As Branco Milanovic points out, historical experience shows that inequality in the twentieth century was not reduced on its own, or by certain policies; rather, her reduction was the culmination of processes she had helped generate, such as wars, social conflicts, and revolutions. These processes also emerge, threatening, in this century, in part because policies expressly aimed at reducing it are not vigorous, in an uncertain world and plunged into an obscene concentration. The spirit of contemporary time is marked by a deep, manifest or lapful social unease, expressed in many different ways in the most diverse countries, even in the richest ones- in the face of deep disparities in access to the fruits of development and concentration of wealth in the hands of the richest 1% of the population. This is exacerbated by recent economic crises, technological innovation so accelerated that it creates uncertainty and stupor towards the world of work, complex trends in globalization, and gaps in legitimacy that politics he can’t fill up.
The way out of Chile’s current political crisis – the deepest since the transition to democracy – and its potential scenarios require understanding what citizens’ longings, without speeches or speakers, have raised in their posters and in their saucepans, in their dialogues, screams, songs, dances, as they travel and bravely fill the streets and squares of Chile courageously and spontaneously for days. To be up to the task, politics must be able to translate that blatant language into changes, and through processes of representation and political participation a new and strong fabric of social coexistence must be dealt with for a new Chile. Undoubtedly, pensions and health have been two strong words of the street lexicon.
The contribution system of pensions in Chile lacks legitimacy of origin, having been established when the rights of freedom, politicians and civils were being violated and having been slain, with extreme verticality, between four walls. To this illegitimacy was added another, over the years, when the very low pensions matured, they evident empirically that it does not fully meet what should be the primary objective of a pension system: to provide income security in old age. This flipped the naive individualistic illusions that had been nurtured by promises that were broken. Non-compliance with the citizen’s right to adequate homogenisation of consumption in old age and which could even consider some dimensions of assurance in terms of protecting individual exposure of savings to economic cycles, has led to question the current articulation of the profit-based contribution system. Pension replacement rates are very low, while direct profits from managers and insurers are very high, and the indirect profits of commercial, financial and banking companies that benefit from having very low interest rates to pension fund resources, which in turn invest profitably. Reforms introduced so far over time are restrictive and have focused on a pillar of solidarity for the poorest or most vulnerable people, financed by fiscal resources.
The current health system was also created during the dictatorship, and is characterized by a dual logic, which is unique at the international level: the compulsory contribution, carried out exclusively by the worker, allows to join the public health system through FONASA, whose sharing base favours solidarity, or to ISAPREs which, despite the mandatory nature of insurance, operate under a private insurance logic associated with individual risk: as individual risk rises from changes in the health condition of the person, or as their age progresses, the prices of policies and co-payments increase. FONASA and the public sector act as a global system reinsurance, as they are devoid of barriers to entry, and migrate to them by those displaced from ISAPREs by the higher cost of plans or exclusions. Known is the political difficulty inherent in the explicit exclusion of benefits by the public insurer in health, and Chile is also quite unique in this area, since FONASA has an explicit catalogue of benefits; this provision, controversial by nature, was also facilitated by the authoritarian context of military government reform. Since the 1990s, the catalogue of benefits has increased substantially, including high-cost benefits that are consolidated with the guaranteed benefits to be provided by public and private providers of the system; however, there are numerous explicit exclusions, or implicit rationing through long waiting lists for specialties or long queues in primary care.
Therefore, health and pension systems have long suffered from increasing delegitimization, as they do not adequately protect people from the vicissitudes of health, nor is it met with the ultimate goal of providing decent income to pensioners after their active working lives. From the student movement and its strong discursive influence in questioning profit in public education policies, the questioning angered toward the accurate qualification of health and pension systems. Unfortunately, as Bachelet’s political capital in his final year of government was squandered, there was no real isable to make fundamental reform progress on health and pensions, which were in the face of innovative discussions, consultations and proposals within the reform committees, and deep social unrest. The Government of Piñera, for its part, has been ultra-conservative in these matters.
The political viability and long-term financial sustainability of social protection systems require legitimacy: hence the importance of a favourable disposition of citizens. In addition to affecting people, pension or health benefit gaps have negative externalities, as they do not generate adequate incentives to strengthen and deepen labour markets, or to strengthen compliance tax and contributory. This creates a vicious cycle because the defunding of the systems is deepened and, in doing so, their sustainability is called into question.
Potential responses and scenarios of exiting the disruptive political crisis make it relevant to reflect on historical experience in social protection reforms. Behind the unique welfare states in the world, different social alliances underlie them. As serious investigations into the historical development of welfare states conclude, the consolidation of European welfare states was at the hands of broad political coalitions that, among other actors, included elites, the middle classes and industrial workers (see, among others, authors such as Dorothy Porter and Peter Baldwin). On the contrary, when such coalitions were not forged, as in the United States, the combination of private insurance was privileged, with the protection afforded to those without resources. When the middle classes played an important role, social policy transcended the political and economically functional minimums; it has also been the case in Latin American countries where the welfare state has been strongest. Social protection from the risks of health, aging, labour insertion and care and, with this, the real redistribution of the individual risk burden at the level of social protection systems has been possible when socio-economic groups, so they found that they shared with the disadvantaged an interest in the reallocation of individual risk. In this sense, historical experience also seems to show that «downpressures» are insufficient to achieve solidarity reforms, and that the unfortunates have been able to benefit from redistributive reforms to the extent that groups of elites, who were politically decisive, could also benefit. Even without a change or increase in the incidence of risk, groups that are not necessarily supportive can gain an interest in redistribution, experiencing a dwindled ability to withstand burdens without assistance. While historical experience shows that the identity of pro-risk re-distribution actors can vary greatly depending on the precise circumstances of countries, the role played by the middle sectors and the perseverance of some resolute groups of the elites, so that social policy—in economic and political terms—exceeds the minimum thresholds. In other words, agreements aimed at redistributing risk beyond any functional minimum level have been made possible by the concurrence of coalitions of redistributive winners, which became politically strong enough to promote solidarity and redistributive reforms.
In this sense, in order to move in Chile towards reforms with more global redistributive effects that challenge stratification and exclusion of social protection systems, it seems essential to forge innovative «redistributive alliances», in the terms Baldwin. To fully reform pension and health systems, it is indiretoscanting to forge such coalitions, and certain current conditions are conducive, by the confluence of the unrest of citizens who are negatively affected, above how poor or well-off they are, and who are confronted with AFPs and pensions, and with the Isapres, and with the pharmaceutical companies, and with the pharmacy chains and their oligopolistic pacts. The malaise with pensions and health has long also been about to be strata in the middle classes and even some high-income disgruntled sectors. Indicative in these terms have been the unusual marches and protests against inequality held within privileged communes of Santiago, and that on the first day they had to face, symbolically, one of the most massive and intimidating military deployments witnessed in the first week of protests.
Health inequalities affect people’s fundamental freedoms and opportunities, because they underpin their ability to carry out projects and achieve the alternative goals in life that they value, as Sen puts it. To paraphrase Barr and Diamond, pension systems must ensure at least four aspects: homogenization of consumption at the end of working life through the best viable and non-profit-conceding replacement rates, poverty relief, forms of redistribution. Social rights are also realized through social protection, and they set imperative standards for society and define situations of deprivation that are inadmissible.
The opportunity opens up an opportunity to consolidate in Chile a social bond of solidarity in the financing of social protection, which strengthens democratic and respectful social cohesion, the reciprocity of social bond, and the common aspirations around the dignity of people, thus acting on belonging and inclusion. Today’s struggle, no doubt, by encompassing human dignity in terms of pensions and health, is against profit-driven systems, and requires forging redistributive political alliances.