Equal Freedom For Men and Women!


In Chile this year’s International Women’s Day was marked by president Michelle Bachelet’s announcement of a new Ministry of Women and Gender Equality to be installed this year. Aimed at ending gender inequality and violence and discrimination towards women, the ministry will propose and implement public policies to combat the perceived gender gap as part of a National Program of Equality. Other measures that have been passed recently include the obligation for political parties to have at least 40 percent of their candidates be female. Female participation in the Chilean labor force has historically been below that of comparable countries, although it has been on the rise in the last decade.

BacheletOn the surface Bachelet may seem like a brave crusader for justice on this issue, and perhaps she even perceives herself as such. Yet it is worth examining what she is really advocating for. After all, no matter how noble one’s goals, the specific actions taken to achieve that end should themselves stand up to ethical scrutiny, even aside from the question of their effectiveness. In fact the nobler the goals the more important choosing the right steps toward them becomes. What is that old saying about the road to hell?

Being a Socialist Party president it is easy to identify the ideological bias upon which Bachelet’s actions are based. At the root of this ideology lies the utopian idea that society can be molded and formed into perfection from the top down. This basic premise has many ramifications, all founded on the idea that paradise can simply be legislated into existence by the stroke of a pen. In short it is the sort of thinking that leads to 40,000 new laws taking effect in a single country in a single year.

After any initiatives aimed at the aforementioned are implemented the resulting statistics will undoubtedly be employed to tout the policies’ alleged benefits, as if there is any honor in changing human behavior by way of coercion. You got someone to do X after threatening him or his property? You must be a master persuader!

In the case of Chile there is ample evidence to suggest that cultural factors have much to do with lower female participation. If there is a little to no discrimination, then, and if it is by women’s own volition that they are underrepresented in the job market, how can government force be morally justified? One of the most well-known reasons for women to choose to work less or not at all, for instance, is having a partner. Does that mean the State should forcibly insert itself into family relationships in the name of gender equality?

Anyone who has written anything on this controversial topic has likely upset at least a few sensitive souls. This article will probably be no different, even if the intention has merely been to trigger critical examination of one’s viewpoints in lieu of the usual discourse replete with name-calling and populist rhetoric invoked by those with a political axe to grind.

As freedom advocates in the midst of debates about the rights of one group or another, let’s never lose sight of what ought to be central in these discussions: the protection and advancement of those individual liberties that are innate within each and every one of us. If that leads many women to pursue professional careers, more power to them. If they prefer to focus their attention elsewhere, however, that should be equally respected. Other women – even those that happen to occupy some political office – have no business telling them how to live their lives.

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How Does Healthcare Reform Impact Liberty in Chile?


For more than three decades Chile has had a dual healthcare system consisting of both state-run and private health services, which has provided more Chileans with greater choice and better access to such services. Initially funded by way of a 4 percent tax on income, by the late nineties the public Fondo Nacional de Salud (FONASA) started running deficits as one in four Chileans opted for private insurance instead. Consequently the obligatory contribution was raised to 7 percent, helping force a significant chunk of people back into the old system. Unfortunately government meddling did not stop there.

1314902_99313658In 2005 a fresh round of regulations listed 56 priority health problems that all insurers must cover. Unsurprisingly, premiums spiked across the board that year as well as the following years. Unfazed, the first Bachelet administration expanded the list to cover a total of 80 medical conditions. The result is as predictable as it is inevitable, and the unfortunate thing is it usually leads to more demonization of the market and increased calls for more heavy-handed government intervention. Considering the aforementioned developments it seems as though that process is already playing out.

Needless to say, the selfless crusaders for more equity – be it in healthcare or whatever other area of life – make no mention of inflation, currently estimated at 4.5 percent, that is stealthily yet ceaselessly robbing all Chileans of their purchasing power. Nor is there any mention of the fact that patent laws are artificially propping up drug prices, or that compulsory medical licensing is keeping competition out of the market. Experiences with “free” state-run healthcare and the resulting long waiting lines and other unintended consequences such as in Canada and the UK are equally overlooked if not purposely left out of the debate.

To point the finger to the market as the source of inequality merely reveals one’s intellectual laziness, if not dishonesty. Moreover, it is to deny the fact that free market type policies have made Chile the most prosperous Latin American nation in known history, slashing poverty from 50 to 11 percent while raising per capita income fivefold. In other words, being poor in today’s Chile generally means owning a used sedan rather than a new SUV, whereas just a few decades ago it was the difference between having three meals a day or going hungry.

Extracting wealth from the SUV driver in the name of equality is not only immoral; it has historically never lead to anything but equal misery for everyone, wherever it has been tried. Besides, the case of the United States shows that simply increasing spending on health by no means guarantees a healthy population. After all, when government policies make healthcare more expensive that inevitably leads to more spending, yet as a measure of effectiveness or efficiency that metric is of no use at all. It does, however, achieve the exact opposite of the stated goal of making healthcare more affordable. Where have we heard that before?

Bachelet’s healthcare reform falls squarely into the category of just another excuse for more government intervention to solve the problems created by previous intervention.

The State of Freedom in Chile


Perhaps one would not know it for some of the articles that have appeared on this website, but libertarians have plenty of reason to be optimistic about Chile. The country’s economy consistently ranks as by far the freest in Latin America, reaching tenth place in the world in the most recent ranking. Free market type policies have lifted millions of Chileans out of poverty over a time span of mere decades while making its capital city a major hub for international business. And despite recent allegations of large-scale corruption regarding political campaign contributions, on the whole corruption is virtually unheard of.

FreedomSuch a success story literally sets Chile apart from every other nation on the continent, as evidenced by the fact that it is set to become its first developed country by the end of this decade. Yet its unrivaled success has all but silenced critics. On the contrary, it seems like the very prosperity that made Chile the envy of Latin America has lulled some would-be free market advocates to sleep, while proponents of state intervention are running on all cylinders. “Free” education and healthcare and Keynesian economic stimulus – read: more wealth confiscation – are just some of the talking points among those aiming to perfect society by way of scribbling words on pieces of paper.

Last March an OECD report made the headlines in Chile for categorizing the country as among the most unequal in terms of income distribution. Such reports provide the kind of ammunition used by interventionists to beat the drum for all manner of reforms, including the recently approved educational reforms. Given the relative lack of government meddling in daily Chilean life – at least on the scale people in most developed nations have become accustomed to – some are eager to seize every opportunity to promote the supposed virtues of government planning.

To be fair, much of this sentiment stems from resentment against the iron first with which economic reforms were implemented by Augusto Pinochet’s military junta. Looking to break with the socialist policies pursued by his predecessor Salvador Allende and its disastrous consequences, the commander and his ilk considered “the Chicago Boys” to be the only group of economists worthy of their trust. Taking his cues from them, the policies subsequently introduced succeeded in reversing the downward trend and revived an economy previously characterized by soaring inflation and deficits coupled with plummeting saving and investment rates.

Since its return to democracy in 1990 Chile has almost exclusively seen left-wing administrations. For the better part of this era, however, economic policies have generally favored the free market over central planning. It is precisely this trend that is a thorn in the side of those who wish to see more top-down decision making, their main spokesperson being Michelle Bachelet. Fortunately their rhetoric does not go so far as to demonize international trade or private property, but it does tend to blame the free market for inequality in just about every aspect of life. This flawed line of thinking is most prominently and frequently used to justify more state control of healthcare, education and the labor market.

The latter, of course, can hardly be said to be a uniquely Chilean phenomenon. Still, it is imperative to the cause of freedom to promote this understanding of the philosophy of liberty; that rather than foster inequality, voluntary trade has historically been – and still is – the most powerful force against it. Not to mention the fact that trade, not coercion, is simply the morally preferable thing to do.

Pentagate Corruption Scandal Rocks Chile


According to Transparency International´s Corruption Perceptions Index Chile ranks as one of the least corrupt countries in the world, ahead of the likes of Austria and France and similar to the United States and Ireland. The World Bank’s governance indicators suggest corruption in 2013 was under better control in Chile than in the U.S. and neared that of the United Kingdom and Canada. Note that we are talking about a country in Latin-America, a continent whose governments are not exactly known for their incorruptible politicians. Consistent free-market policies have made Chile the rare exception.

However, a major political scandal that broke last week is threatening that status. Known as Pentagate the campaign finance scandal currently making headlines in Chile allegedly involved dozens of politicians from across the political spectrum, although the majority are said to be members of the Independent Palacio-de-JusticiaDemocratic Union (UDI) party. Some of the more prominent individuals being investigated include former Finance Minister Andrés Velasco, who served one term under current president Michelle Bachelet during her first four years in office, officials of the previous Sebastián Piñera administration, as well as several former presidential candidates.

It was the privatization of state corporations after the fall of the Pinochet military dictatorship in 1989 that gave birth to the Penta Group. Formerly known as the Instituto de Seguros del Estado the insurance company was bought by two investors – Carlos Alberto Délano y Carlos Eugenio Lavín – who incidentally both used to work for the government during the regime. The former is known as a big political donor and a friend of former president Piñera, while the latter tends to keep a lower profile. Last August their holding company came under investigation by Chilean authorities for tax fraud, which besides several arrests lead to the laying off of the Group’s director. And while many a libertarian may not raise any moral objections to these sorts of practices, it now seems the increased scrutiny of the Carlos duo has brought other, more reprehensible facts to light.

While the revelations may have shocked some Chileans, for proponents of the free market there is arguably a very bright side to the story. After all, what better libertarian arrows could one possibly wish to have in his quiver than the sort of widespread political scandal that reads like a novel? Besides, if this is what is happening in a country whose government is regarded across the continent as the most effective and efficient, just imagine what is going on in all those other countries!

Admittedly some on the left will seize the opportunity to espouse the supposed virtues of government-run enterprise as compared to the greedy capitalists only out to make a buck. Yet this argument is easily refuted; since few people are in favor of a completely centralized economy all they need to be convinced of is that interventionism invariably leads an economy down that very path – two prominent and current examples being Venezuela and Argentina.

The better alternative, then, is to start from the premise that a government big enough to “regulate” an industry is a government big enough to award the well-connected within that industry special favors. It should be concluded that privatizing some industries is not sufficient to achieve a free society. So long as government is allowed to drive the economic bus, it will always determine who gets to sit in the front and who is relegated to the back – before ultimately driving over a cliff.

[N.B. Some of you may have noticed I (unexpectedly) took a bit of a hiatus at the end of last year. If you missed seeing regular articles on here rest assured things are back up and running, so be sure to look for those weekly posts again in 2015!]

For School Choice, in Chile and Elsewhere!


In her second term as president of Chile Michelle Bachelet is set to impose significant educational reforms to further her socialist agenda. An estimated increase of 1.5-2 percent of GDP on top of existing spending is supposed to improve the quality of and access to (higher) education and thereby reduce the problems of inequality and segregation.

Bachelet’s plan to provide “free” college education to all Chileans exposes her ignorance of the effect of such policies in other countries. It is a statist’s’ knee-jerk reaction: once we’ve identified a problem naturally all we need to do is throw a bunch of money at it and have the government point guns at people, and the rest will take care of itself! After all, the Danish taxpayer is forced to pay for everyone’s college tuition, and they are prospering!

Chile_EducationThis sort of simplistic stance on education completely ignores historical and empirical evidence that shows that the voluntary system in existence before the dawn of compulsory schooling already met the existing needs for education, or that modern public schooling is a lot more likely to increase social segregation. The latter is confirmed by Chilean figures correlating people’s addresses, incomes and test scores. Besides, we already know that putting more power into the hands of bureaucrats in faraway government buildings, where we can be sure their views and policies will be heavily influenced by special interest groups, will invariably reduce transparency, accountability and quality.

In the United States, for instance, this has lead to a ballooning student loan debt that now stands at $1.2 trillion or some $30,000 per student. In three decades tuition fees have risen by 1,120 percent, meaning that the same college degree today costs 12 times as much as in 1978. The total bill ranked up on behalf of the American taxpayer stands at $22 billion per year, much of which can be traced back to the government programs championed by Lyndon B. Johnson in the sixties as part of his “Great Society”.

The modern school system is largely based on a foundation laid by Iron Chancellor Otto von Bismarck in the late 19th century, with the aim of supplying his military with soldiers willing to follow orders unquestioningly. Should we be surprised, then, that our schools don’t produce critical thinkers and enterprising individuals? Is it any wonder how pervasive statism is in our society? If we were all forced to go to universities funded and run by Coca-Cola could we reasonably expect anyone to be critical of Coca-Cola?

In recent debates about education here in Chile we have heard some shockingly uneducated (pun intended) statements from officials, stating “we don’t know if for-profit education, selection or shared finance of schools and universities actually affect quality” and that “there is no recipe for quality”. The fact that these people are not only engaged in the debate but likely to exert If an objectively written book was ever published on the State’s involvement in schooling our children it might be titled “Government schooling: making every student equally miserable since the 1870s”. Should the Bachelet administration succeed in stripping away school choice the educational system will likely go down that very path.

As Murray Rothbard pointed out: “It is clear that the suppression of free instruction should be regarded with even greater horror than suppression of free press, since here the unformed minds of children are involved.” Chilean libertarians have their work cut out for them.

Keynesianism in Chile


Last week Chilean president Michelle Bachelet announced an “especially anti-cyclical” government budget for 2015. Utilizing the usual rhetoric of creating jobs and stimulating the economy, the first budget in her second term is set to increase by a whopping 9.8 percent. The new budget’s “historical increase in public investment” – mind you, these are the words of a Socialist Party president – will be directed mostly toward social reforms.

La_MonedaThe increase in spending is supposedly covered by a landmark tax reform passed last month raising corporate taxes and closing tax exemptions. These funds, confiscated from those who could make actual investments to meet market needs, will be used to ramp up spending on health care by 85 percent and education by 10.2 percent. In addition, Bachelet pledged to pump more money into developing certain remote regions and consolidate social welfare schemes, stating her administration’s goal to have 1,700 of the poorest families on the dole by next year.

The latter, of course, is typical of the redistributionist ideology; the fundamental difference between giving a man a fish to feed him once and teaching him how to fish so that he may become more self-reliant. As always the irony of striving first and foremost to make the poor and destitute more dependent on others for their sustenance seems to be lost on most people. Growing up, children are expected to become better able to take care of themselves and take on more responsibility as they get older – I personally recall a story or two about my older sister looking after me when we were kids. Yet when government takes this inherent human instinct and turns it on its head, nobody bats an eye.

In her press conference president Bachelet administration claims the stimulus will create 139,000 jobs. What she left out, however, is how many jobs will be destroyed or never created because of the tax hikes. After all, there is no way of knowing how many more or fewer jobs would have been created if the government had not decided to extract more resources from the voluntary sector. Nor does Bachelet specify what types of jobs will be created. Since jobs created by an institution that does not have to make a profit are not subject to the discipline of the market, the creation of these jobs might actually harm the economy and the people rather than help them. And all of this is assuming the tax hikes will even create enough revenue to cover the increased spending.

Rather than help sustainably grow the Chilean economy, the new budget represents the State’s clenching fist on an economy that is already struggling. The slowdown in the Chinese economy and the Finance Minister’s announcement that there will be no stimulus has lowered demand for copper, Chile’s main export product. With Chinese demand for copper dropping the commodity’s price has fallen by over 6 percent in recent weeks. If the U.S. dollar keeps strengthening the way it has for the last 12 weeks the price of copper is expected to fall further.

The good news for the Chinese is that it seems their economy will be allowed to run its (semi-) natural course rather than get a temporary monetary fix, which is inevitably followed by a correction. Unfortunately the Bachelet administration either does not understand that or is simply doing what is politically expedient. Either way it is telling to witness a socialist president in Chile implement more interventionist policies than the so-called communist Chinese. The difference will be that when the Chinese economy bounces back, it just might be a more sustainable recovery.