Sebastian Edwards, in the opinion tribune of El Mercurio (20-08-2020), recalls his youthful times, of Leninist readings, when he militated in Chilean socialism. And today he transforms his renunciation of the past into radical anger against the young people of the Broad Front. He accuses them of ultra children, who use “reasoning that contains logical flaws that contradict history and truth.” We must be very wise to arrogate the heritage of historical interpretation and truth. Being a UCLA professor, I don’t think it’s enough to do that.
For my part, I prefer to doubt the indisputable truths because, as Descartes said, the only truth is our own existence. But the controversy is legitimate, and therefore I will try to prove that the “logical failures” are committed by Edwards.
The attacks, even ad-hominen, of the US-based professor on FA youth, concern very debatable issues, legitimate controversy. They don’t deserve that much disqualifications. It’s not to be angry.
Edwards is annoyed by the withdrawal of 10% of the AFP members and, in particular, that it included high-income people. Nor does it seem right to support the desirability of emulating the Nordic countries, with the proposal to include social rights, in the new Constitution. Finally, “another ill-spinning idea”, by the young “revolutionarys” (the quotation marks are Edwards’s) is the proposal for an industrial policy.
He describes these proposals as “sloppy and puerile.” The professor is unaware that there are many more stakeholders in these three subjects than young “revolutionary”
Edwards’ particular encono with the young people of the FA, and his remoteness of the country, make him confuse the adversary In fact, the proposal, converted into law, for the withdrawal of 10% of the funds of the AFP members, was promoted by the Green Regionalist Federation (FRV). The decision was inevitable, because of the inability of the Piñera government to have resources for the survival of the Chilean family, because of the ravages of Covid-19. It was also a consequence of the discredited thesis of targeting, which prevented access to the universe of those in need, which forced Parliament to approve that 10% were withdrawn by all members, regardless of their conditions of entry.
Edwards needs something else to complete his information. The 10% withdrawal law was passed by two-thirds, both deputies and senators, with the backing of the entire opposition and a broad contingent of right-wing, UDI and National Renewal parliamentarians. Edwards adds, however, a legitimate concern: tax exemptions for high-income people, which were favored with the 10% withdrawal. But, for Edwards’ peace of mind, it’s time to make the corresponding tax adjustments to compensate for that tax loss.
The second issue that angers Edwards is social policies and their association with the Nordic countries. Here I recognize my lack of objectivity and conceptual bias. I love the Nordic countries and their welfare state and instead feel an inevitable distance from the Anglo-Saxon liberal state. I like the protection of universal social rights, which characterizes the Nordic countries.
Edwards expresses annoyance in his article that Claudia Heiss, a militant of the Democratic Revolution, said in a seminary that social rights should be included in The new Chilean Constitution, as in the Nordic constitutions. The professor says that it was not true that social rights are consigned in all the constitutions of the Nordic countries. And he’s right.
It is true that in some Nordic countries social rights are included in the Constitution and others are not incorporated, but there are specific laws that safeguard them. But what matters, at the end of the day, is that those rights are guaranteed. It’s not to get so angry with Claudia, the RD militant. But it is inescapable for our country to constitutionally secure universal social rights; only in this way will the ruling class, and its economists, end up with that trapdoor of social focus.
Social rights must be considered in the same hierarchy as civil and political rights because inequalities in health, education and foresight undermine democracy, social stability and our country’s own development. Social rights are universal and cannot be emptied of guarantees.
Finally, Edwards embarks on criticism of the proposals on industrial policy, and withwho propose to modify the productive matrix of natural resources. He again attributes main responsibility to the FA boys, but he extends it to the left and CNN journalist Daniel Matamala. Edwards likes things the way they are, defends Chile’s primary exporting model and uses New Zealand and Australia as a positive reference and as a negative benchmark the case of El Salvador.
In reality, the reference of El Salvador has no relevance. The professor should know that in the production and export of El Salvador the maquila of Free Zones predominates, where there are no labor rights and companies are exempt from taxes. In reality, exporting T-shirts and socks from those Free Zones to the U.S. does not generate any kind of chaining to the economy as a whole. That does not qualify it as a predominant industrial economy. That’s why the Salvadoran economy is doing badly. It’s not a good example. That’s not what we want for the Chilean economy.
With regard to the references of Australia and New Zealand we could go a lot. True, natural resources are significant in the production and exports of both countries; but under no circumstances have these countries renounced the industry, nor do they avoid adding value to primary production. There is a myth that deserves to be denied.
Australia produces and exports a wide variety of manufactures, including organic chemists, machinery including computers, electrical machinery, medical and optical devices. And, in the case of New Zealand, diversification targets exports of manufactures in plastics, carpets, textiles and high-tech equipment for computers. It cannot be otherwise, because investment in science, innovation and technology, as well as their high level of education, inevitably favor the deployment of intelligence in the most varied sectors of these Pacific economies and societies.
We have the problem in Chile. And it’s serious. That is why we need to promote the industrialization of our country. The fragile productive matrix is negatively affecting the economy. The deminution of GDP has a secular character: 7.4% between 1990-1997, in the period 1999-2007 it was 4.4% and now, in 2014-2018 only 2.2%. In addition, productivity has been falling for more than a decade and international competitiveness has also declined. To this structural reality is added recently, the impact of the US-China trade war and now the serious effects of Covid-19.
Concern about the Chilean production matrix is not just for FA children (as Edwards rates them). He is also of well-known economists, with different conceptual perspectives and diverse ideological visions.
Indeed, the same former Minister of Finance, Felipe Larraín, in a 2000 study, together with economists Sachs and Warner, notes:
“Chile has not integrated into the world economy as an independent innovator or as a generator of cutting-edge technologies, but as a supplier of a few natural resources. And…… these sectors are insufficient to propel Chile towards a high-income growth stage. Chile will have to diversify its export base or is highly likely to experience a decline in its growth.” (A Structural Analysis of Chile’s LongTerm Growth: History, Prospects and Policy Implications, paper, 2000. Harvard University)
Economist Ricardo Hausmann of Harvard University is right when he says that Chile’s copper-priced, unrefined, opens the door to development.
“The country’s economy is “uns diversified” and the country “cannot expand” on the foundations that governed when copper was high value” (CNN Chile, 09-17-2015)
For his part, Ha-Joon Chang of Cambridge University emphasizes that to boost the economy in the medium and long term and enter development it is inescapable to walk beyond the production of natural resources. Designates:
“While a fish industry can be as profitable as an electronics industry, the former requires and promotes fewer productive and organizational skills than the last. International evidence shows that most countries improve their skills through industrialization and, especially through the development of the manufacturing sector, the true center of “learning capitalism.” (CIPER, 30.05.2016)
Thus, out of every $100 that the country sells to the global market, $90 is raw or un transformational raw materials from the mining, forestry, fisheries and agriculture sectors.
As at the time of the salt boom, the economic growth and resources generated by the external sector have not been used to diversify the structurectiva. And today, when the world is turning toward protectionism, it highlights the fragility of living in natural resources.
Natural resources, which Chile produces and exports, have become a bottleneck. Although they are a high-earning business for a minority of large entrepreneurs, they narrow the productive frontier of the economy and their profit is not spread to the rest of society.
The export of natural resources deprives the economy of the possibility of generating chains that enhance the development of new productive capacities at the domestic level. Nor does it help job creation, and when it does, that employment is characterised by its precariousness.
As non-renewable wealth is over-exploited, and its profits are concentrated in a business minority that produces and exports them, the environment has been increasingly affected. Water is now a dramatically scarce resource, used abundantly for productive, agricultural and mining work. Industrial overfishing has led to the collapse of major marine resources. The razing of the native forest has been accompanied by an increase in exotic forest plantations, especially pine and eucalyptus.
With the current production structure the private sector is not interested in investing in science and technology. And, the state, it doesn’t either. Evidence of this is a lean investment in science and technology of just 0.40% of GDP for science and technology, while in the OECD it is 2.5%.
On the other hand, the State does not feel compelled to address inequalities in quality in education, because it is not indispensable to the existing productive model. Hence the wages are very low in Chile. And, by the way, to transform the productive matrix requires tackling economic heterogeneity between companies large and small for which there are no public policies, nor are there to reduce inequalities between the different territories of the country.
Why is there no productive transformation? Because consciously or unconsciously, much of the establishment’s political class and economists (or most) are convinced that the market cannot be intervened, it cannot be oriented. And, perhaps more importantly, especially in recent years, has been the subordination of politicians to the great entrepreneur who, in exchange for money for political campaigns, impose laws and decrees that ensure the permanence of their renters business.
Thus, the growth and openness to the world of the Chilean economy has not opened the way for Chile’s development. In the productive and exporting matrix of natural resources lies the limitation to development and is also the material basis of inequalities. Aníbal Pinto pointed out decades ago, with his famous book on the frustrated development of our country. History repeats itself: our country has again been frustrated with its development.
Edwards tries to disqualify the FA by using the term “buenismo,” which refers to naive thinking. However, there does not appear to be any naivety or “child vision of the world” in the proposals advocated by the FA’s youth. Instead, they have helped refresh politics, installing substantive issues to eradicate the inequalities, abuses and injustices that Chilean society has suffered over the past 40 years.
The content poured into this opinion column is the sole responsibility of its author, and does not necessarily reflect the editorial line or position of El Mostrador.