According to the former leather and footwear trade union leader, Juan Jara (leadership period: 1965-1973), the capitalist economic model was implemented in Chile for the benefit of the big businessmen to the detriment and with the clear purpose of subjugating the most dispossessed working class, in order to increase their excessive incomes, without modifying the unequal structures that to this day keep the real creators of wealth, i.e., the workers, in poverty and vulnerability.
Here is a brief anatomy of Chile, which must change after the social outburst of 18 October 2019. Our country and its citizens have been plundered by its political, business and leadership leaders. This Chile that has gradually risen up to say “enough!” to the blatant abuse it has suffered in its history and that is expectant of a potential new constitutional course.
State-backed credit (CAE): if in 2006 the CAE represented 2.4% of the budget for Higher Education, today it exceeds 24.4% and, in addition, the Treasury has committed $553,564 million for 2019. According to the latest edition of Fundación SOL’s study, Endeudar para gobernar y mercantilizar: el caso del CAE, between 2006 and 2018 the banks have given 7,657 million dollars in CAE credits, some 5.3 trillion Chilean pesos (millions of millions) to more than 870,000 students. If we compare, the total debt of CAE debtors is equivalent to 10.4% of the National Budget for 2019. This large amount of credit, given to students who projected little job security and low salaries upon graduation, was not profitable for the banks, so after the approval of the CAE Law in 2003, a business model was devised where the State would pay the profits not received by the banks. More than half of these credits have already been “repurchased” by the Treasury from the banks, which in addition to charging the original 6% interest on the CAE, charge another “surcharge” to the state, called “recarga”, which on average amounts to 25% for each credit. This mechanism was devised in the regulations of the CAE Law and was the key to the banks becoming part of the financing system at the end of the government of Ricardo Lagos and the beginning of Michelle Bachelet’s first administration. The report states that between 2006 and 2018 the Treasury has repurchased 53.7% of the CAE credits, and for this repurchase it paid $3.59 billion (millions of millions), of which $734,105 million correspond to the recharge. In other words, the state has paid more than a million dollars in surcharges to the banks. 2018 is one of the years in which the Treasury has paid one of the highest amounts for the repurchase: $78,555 million. As the number of loans granted dropped from 299,000 in 2017 to 269,000 in 2018, the state repurchased fewer loans than the previous year, but the amount of that repurchase increased by $10 billion over 2017. the amount of billions of pesos handed over by the treasury to the banks demolishes the thesis of the lack of funding to expand higher education enrolment in the early 2000s. “The argument that there was a shortage of resources to go to the banks is clearly no longer valid,” the report said. Fundación Sol’s analysis found that 90% of CAE credits have been given to three banks: Scotiabank, Itaú-CorpBanca and Banco Estado. In addition, the banks Itaú-CorpBanca, Internacional, Santander and Scotiabank have benefited the most from the repurchase, accounting for more than 50% of the repurchased loans. On the other hand, BCI has the highest percentage of overpricing paid by the State, which reaches 55.6%.
Isapres: according to the article “Isapres’ profits jump strongly in the year of the pandemic” (La Tercera, 2021), private insurers made profits of $82,548 million in 2020, which is equivalent to an increase of 772% compared to $9,465 million in 2019. In the fourth quarter, meanwhile, profits totalled $16.1 billion (about US$22 million), down slightly (-2%) from $16.4 billion in the same period last year. In disaggregated terms, with Ch$26,354 million, Colmena is the one that registers the highest profits. It is followed by Banmédica with Ch$22,550 million, VidaTres with Ch$17,213 million, Nueva Más Vida with Ch$13,110 million and Consalud with Ch$5,701 million. CruzBlanca, meanwhile, registered some losses.
Pension Fund Administrators (AFPs): as of December 2019, 50% of the 984,000 retirees who received an old-age pension obtained less than $202,000 (strictly speaking, $145,000, if the State’s Solidarity Pension Contribution (APS) were not included). Of the seven AFPs operating in Chile, five earned more than $100 million a day in 2020. Habitat earned $351 million per day in December. ProVida earned more than $211 million pesos per day. AFP Capital, more than $163 million a day, while Cuprum earned $124 million a day. Modelo made $106 million pesos a day. PlanVital only made a profit of $59 million per day and AFP Uno only made a loss in December. In conclusion, more than one billion pesos in profits per day in 2020. An important figure, given that at the same time the country saw the economy shrink due to the effects of the health crisis. In summary, in 2020, they recorded profits of $332.818 million.
Drug prices: Original medicines are 38% more expensive in Chile than the average price in Latin American countries. This is shown in a study by the consultancy firm IMS Health, which defines itself as the world’s leading provider of market intelligence for industries of this nature. According to its reports, Brazil is the country with the cheapest originator drugs, with an average cost of $14.5 per pack, a figure that is almost doubled in Chile, with an average of $28.5 for this type of drug. In an interview, the creator of Yapp, an application that allows you to compare drug prices in Chile, said that the figures provided by the study are not surprising, adding that in Chile, “85% of drug spending comes out of pocket, only 15% comes from insurance coverage. In other countries, this is as high as 30% or 40%”. Furthermore, the average family’s out-of-pocket health expenditure, i.e. what they spend each month that is not covered by insurance, Isapres or the National Health Fund, increased by 50% between 2012 and 2016. This type of circumstance has a direct impact on people. It should be remembered that a household with relatively normal health spends $150,000 each year on medicines alone, which is the main item of expenditure in this area, precisely because of the high price of drugs and the low coverage of this type of product in insurance systems. This unfavourable situation is particularly noticeable in the case of original drugs, known as innovators because they have a patent on the active ingredient and are usually the most up-to-date products for treating different diseases. On average, this type of medicine is sold at US$ 28.5 in national pharmacies, which is the highest cost of the countries analysed, exceeding the average sale price in the region by 38%. For example, in Argentina, the average price paid for this type of product is US$ 17.6.
Salaries: 50% of Chilean workers earn less than $401,000, 2 out of 3 workers earn less than $550,000 in cash and only 19.4% earn more than $800,000 in cash. In November 2019, the income poverty line in Chile for an average 4-person household is $445,042, according to the Ministry of Social Development. “If we consider only salaried workers in the private sector who work full time, the median is $449,652, which means that practically 50% could not even remove an average family group from poverty and it is mandatory that at least two people work in the household,” the report states. Specifically, 54.5% of all employed people in Chile could not remove an average family from poverty (62% in the case of women and 49% for men) and 49.2% of private wage earners working full time are in the same situation. The data also show a significant gender gap, with 84.8% of women in paid employment earning less than $800,000. The average income earned by women is equivalent to 71.9% of the income earned by men.
At the regional level, there are also clear differences, because in Coquimbo, Libertador Bernardo O’Higgins, Maule, Biobío, Araucanía, Los Lagos, Los Ríos, Arica y Parinacota and Ñuble there is a more pronounced wage gap, because 70% of the employed earn less than $520,000. On the other hand, it can be seen that in 38 of the 52 provinces with available information, the median does not exceed $400,000 liquid. In 17 of the 33 large Chilean cities reported, the median does not exceed $400,000, in 12 it is between $400,000 and $500,000 and only in Coyhaique, Antofagasta, Calama and Punta Arenas does it exceed $500,000.
In terms of labour dependency, there is also an evident gap. It is estimated that there are 1.1 million external salaried workers (subcontracting and supply). Directly hired workers earn on average 15.1% higher wages than external workers, and the gap exceeds 80% in sectors such as mining, public administration and financial activities, among others. In addition, 1,164,736 “false wage earners” are registered, i.e. people who do not have an employment contract and therefore do not have access to health, social security or unemployment insurance contributions. Nor are they governed by the rules of the Labour Code (they cannot form trade unions or bargain collectively). Of these, 80% earn less than $454,000. Likewise, there are almost 840,000 underemployed in Chile, and 50% earn less than $176,000.
Indebtedness: according to data from the XXIX San Sebastian University-Equifax Delinquent Debt Report, there were 4.9 million delinquent debtors in Chile as of June 2020, with an average amount of $1,894,721 in arrears. Furthermore, according to data from the Family Budget Survey (VIII EPF) of the INE, more than 70% of households are in debt. This is a phenomenon that has taken on structural characteristics. In fact, for the 25-44 age bracket, while 3.67 million people are employed (have a job), 2.49 million are registered as being in arrears, which is equivalent to almost 70%. In addition, 71.1% of defaulters at the general level have remained in arrears and did not emerge from this condition during 2019. In Greater Santiago, the 9 communes with the highest level of delinquent persons in relation to the total number of inhabitants over 18 years of age are: San Ramón, Lo Espejo, La Pintana, El Bosque, Cerro Navia, La Granja, Pedro Aguirre Cerda, Lo Prado and Conchalí. All these communes, precisely, concentrate a greater number of households with medium or low incomes, and the percentage of people in arrears is between 51.3% and 43.8% of their inhabitants over 18 years of age.
Inequality: according to ECLAC (2017), in Chile 50% of the lowest-income households had 2.1% of the country’s net wealth, 10% concentrated 66.5% of the total, and the wealthiest 1% concentrated 26.5% of the wealth. The Organisation for Economic Co-operation and Development (OECD) report, A Broken Elevator? How to promote social mobility (2018) states roughly that as income inequality increased since the 1990s, social mobility stagnated; this means that fewer people at the bottom of the social ladder have been able to move up the ladder while the richest have maintained their large fortunes. Then, given current levels of inequality and intergenerational income mobility, it would take on average at least five generations for a child from a poor family to reach the median income level in OECD countries. The report also finds that in nations with high social mobility and low inequality, it would take three to four generations for those born into low-income families to approach the median income of the society. Meanwhile, those born in states with low social mobility and high inequality could take up to eleven generations. In the particular case of Chile, upward social mobility takes on average a whopping six generations, or approximately 180 years.
Bank profits: In the first four months of this year 2021, the largest banks accumulated profits of $6,239 million per day. In total, the four institutions made more than $748 billion in this period. Banco BCI, for example, increased its profits by 58.3%. The Saieh group’s ITAÚ bank earned $109,505 million in the four-month period. The Yarur group’s BCI, $189,218 million. Banco de Chile, of the Luksic group, $212,584 million. Banco Santander, of the Santander group (Spain), $237,461 million (Diario Financiero).
Education: according to economist Andrea Repetto (2012), in Chile, the surname has a significant predictive power on income. Social stratification is persistent. In other words, there is some social mobility, but with a ceiling. The study Inequality, segregation and educational outcomes (2014) by the Centro de Estudios Públicos (CEP) cross-checked data on average earnings and Simce scores according to the proximity of a family’s residence to a metro station, finding strong correlations between place of residence, socio-economic group and educational outcomes. The 2017 SIMCE results reflect that we have not managed to narrow socio-economic gaps significantly. In Language the difference is between 50 and 60 points at all levels of education, while in Mathematics the gap starts at 60 points in 4th grade and increases to 105 points in 2nd grade”. Then, the difference between students from high and low socio-economic sectors is two years.
Medicine: Chile has a serious shortage of doctors and nurses, hospital beds and generic medicines, as revealed by OECD data: compared to OECD member countries, Chile has a lower number of doctors (1.7 x 1,000 inhabitants) than the average of other countries. ) than the average of the other countries (3.2 x 1,000 inhabitants), fewer nurses (4.2 x 1,000 inhabitants versus 8.8 x 1,000) and fewer hospital beds (2.1 x 1,000 inhabitants versus 4.8 x 1,000), and the percentage of generic drugs on the market is 30 per cent in Chile and 75 per cent in OECD countries. Less than 50 per cent of doctors work in the public sector and a majority work in the private sector, attracted by more comfortable working conditions and higher incomes. Dental care coverage is limited: the WHO recommends 1 dentist per 2,000 inhabitants; Chile is estimated to have about 18,000 dentists, 1 x 958 inhabitants; of these, only about 4,000 work in the public health sector. Out-of-pocket spending on health is high in Chile: 4.6 per cent, while the average for OECD countries is 2.86 per cent, which, in terms of social equity, reveals one of the system’s most serious shortcomings.
General social humiliation: According to the OECD’s How’sLife (2020) report, 53 per cent of the Chilean population is at risk of poverty if they had to give up three months of their income, the fifth country in the bloc with the highest percentage and far from the 36 per cent average for the whole group. According to the NGO Techo, between 2011 and 2019 the number of camps in Chile increased by 22%, reaching 47,000 households and, after the social crisis, the number would be approaching – in the first analyses – 52,000 families or more and it is most likely that in the post-Covid-19 context this will probably shoot up to 100,000 households. Doctors always ask people to wash their hands several times a day to prevent the spread of coronavirus but, according to the 2017 census data, there are 383,204 households without drinking water. 56% of dwellings in the Metropolitan Region are smaller than 70 m2; the 3 communes with the smallest housing area are: María Pinto with 47.8 m2, San Pedro with 48.37 m2 and La Pintana 48.48 m2. In the affluent sectors, the average size of the dwellings is: Lo Barnechea, 169.1 m2; Vitacura, 154.5 m2 and Las Condes 116.6 m2. (These last figures have come to public light as a result of the isolations and quarantines that must be carried out by Covid-19).
Poverty: while the labour force in Chile is 8.5 million people, there are 11 million citizens over the age of 18 in debt. Of these, 4.6 million are unable to pay. This is because most of these financial commitments are non-patrimonial, i.e., they are not to buy goods such as a house or a car, but to feed themselves, clothe themselves, pay basic bills, or for education and health. In Chile, poverty is measured through the household reports of the National Socioeconomic Characterisation Survey (CASEN). It calculates household income, which for the vast majority comes from work, but also reports state subsidies and imputed rent, and the SOL Foundation concluded that if only autonomous income, mainly from work and contributory pensions, is taken into account, poverty rises from just over 8.9 per cent officially to almost 30 per cent.
Basic food basket: The cost of a basic food basket in Chile amounts to about one third of the amount of the monthly liquid minimum wage, which places the country in the range of the global average. In Chile, a basic basket of bread, milk, eggs, rice, cheese, meat, fruit and vegetables costs about $70,386, according to a study by Picodi.com (2020).
Housing: in Argentina it is 47% cheaper than in Chile. According to the Index of Access to Housing (2018) of the Chilean Chamber of Construction, Chile is among the countries where trying to buy real estate is “severely unattainable”. Santiago is more expensive than Miami. This means that the average family has to spend 7.6 years of its total income to finance a property. According to the report, the cost of buying a house or flat has increased by almost 68% in eight years, while household incomes have only risen by 24.7%.
Public transport: according to a survey conducted by the Colombian business newspaper La República (2019), Chile is one of the countries with the highest transport prices, being surpassed only by Montevideo, where it costs 38 Uruguayan pesos, or US$1. It is followed by Lima, at US$0.74, and Sao Paulo, where fares – both Metro and bus fares – cost US$0.72.
Drinking water and electricity tariffs: At the national level, water and sanitation tariffs vary significantly, with the highest, at the level of regional capitals, being the one paid by the inhabitants of Coyhaique. In that area the tariff per m3 is US$3.43. Other tariffs are: Antofagasta (US$3.10), Copiapó (US$3.05), Iquique (US$2.61), Punta Arenas (US$2.52), Puerto Montt (US$2.39), Valparaíso (US$2.21), Arica (US$2.21), Concepción (US$1.68) and Santiago (US$1.45). As for electricity, in 2017, the value is one of the highest among South American countries. The rate is 15.80 US cents per KWh ($105), exceeding the average of 10.21 US cents ($65). This was revealed in a 2016 analysis by the Centre for the Study of the Economic Regulation of Public Services at the University of Belgrano. The values were compared on the basis of Enel’s tariffs. As such, electricity prices in Chilean residences are surpassed only by Peru. as for electricity prices for industry, the Chilean rate is 8.89 cents per kWh ($59) compared to the average of 7.53 cents ($52). according to the same analysis, Chile ranks fifth in terms of prices for industrial energy in South America.
Gasoline: according to GlobalPetrolPrice (2021), the average price of gasoline worldwide is US$ 1.18 per litre, something like $851.3, using the latest observed dollar from the Central Bank. With data as of 31 May, GlobalPetrolPrice calculates the average price of gasoline in Chile at US$ 1.28, placing the country in 67th position among 171 economies under study. It should also be remembered that the controversial Specific Fuel Tax, a tax created in 1985 to finance the reconstruction of the country after the earthquake of that year, accounts for more than 40% of the final price of petrol.
The neoliberal capitalist system propagates the irrational production of unlimited consumption and the commodification of personal and social life, thus generating parasitic oligarchies that transgress the principle of the common good, creating a chain of credit and interest, surplus value and exploitation of so-called human capital.
Karl Marx pointed out that the champions of liberalism took the capitalist regime and its institutions based on private ownership of the means of production and social inequality produced by class antagonism as natural. According to Marx, “For them there are only two kinds of institutions, artificial and natural. The institutions of feudalism are artificial, and those of the bourgeoisie are natural”.
