Why the Chilean Direct Democracy Experiment Failed

Yesterday, in overwhelming numbers – the ‘no’ vote was 62% – the Chilean people voted to reject a draft Constitution that would have been one of the most progressive national charters in the world, enshrining gender parity and a range of social, indigenous and environmental rights. Failure will not mean the end of the process. Some 80% of Chileans had previously voted to replace the Constitution inherited from the Pinochet era. However, for now, it’s back to the drawing board for a left weakened by the result.

Yesterday’s vote was a blow to the recently elected government of Gabriel Boric, which backed the draft Constitution and the process that generated it. Yesterday, Boric was trying to make the most of it:

“We have to listen to the voice of the people. Not just today, but the past intense years we’ve had,” Boric said. “This anger is latent, and we cannot ignore it.” The president said he would work with Congress and different sectors of society to draft another text drawing lessons from Sunday’s rejection. Center-left and right-wing parties that promoted the rejection campaign also agreed to negotiate to prepare a new text.

Yesterday’s failure in Chile will sound the alarm to other recently elected left-wing governments across the region. Mexico, Argentina and Bolivia elected leftist leaders between 2018 and 2020, and Peru, Honduras and Colombia have done the same in the past 12 months. Moreover, in Brazil, polls indicate that veteran left-wing leader Lula Inacio Lula da Silva is likely to win next month’s national elections, finally ridding the country of the Bolisario administration.

Unfortunately, yesterday’s rejection backs up the UK’s claim
FinancialTimes and others that the region’s pivot to the left has been a revolt against the incumbents, rather than an embrace of socialism per se. Across the region, the left has been thrust into power by a desperately impatient populace seeking immediate relief from cost-of-living issues and rising crime. Apparently voters want results, not ideology. If only it were that simple. Arguably, only a change from free market ideology can hope to produce significantly different results.

Meaning: Despite the rise of left-wing populism, there are no silver bullets available. Across Central and South America, leftist leaders inherited low-growth economies plagued by corruption, entrenched social inequalities, substandard infrastructure, and poor health and education services. which were never designed to meet the needs of the majority of the population. To assume that the same neoliberal economic policies that generated these problems could somehow magically solve them in the future is folly. Yet the main alternative – a state-led economic response – risks encountering resistance from the same fearful middle classes and self-interested elites who yesterday helped derail Chile’s draft constitution.

What went wrong with yesterday’s vote? To be flippant, one could say that if a plan contains 388 principles, almost everyone will be able to find five or ten that they don’t like. This draft document had vast world premiere ambitions:

He would have legalized abortion, mandated universal health care, demanded gender parity in government, gave Aboriginal groups greater autonomy, strengthened unions, tightened mining regulations, and granted rights to nature and animals. In total, it would have enshrined more than 100 rights in Chile’s national charter, more than any other constitution in the world, including the right to housing, education, clean air, water, food, sanitation, internet access, pension benefits, free legal advice. and care “from birth to death”.

And that would have eliminated the Senate, strengthened regional governments and allowed Chilean presidents to run for a second consecutive term. The text included commitments to fight climate change and protect the right of Chileans to choose their own identity “in all its dimensions and manifestations, including sexual characteristics, gender identities and expressions”.

In the end, this program proved to be too drastic a formulation for voters clustered around the center of the political spectrum. The draft document has come to be widely seen as a left-wing partisan project, a perception fueled by some well-publicized incidents flamboyance and deception. In particular, leaders of the “rejected” camp have focused on proposals to grant virtual autonomy to a range of indigenous groups, which would have been empowered to run their own justice systems. Tellingly, the ‘no’ vote was strongest in five regions in the south of the country, where logging companies have regularly been in direct and violent conflict with indigenous groups.

On this issue and others, voters in the center were easily spooked. Like even the New York Times conceded:

There was widespread uncertainty about the implications and the cost [of
the draft document] some of it was fueled by misleading information, including claims that he banned home ownership and that abortion was allowed in the ninth month of pregnancy.

However, not all opposition could be attributed solely to self-interest, elitism and misinformation. Although easily exaggerated, the additional cost of implementing (all) the proposals (all at the same time) would have been substantial. Even then, the gradual introduction of additional spending on social services would have started from a very low base:

Economists expected the proposed changes to cost between 9% and 14% of Chile’s gross domestic product, which stands at $317 billion. The country has long been one of the lowest spenders on public services among major democracies.

Waiting for the rest… There is no doubt that Boric and his colleagues will again take a blow to their popularity rating, which has fallen sharply since his election. Yesterday he was promising cabinet changes. The process of writing a new text to replace the Pinochet-era document will now be thrown back into the arena of traditional politics. A sin:

The left-leaning president said he would work with Congress and different sectors of society to draft another text drawing lessons from Sunday’s rejection. Center-left and right-wing parties that promoted the rejection campaign also agreed to negotiate to prepare a new text.

For the moment at least, the Chilean experiment of direct democracy by constituent assembly is over. The “approved” block will need to salvage as much of the wreckage as possible.

Footnote: As mentioned, the same inheritance issues facing Chile are evident elsewhere in Central and South America.
So far, The newly elected leader of the Colombian left, Gustavo Petro, proceeded with caution. From the start, he was committed to the search for multi-party solutions and appointed José Antonio Ocampo, a world-renowned development economist, as Minister of Finance. Colombia pursues much the same social agenda as Boric in Chile, but (so far) the rhetoric at least has been inclusive:

Uproot government policies that have kept indigenous peoples, Afro-Colombians, poor farmers, and women of income equality, access to land and development were at the heart of [Petro’s] Platform…. Petro…has been working to expand his coalition in Congress, where his most ambitious proposals must pass. While Petro’s political party, the Historic Pact, made significant gains in the last election, it still needs support from the establishment parties that Petro has previously criticized to pass future legislation.

The problem being that revenue to meet Colombia’s social needs will require significant tax reform, which will be resisted by the same opposition parties that Petro is currently courting:

Among the most contentious bills is the tax reform measure. It is vital to fund Petro’s social programs and curb inflation, which reached 10% in July, the highest rate in 20 years… The reform is expected to increase revenues by 25 trillion Colombian pesos (5.75 billion) in 2023 by raising income taxes for the wealthiest Colombians, increasing export tariffs on oil and gas, and closing loopholes for tax evaders. The sweeping change in revenue collection could make it difficult for some members of Congress to support him, analysts said.

At the crucial moment, it remains to be seen whether this supposedly gradual approach in Colombia will prove more effective in solving the country’s problems – or in enabling the survival of the Petro administration – than the path taken by Chile.

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