fell but the incomes of the richest are still more than 25 times those of the poorest, which might explain the frustration and anger. Here is the link to the OECD data (see the left margin for different measures (income, wealth, etc.):

Cowen's reference to transportation options is important here in the U.S. too. The wealthy travel by private jet, and have little or no interest in improving (funding) public transit. That helps explain the deteriorated and antiquated condition of public transit. Some would like us to believe the problem is primarily government: regulations make improvements in pubic transit prohibitively expensive. If the wealthy relied on public transit, the politicians the wealthy support would solve the problem. As it is, the supply of politicians who reflect the demands of the wealthy aren't that interested in a solution.

Down here in the South we have this useful expression: God made Mississippi so Alabama wouldn't be last.

I thought God made God made Mississippi so that Spelling Bees wouldn't be easy.

In the U.S. wealthy people travel by automobile for short distances just like the middle class (and poor people get a car the first chance they get). It's because both of those groups are not especially keen on public transportation that politicians follow their preferences. That's democracy in action, not the tedious blather about oligarchy.

Galling only to ingrates who let themselves be controlled by a little green monster. Gutting the domestic services and first job mixing in the US with minimum wage laws and withholding and other buy side tax obligations has not been in service of racial harmony or greater equality of outcomes. Begetting only swelling doles and more untempered race hate the architects must have understood that it's easier to despise those you don't know, even though they marketed things differently. Just a fringe benefit for splitter politicians whose client voters degrade and destroy their own living places. What is the cost in terms of peak income for the dude that spent several years getting checks from uncle sugar cause he din wanna work for no cracka?

Is Hong Kong also a problem of high expectations? They already have some of the highest living standards in the world. Pricey real estate, the best banking system in Asia, and one of the world's best ports.

I think living in Hong Kong and not being rich is extremely crappy.

Ah, high expectations, classic [de Tocqueville I believe]: Things improve, leading people to expect further improvements, but, alas, those expectations outpace the actual improvements, leading to greater discontent.

And, to the extent that at least some protests are fueled by the mismatch between expectations and accomplishment, we might see protests as an indicator of PROGRESS.

Prof Cowen, please update your priors.

Before the military killed protesters, the issue was about pensions, education, health or whatever. Poor crisis management from the government made the problem escalate into a human rights crisis.

Even the brutal Chinese communist party has been careful enough to avoid killing dozens of people in Hong Kong. The whole NBA twitter affair was because of events of this level (Prince Edward MTR incident, Aug 31)

The Spanish government has been intelligent enough to let Catalan protestors injure the police during demonstrations. The protests eventually went down because everyone got tired a week ago.

An elected president chooses to act as a banana republic dictator by killing protesters. Why write about "highest real wages in Latin America" instead of human rights violations? Are you waiting for an NBA player or executive to do it first?

"Prof Cowen, please update your priors. "
You don't seem to understand what Tyler's job is do you?

Your opinion is that the government should step aside and allow criminal mobs to run amok, burning down businesses, killing people and throwing bombs at police?

" we might see protests as an indicator of PROGRESS"

No you have that wrong. You're implying here that protestors are a sign of progress and if people were just patient things would improve even more.
But the historical examples are that the system needs to be overthrown because its acting as a drag on progress. The Tocqueville example with the French revolution is exactly the point - the Ancien Regime was acting as a drag on the rate of progress, being patient wasn't going to help things, the system needed to be dismantled so that a more efficient system could be implemented.

Seems to me that the gig workers with Instacart, Uber, etc. put a lot of economic disparity in close, regular contact. How does it feel to buys groceries you could not afford, take them to a house you could not live in, and deliver them.

And not only that, a lot of these people doing that work have jumped through the hoops of education and credentials. Maybe they didn't get the best ones or should have swerved this way or that way in their educational choices but to them they did what they were supposed to.
A hallmark of many past revolutions has been a large number of young people who have gotten the education and expect social advancement but it doesn't come. A build-up of these people at the bottom leads to mass frustration.

How does it feel to buys groceries you could not afford, take them to a house you could not live in, and deliver them.

Oh, probably about the same as it does to do plumbing, remodeling, gardening, cleaning or painting on a house you could not afford. Or to wait tables at a restaurant whose meals you couldn't afford or to work at a country club or countless other jobs were the poor and middle class perform service jobs for the wealthy -- that same as for countless generations. There's really nothing special about the gig economy in that respect. In fact, in past generations, regular close contact was more common as many more wealthy families hired domestic help (maids, drivers, cooks, nannies). The houses in my academic neighborhood (built mostly from the 20s through 40s) have rooms intended for live-in maids in the attics or basements. And these were homes built for university professors not gilded-age robber barons.

How many Mercedes salesmen driver Mercedes?

Probably most of them actually.

The fact that Noah and Tyler are on the same page with Chile makes my spidey sense tingle.

I was told that J D Rockefeller and many of the rich USAers wanted their children to work and that made them different than the European rich. Whether that is true or not. i don't know. it is good myth that I was raised on.

I did not click. I do not want to be told how to think about something.

Because the Tyler Cowen Model of Human Cognition seems not to treat volition explicitly, "how to think about something" is virtually indistinguishable from "what to think about something".

A distinct pity, too, that whatever lessons in cognition TC purports to impart could not have treated by our public education bureaucrats before the little tykes in their tender care could grow up to become dysfunctional adults.

Dire days for contemporary epistemology.

Clearly the problem in all these places is not enough immigration, preferable by people who don’t speak the language and have rudimentary education. Don’t they read The NY Times?

Bachelet implanted her own deep state operatives and even now is working to sabotage the current government from her UN chief of human rights perch. Read between the lines at: She was Chile’s Obama during her first term and Elizabeth Warren in her second. Predictable results. Once a hard-core leftist controls a government it takes generations to restore the rule of law.

To me one big driver is the transparency afforded by the internet age: corruption, inequality, cronyism are in full view more so than ever before. It hardly matters if those issues are getting slightly better.

This is the thread winner, +10 internet points

how monotonous and oppressive is chile compared to the united states? to the DMV?

Latin America in general has a culture that is very focused on status. Chile has some advantages (a more homogeneous population) but that culture is still there. To think that students were protesting against inequality is silly. These are "kids" who grew up in a Democracy and had, for the most part, a much easier and richer life than their parents. So yes, this is all about envy. It is about university students who don't want to work on the tough / well paying jobs available (mining engineering, finance, etc.) and want the "right" to a life that is as good as people who do. Yes, the government did go heavy on them but that is no excuse.

It seems to me that if someone is wiling to go downtown, and face off against militarized police who would quite happily stomp their heads, and face arrest, beating, pepper spraying, acoustic weapon devices, fire hoses, attack dogs, and even possibly assassination - or at the least get their name and face recorded on some state spook database somewhere - then we ought not trivilalize their concerns, or subject them to comparative conditional ranking.

I looked a bit. Chile is big on mining and wood products. They have a hard time moving up the manufacturing ladder. Otherwise it is a puzzle to me.

Chile apparently wants to become Argentina again.

Just checking everyone knows Chile is one of those weird countries where voting is not compulsory and have included that in their mental model of the place?

Perhaps it's Tyler's clear distinction between inequality and poor conditions that "won't wash"?

Conditions will always be judged on a relative basis. Chileans that are protesting would not be protesting if what they have now was better than most.

*At the level of inequality that exists currently*, conditions could clearly be improved by reducing inequality. This would be more true if it weren't for, in the view of many, immoral actions of very rich people (tax avoidance/evasion).

I suspect unequal outcomes are less galling when no one argues that a) reports of inequality are incorrect and exaggerated and b) that anyway inequality is the result of our perfect sociopolitical arrangement. I trace our current discontent to George Romney starting to talk about "class war," the rise of the "makers v taker" meme, and outrage over Obama's "You didn't build that" remark.

EM analyst for over 10 years here. What you are seeing is the beginning of a massive rebalancing towards the United States. For about 40 years you had seen the decline in american industries and the rise of the rest. Right now about 2/3 of the global wealth is ex-US and 1/3 is US and I think in the next 10-20 years it will flip the other way around.

The reason for this is that the world is about to be lit on fire, and America is Switzerland to the world (just like in the 1920s). I would not be surprised we get a repeat roaring 20s like the which we had never seen before. The reason is that you have 10 years of pent up resentment in middle income countries due to the inability to climb out of the middle income trap and a bunch of underemployed young people who are finding themselves trapped by rent seekers in large highly urbanized centers. Housing price and rent to income in the U.S. is actually the lowest in the world and highest in Europe and Asia. Most of the gains from productivity and growth gets captured by various forms of rent seekers. Most countries just do not have a massive frontier/hinterland for young people to escape from to actually build up wealth, success and personal ambitions. Locked into stasis for too long and people will revolt. HK and Santiago are just the beginning.

Related to the Hong Kong protests and the controversy over the NBA's reaction to China's reaction to Daryl Morey's tweets: Blizzard customers and fans do not like how Blizzard is muzzling its pro-Hong Kong players.

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