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Secretos de la Concertación: Recuerdos para el futuro by Carlos Ominami BY MARIA DE LOS ANGELES FERNANDEZ AND PETER M. SIAVELIS Commentary on Chilean democracy has evolved from praise to concern since conservative President Sebastián Piñera moved into La Moneda Palace in 2010, bringing the Right to power for the first time in over 50 years. The praise was well-earned. Piñera’s victory not only showed the Right’s vote-getting ability; the peaceful alternation of power in Chile offered conclusive demonstration of one of the continent’s most successful democratic transitions. Nevertheless, the Right’s victory, which ended 20 years of government by the center-left Concertación, also coincided with a challenge to perceptions about Chile as a paragon of fiscal discipline and political stability. Contemporary Chile is convulsed by social mobilization, and by demands for redistribution and deep reforms to the economic and social model that was once heralded across the region. In the period leading up to the election, groups across society challenged a market model that privileged growth over equity, as well as a political system that was perceived as unrepresentative and lacking in competition. Increasingly, in the eyes of the public, academics and the press, Chile is no longer a political “model” to boast about; rather, it is seen as a democracy weakened by the rotation of elites who are out of touch with the needs of ordinary Chileans. In this context, Piñera’s 3 percent margin of victory represents more of a defeat for the Concertación than a definitive triumph of the Right. That, at least, is the conclusion drawn by Carlos Ominami in his analysis of Chile’s perplexing political trajectory in Secretos de la Concertación: Recuerdos para el futuro (Secrets of the Concertación: Memories for the Future). Ominami, a former cabinet minister and longtime political insider associated with the Partido Socialista (Socialist Party—PS), contends that the Concertación was “a pact of elites formed towards the end of the 1980s that failed to consolidate democratic governability.” This runs counter to most descriptions. But Ominami proves his point with a trenchant analysis of the deep political and social transformations that Chile experienced during the democratic transition, as well as of the complex process whereby the Left regained its political credibility and constructed a new political majority. In an artful and enjoyable read, he shows how each of these processes fell short, and then looks forward to the challenges facing both the Concertación and the country. Ominami is well positioned for such an analysis. He was both a witness and a protagonist in Chile’s democratic demise and rebirth, and remains an astute observer of its current growing pains. A veteran PS strategist, he was a front-line actor in the democratic transition, serving as minister of economy in the Patricio Aylwin government, as a close advisor to former President Ricardo Lagos, and as a senator for 14 years. His intensely personal account provides readers with an intimate take not only on crucial events in Chile’s political evolution, but also on the emotional significance and consequences of those events. Ominami seamlessly weaves into his account the hopes and fears—and the simmering guilt—of the generation that lived through the traumatic 1973 coup and those who were lucky enough to survive and witness the return to democracy. His book fills an important gap. Until now, there have been no instructive accounts of the renovation and renewal of Chilean socialism over the political trajectory of four Concertación governments, and Ominami provides some illuminating insights. For example, he contends that while it was crucial for Socialists “to dramatically break with past notions of democracy as purely instrumental and formal,” they failed to “establish an adequate equilibrium between the State and the market and an organic set of political ideas that could lead to coherent and consistent policy.” Ominami’s experience as a cabinet minister gives his analysis of the governments of Aylwin (1990–1994), Eduardo Frei (1994–2000), Lagos (2000–2006), and Michelle Bachelet (2006–2010) special weight. Noting the three central roles Chilean presidents have had to play—head of state, head of government and leader of the Concertación—Ominami argues that each brought a distinct style of leadership to La Moneda but none of the presidents was “capable of challenging the reigning accepted wisdom to open up innovative paths to national development.” Conventional wisdom traces the Concertación’s success to the convergence of secular and Christian humanism that created a transformational, yet stabilizing, combination of continuity and change. Ominami disagrees, contending that the coalition, and not just its presidents, erred by focusing on administration instead of transformational change. Ominami believes that evaluations of the Concertación’s legacy should not simply be framed by the defeat of Augusto Pinochet. He argues instead that the bar should be set much higher. The coalition represented an opportunity to defeat Pinochet and to transform the deep societal imprint that the military regime left. He contends that with the Concertación’s mandate and support it could have acted much more aggressively to reform Pinochet-era policies. However, he observes (in an argument that many in the Concertación will see as overly critical) that “this center-left coalition ended up consolidating the dearest and most fundamental values of the Right in Chilean society.” If the Concertación had confronted this reality head-on and made an effort to address the erosion of public confidence in political institutions, it could have avoided electoral defeat. To demonstrate his point, Ominami explores the neoliberal and conservative elements of Chile’s political landscape that the Concertación lacked the will to reform. At the core, he contends that despite reform, the essential outlines of the Pinochet constitution remain in the form of the legislative electoral system, high quorums for reform and the series of difficult-to-reform organic laws. What is more, none of the reforms altered the constitution’s very traditional stress on political rights as opposed to economic rights that appear in many of the recently amended or more progressive constitutions in the region. By concentrating economic, social and media power within the small set of elites, the constitution acted as a barrier to significant reforms in social welfare, education and health. This is the source of the protests today. This book will appeal to at least two sets of readers. For those who would like to know more about the realpolitik that undergirded the durability of a coalition, this book provides the answers. It is also a road map for those who seek to reconnect Latin American and European debates on the future of social democracy, some of which the victory of French President François Hollande may reignite. In this vein, Ominami’s chapter on Chile’s declining economic dynamism and the challenges of diversification and social integration is particularly interesting. Ominami outlines his social democratic vision based on a rethinking of the European welfare state, and on the experiences and successes of progressive governments in Latin America. Fundamentally, Ominami traces social democracy’s crisis not to deficiencies in its core principles or ideas—which he asserts are more relevant today. Rather, the problem is social democrats’ eroding credibility as a result of having lost touch with their fundamental values. He calls on social democrats to promote broadened democracy, new freedoms and access to state assistance, and to renew their commitment to equality and sustainable development. This book provides food for thought for anyone who wants to make that happen. Back to top The Developmental Challenges of Mining and Oil: Lessons from Africa and Latin America by Rosemary Thorp, Stefania Battistelli, Yvan Guichaoua, José Carlos Orihuela, and Maritza Paredes BY CAROL WISE The first decade of the twenty-first century has witnessed some remarkable developments: the 9/11 terrorist attacks, the rise of China, the 2008–2009 financial crisis, and the Arab Spring, just to name a few. South America’s commodity and natural resource boom should be added to that list. The buoyant market for soy beans from Argentina, oil and natural gas from Bolivia, iron ore from Brazil, copper from Chile, and fishmeal from Peru, among other examples, has not occurred in the region for nearly a century. Prices and demand have held steady as emerging market countries like China and India have voraciously consumed these exports in their pursuit of economic growth. The Developmental Challenges of Mining and Oil: Lessons from Africa and Latin America comes at the right time to understand the implications of this boom. The five authors—Rosemary Thorp of St Antony’s College at University of Oxford; Stefania Battistelli of the UN Food and Agriculture Organization; Yvan Guichaoua of the United Kingdom’s University of East Anglia; and José Carlos Orihuela and Maritza Paredes of Brown University’s Watson Institute for International Studies—consider six country cases, three from Africa (Botswana, Nigeria and Niger) and three from South America (Bolivia, Chile and Peru). Unfortunately, the authors employ a rather busy analytical framework in writing their case studies. Each seeks to explain the interplay between resource abundance and development through the lens of “historical institutionalism.” This term is expanded, perhaps too flexibly, to encompass everything from colonial legacies to political and economic institutions, leadership, state–society relations, and the influence of external actors and multinational corporations. The result is that so much old ground is covered in these chapters that more recent trends of the current commodity bonanza are barely addressed. Inexplicably, the chapter on Bolivia does not go beyond the 1950s. Moreover, the justification for choosing the country cases is not clear. Within each region, the authors designate one “successful” case. For Africa this is Botswana; for South America, Chile is portrayed as the winner. The four other cases, each in its own way, are deemed “failures.” However, the criteria for success or failure are not well spelled out, leaving the various references to these terms somewhat vague and uneven. In the cases of Botswana, authored by Battistelli and Guichaoua, and Chile, authored by Orihuela, “success” is defined as a more accountable distribution of the rents from diamonds and copper and cohesive state-society collaboration in upholding property rights and the rule of law. In a chapter on developmental outcomes, the book’s five authors write that in Botswana and Chile “the centralization of revenue from extractives in central government hands allowed its relatively unobtrusive use to sustain the political system without provoking the regional tensions so vivid and disrupting elsewhere.” The failed development cases are roughly defined against this same standard. In one form or another—and when compared with the success cases—failure implies a weaker and distorted form of distribution (Bolivia and Peru), or the lack of checks, balances and institutional oversight (Niger and Nigeria). In the failed cases, resource abundance becomes both cause and effect in perpetuating dysfunctional institutions, incompetent policies and persistent inequalities. It would be difficult to dispute the evidence for failure in Niger and Nigeria, which are considered in a chapter by Guichaoua. These countries define the very meaning of “resource curse.” The enormous rents from uranium (Niger) and oil (Nigeria) have freed authoritarian and paternalistic rulers from accountability or from even minimally upholding the rule of law. Nigerian President Goodluck Jonathan’s failure to curb the misappropriation of billions of dollars in fuel subsidies since 2009 is testimony to this ruthless exploitation. In his gripping and tragic account, Guichaoua writes, “Nigeria’s per capita GDP in 2000 was roughly the same as in 1970 [...] but the proportion of the population living on less than a dollar a day doubled over the same time period.” Although difficult to fathom, Niger is in even more dire straits—ranking second to last in the 2011 UNDP Human Development Index. When compared with these African cases, their counterparts in Latin America—Bolivia and Peru—start to look much better. Still, these mineral producers continue to grapple with the legacies of resource exploitation, enclave development and discrimination against Indigenous populations. After offering a cursory summary of the current period in the introduction, Maritza Paredes, the author of the chapter on Bolivia, identifies the challenge as “the disconnect between state autonomy and state capacity, the common and problematic legacy of mineral states, and of the problems of Bolivia.” But since Paredes sticks closely to her declared commitment to tackle this “paradox by exploring the history of Bolivia,” the reader is left without insight into the current period. This is unfortunate. The Bolivian case raises important contemporary questions concerning the economic effects of nationalization in the hydrocarbons sector, the collection and disbursement of new royalties on oil and natural gas, and the interaction of these trends with the efforts of President Evo Morales to implement policies of redistribution and social inclusion. Despite the similarities between Bolivia and Peru in terms of history, geography and endowment factors, the justification for lumping these two countries together in the “failure” column is not all that convincing. The Peru chapter, written by Thorp, draws heavily from her iconic book, Peru 1890-1977: Growth and Policy in an Open Economy (1978), co-authored with Geoffrey Bertram. Yet her brilliant analysis in that book is oddly out of place in the current volume, as Thorp’s analysis, like Paredes’, is largely historical. Although more attention is paid by Thorp to the contemporary era, trends that could actually bode well for Peru’s development are not treated as such. For example, the more recent devolution of royalties from oil, mining and natural gas to the provinces where these resources are extracted is certainly better than the previous regime of hoarding these rents in central government coffers. Thorp also rightly notes that efforts to disburse these funds in a transparent manner on social infrastructure projects have been abysmally slow. This, however, hardly constitutes a critical failure. Thorp overlooks Peru’s high growth, sound macroeconomic track record and the fact that the Peruvian middle class has grown in leaps and bounds. This last point is where the lines between “success” and “failure” begin to blur. The designation of Bolivia and Peru as failed cases rests largely on their poor distributional and development indicators and their inability to change a strong dependence on revenues from primary exports. In both cases, the result has been stunted institutional modernization. The success stories, Botswana and Chile, are depicted as having broken out of this syndrome, each in its own way. But the data tell a different story. Because of its diamond wealth, Botswana’s per capita income (based on purchasing power) is about $17,000 a year. Yet some 30 percent of the population lives below the poverty line, and another 20–25 percent is infected with HIV/AIDS. Its ranking on the UNDP Human Development Index is worse than that of Bolivia. Chile’s indicators are much better. Its per capita income is on a par with Botswana: just 11 percent of the population lives below the poverty line, and it ranks in the Index’s “very high” category. Meanwhile, Chile’s ranking on inequality falls midway between that of Bolivia and Peru, whereas Botswana ranks as one of the world’s most unequal countries. Both Bolivia and Peru have a more diverse export portfolio than either Botswana or Chile. All the authors tend to treat the distributional downside of mono-export dependence in Botswana (diamonds) and Chile (copper) as caveats or anomalies, whereas the scale of similar challenges faced by Bolivia and Peru are deemed sufficient for an indictment of failure. If the latter is indeed true, the facts are not entirely borne out in this volume. The authors would have done better to avoid normative approaches that seek to classify cases which, in the end, defy neat categories. In line with the historical institutional approach, it is the subtle variation among countries that can sometimes be more revealing than an effort to identify stark contrasts. Back to top The Great Gap: Inequality and the Politics of Redistribution in Latin America edited by Merike Blofield BY DARRYL MCLEOD From the Occupy movement to the demonstrations at the G20 Summit in June, frustration over longstanding and deepening inequality is boiling over. This makes a volume exploring the politics of persistent inequality in Latin America—long the world’s most unequal region—very timely. In The Great Gap: Inequality and the Politics of Redistribution in Latin America, University of Miami political scientist Merike Blofield assembles a distinguished group of social scientists to look at why democracies tolerate high inequality. Blofield concludes that a “window of opportunity” may be opening for more redistributive policies as populist regimes in Venezuela and Bolivia offer a wake-up call to the region’s elite about the perils of not acting. This may help persuade the middle and upper classes to invest in a new social contract where more public expenditures target the “unincorporated” poor. Readers may question Blofield’s optimism. The contributors to this volume blame the failure of Latin American governments to reduce high inequality over the past 20 years on entrenched, oblivious elites, and on International Monetary Fund-mandated reforms that have contributed to already regressive taxation and public spending policies. The result, Blofield notes, is that the region has “weak middle classes, exorbitant socioeconomic power in the very elite” and in most countries “a large unincorporated informal sector.” The elite escape taxation via capital flight and have captured key government agencies, preserving their monopolies and subsidizing their pensions and children’s education. At the same time, a significant fraction of the labor force operates in the large informal sector, evading taxes and thus not expecting much from government programs. Notably missing is a middle class that dutifully pays its taxes and expects good government in return. Hence The Great Gap’s discouraging conclusion: inequality is perpetuated by a seemingly intractable “vicious cycle,” where “inequalities perpetuate inequalities” via “ the threat of capital flight, elite culture, media access and framing, campaign financing, agenda setting [...] taxation and social policies.” Even when they want to redistribute income, the power of elected officials is thwarted by globalization and the capture of government agencies and the media by “entrenched interests.” Political sociologist Elisa P. Reis of the Universidade Federal do Rio de Janeiro surveys a disconnected Brazilian elite that sees deep inequalities but does not feel responsible for them. Communications professor Sallie Hughes of the University of Miami and Paola Prado of Roger Williams University conclude that Latin America’s mass media “are controlled by a small elite that uses the media’s definitional power” to further interests and ideologies that help “maintain a status quo or social inequality.” Apart from lower incomes, Latin America is set apart from OECD countries by a tax and expenditure system that largely fails to redistribute income. Professor James E. Mahon Jr. of Williams College blames failed tax reforms, an absence of progressive income taxes, and a tax system that relies too much on regressive sales or VAT taxes that perpetuates regional inequality. Regressive fiscal spending also tends to favor the rich. This inequality of opportunity is documented in an analysis of personal mobility by Anna Crespo of the Inter-American Development Bank and Francisco H. G. Ferreira of The World Bank. They show how inequality is determined by circumstances beyond one’s control: family background—not just parents’ education, but also their social networks and cultural mores that can perpetuate stratification and limited mobility. Given these formidable political and institutional obstacles, it is no surprise that 20 years of democracy have not sufficiently reduced persistently high inequality. But what about the dramatic swing to the Left that started in Venezuela at the end of the 1990s and spread in different degrees to Brazil, Argentina, Bolivia, and several other countries—most recently Peru? Unfortunately, the more radical of these left-wing governments represent a crisis of democracy, not its triumph, argues sociologist Fernando Filgueira of the United Nations Economic Commission for Latin America and the Caribbean and his colleagues in a pivotal contribution. The “radical populist strategy” is itself an outcome of the failure of “conservative modernization” and carries “enormous risks and costs.” It concentrates power in the executive, thereby sparking “intense political confrontations.” Most important, “there are doubts about its political and economic viability in the medium term, beyond the boom of primary commodity prices.” In her conclusion, Blofield summarizes the overwhelming evidence that the region’s high inequality has become proficient at reproducing inequality, a dynamic reinforced by a global capital market that punishes progressive governments. Yet she ends on a surprisingly optimistic note. Pointing to the “wake-up call” that social upheaval gave European elites a century ago, Blofield sees a parallel in the radical regimes of Venezuela, Bolivia and Ecuador. Perhaps more important, she argues that the recent successful experiences of the left-wing governments of Uruguay, Chile and Brazil in reducing poverty “without changing the fundamental market orientation” of their economies shows that a new era of redistributive policies may help to finally reduce inequality. These social democratic governments show that it is possible to achieve redistribution with growth and without sacrificing democratic checks and balances. Though progress through 2007 was modest, as Blofield notes, recent data shows inequality and poverty continuing to fall significantly in 14 of the region’s 18 large economies. Hopefully voters, leaders and technocrats will continue to defy history, global trends and powerful elites to continue narrowing the great gaps in opportunities and outcomes that have wasted the potential of many Latin Americans for so long. Blofield’s volume is itself a wake-up call that democracy is only as strong as the level of equality it can help to produce.