Chile elected a new president tonight.
Gabriel Boric is 35 years old, a former student protest leader and left-wing congressman who was not even born when Augusto Pinochet seized power in 1973. He defeated José Antonio Kast, a conservative candidate whose politics represented almost the opposite vision for Chile’s future.
The contrast between them was unusually sharp. Boric campaigned for a larger welfare state, pension reform, stronger public healthcare and education, higher taxes on the wealthy and a faster environmental transition. Kast emphasised law and order, lower taxes, private enterprise and a tougher approach towards crime and migration.
Tonight, Chile chose Boric.
It would be easy to describe the result as another Latin American country turning left.
That is true in the narrow electoral sense.
But I think the more interesting question is why a country that economists spent years describing as one of Latin America’s greatest economic successes has produced such enormous demand for structural change.
Because Chile presents an uncomfortable challenge to the way political success is measured.
An economy can grow.
Poverty can fall.
GDP per person can rise.
Foreign investors can consider the country stable.
And millions of citizens can still conclude that the economic system is not working fairly for them.
Those statements are not contradictory.
Chile’s economic transformation over the last several decades is real. Following market-oriented reforms introduced under the Pinochet dictatorship and modified significantly after democracy returned in 1990, Chile became one of Latin America’s wealthiest and most stable economies. Poverty declined dramatically. Inflation became relatively controlled. Institutions strengthened. Chile eventually became the first South American country to join the OECD.
For advocates of market-oriented economics, Chile became an important example of what trade, private investment, fiscal discipline and markets could accomplish.
Then, in October 2019, an increase in Santiago’s metro fare helped trigger some of the largest demonstrations in Chile since the return of democracy.
The slogan that emerged from the protests captured the political problem perfectly:
“It’s not 30 pesos, it’s 30 years.”
The fare increase was the trigger.
The anger was about much more.
Pensions.
Education.
Healthcare.
Wages.
Household debt.
Inequality.
The perception that wealthy Chileans lived inside a different economic system from everyone else.
This is where aggregate statistics begin becoming politically insufficient.
Suppose national income rises by 5%.
That tells us the economy became larger.
It does not tell us who received the additional income.
Suppose poverty falls.
That is unquestionably good.
It does not tell us whether middle-income households feel economically secure.
Suppose unemployment remains low.
That does not tell us whether wages are sufficient, whether employment is stable or whether households are heavily indebted.
Economic indicators measure specific things.
Political frustration often comes from the things between them.
This does not mean GDP is meaningless or that growth does not matter. Countries with higher productivity and incomes generally possess more resources to improve living standards.
But growth and distribution are different questions.
How much wealth does an economy create?
How is that wealth distributed?
How much security does it provide?
How easily can somebody move upwards?
How vulnerable is a household to illness, unemployment or retirement?
A country can perform extremely well on the first question while producing much more contested answers to the others.
Chile appears to have done something like that.
The pension system has become particularly symbolic. Chile pioneered a system based heavily on individual privately managed retirement accounts under Pinochet. The model influenced pension debates internationally.
In theory, individuals save during their working lives, private pension administrators invest those savings and retirees eventually live from the accumulated assets.
The system reduces some of the fiscal pressures associated with traditional pay-as-you-go public pensions and creates large pools of domestic investment capital.
But many Chileans argue that the pensions produced are inadequate.
That demonstrates an important difference between evaluating a system through macroeconomics and evaluating it through lived experience.
An economist can explain that a pension system is fiscally sustainable.
A retired person asks whether the pension pays the electricity bill.
Both questions matter.
A policy that is financially sustainable but socially inadequate has a problem.
A policy that is socially generous but financially unsustainable has a different problem.
Good government has to solve both simultaneously.
Boric’s political rise comes partly from the argument that Chile has focused too heavily on the first side of these trade-offs.
His generation is particularly significant. He emerged from the student protest movement that demanded changes to Chile’s education system roughly a decade ago. His political career therefore developed not inside the traditional parties that managed Chile’s democratic transition, but partly through movements arguing that the post-Pinochet economic and political settlement remained insufficient.
This creates an interesting generational divide.
For Chileans who experienced dictatorship, the political achievement of the 1990s was enormous: democracy returned, institutions stabilised and the country avoided the economic crises that damaged several neighbours.
For younger Chileans born after dictatorship, those achievements are history rather than personal memory.
Their comparison is different.
They are not asking:
Is this better than Pinochet?
Of course it is.
They are asking:
Is this as good as Chile can be?
That is a much more demanding standard.
Political legitimacy therefore changes between generations.
Governments cannot indefinitely rely on solving yesterday’s problem.
Eventually voters judge them against today’s expectations.
This resembles something I wrote about Cuba in July. Revolutionary governments cannot rely forever on the legitimacy of the revolution. Chile presents almost the opposite ideological example, but the political mechanism is similar.
The democratic governments that succeeded Pinochet gained enormous legitimacy from restoring democracy and stability.
Thirty years later, younger voters want to know what comes next.
Historical achievement depreciates politically.
That does not mean Boric’s economic programme will necessarily work.
This is where celebrating the election as a simple victory over neoliberalism becomes much too easy.
Expanding public services costs money.
Higher pensions cost money.
Universal healthcare costs money.
Education reform costs money.
Chile will need tax revenue and continued economic growth to finance those commitments sustainably.
If taxes are designed badly, investment can fall.
If regulation becomes unpredictable, businesses may delay projects.
If government spending grows faster than the economy’s capacity to finance it, fiscal problems can eventually undermine exactly the welfare programmes Boric wants to build.
Redistribution requires something to redistribute.
That sounds obvious, but political debates frequently separate the creation and distribution of wealth as though governments can choose one without affecting the other.
The strongest case for Boric is not that markets failed and therefore the state should replace them.
Chile’s markets created enormous economic gains.
The stronger argument is that markets are extremely effective at coordinating production and investment but do not automatically produce distributions of income, risk and opportunity that societies consider fair.
Government therefore has a role in shaping the distribution without destroying the mechanism producing the wealth.
The difficult word is without.
That is the economic balancing act Boric will inherit.
Kast’s campaign represented a very different response to Chile’s recent instability. After the enormous 2019 protests, rising concerns over crime, migration and political disorder have strengthened demand for security and authority.
His success in reaching the runoff demonstrates that Chile is not simply moving uniformly leftwards.
The first round of the presidential election was actually won narrowly by Kast.
That matters.
Chile is polarised between different interpretations of what has gone wrong.
One side sees an economic system producing inequality and insecurity.
The other sees political disorder threatening the stability that allowed Chile to prosper.
Both fears can reinforce each other.
Economic inequality creates protest.
Protest creates instability.
Instability produces demand for law and order.
A stronger security response can create further resentment.
Politics then becomes organised around competing diagnoses rather than shared solutions.
Boric’s victory does not make the voters who supported Kast disappear.
That is particularly important because presidents do not govern through election results alone.
Chile’s Congress is divided.
Boric will therefore face institutional constraints on how much of his programme can actually be implemented.
This may ultimately be healthy.
A president elected with 56% of the vote has a clear democratic mandate.
He does not possess unanimous permission to redesign every institution.
Coalition-building forces policy to pass through a broader political process.
That may frustrate supporters who expect immediate transformation.
But institutional constraints are not necessarily evidence that democracy is failing to respect the election.
They are part of democracy too.
The constitutional process makes the situation even more significant.
The 2019 protests eventually produced an agreement to write a new constitution replacing the one originating during the Pinochet era.
A constitutional convention is currently drafting that document.
Chile is therefore simultaneously changing its president and reconsidering some of the fundamental rules of its political system.
That creates enormous opportunity.
It also creates risk.
Constitutions are difficult because they are supposed to establish rules that survive whichever political movement is currently popular.
A constitution written only to implement the priorities of today’s majority can become a problem when tomorrow’s majority changes.
The objective should therefore not be writing a left-wing constitution or a right-wing constitution.
It should be constructing institutions under which both sides are willing to lose elections.
That may be the most important test of constitutional design.
Would you still consider the rules fair if your political opponent controlled the government?
If the answer is no, the rules probably give somebody too much power.
Chile’s current transformation therefore goes much deeper than Boric.
The country is attempting to renegotiate the social contract created during its transition from dictatorship.
How large should the welfare state be?
How should pensions work?
What rights should the constitution guarantee?
How much autonomy should indigenous communities possess?
What role should private providers play in public services?
How much should wealthy citizens pay?
How should environmental protection be balanced against mining and investment?
These are not questions with purely technical answers.
Economists can estimate consequences.
Lawyers can design institutions.
The final choices involve values.
How much inequality is acceptable if overall incomes are rising?
How much taxation is justified to provide greater security?
How much individual choice should exist in pensions or healthcare?
Different democratic societies can reasonably choose different answers.
This is why describing one economic model as objectively correct becomes dangerous.
Economic policy involves trade-offs.
Markets are extraordinarily effective at generating information through prices and coordinating decentralised decisions.
Governments can provide insurance, public goods and redistribution that markets will not necessarily produce efficiently or fairly on their own.
Markets can fail.
Governments can fail.
The relevant question is not state or market.
It is which institution performs which task better under which conditions.
Chile is about to test a different balance.
There is also an important international context. Latin America has experienced repeated cycles between left- and right-wing governments. When one model disappoints, voters often swing sharply towards the alternative.
That can produce policy instability.
A left-wing government nationalises or regulates.
A right-wing government reverses it.
The next left-wing government reverses the reversal.
Businesses become uncertain about the rules.
Citizens lose trust that reforms will survive the next election.
Stable democracies therefore need something between ideological stagnation and permanent policy revolution.
Governments must be capable of changing direction after elections while preserving enough institutional continuity that people can plan for the future.
Chile has historically been relatively successful at that compared with much of the region.
Boric’s challenge is to deliver meaningful change without destroying that advantage.
Tonight’s result is therefore not proof that Boric’s programme is correct.
Elections do not establish economic truth.
They establish political authority.
Chileans have given Boric the authority to attempt a different direction.
Whether that direction works will depend on outcomes: wages, pensions, investment, productivity, inequality, public services and fiscal sustainability.
Those indicators may move in different directions.
If inequality falls but investment collapses, that matters.
If GDP grows while household insecurity remains unchanged, that matters too.
Economic policy should not be evaluated through whichever single statistic makes our preferred ideology look successful.
That may be the larger lesson from Chile itself.
For decades, outsiders could point towards GDP growth and poverty reduction and say:
Chile works.
Millions of Chileans looked at their pensions, debts and public services and replied:
Not well enough.
Neither side was necessarily lying.
They were measuring different outcomes.
Perhaps political stability depends partly on governments understanding that distinction before dissatisfaction becomes a million people in the streets.
Boric’s victory tonight demonstrates that Chilean voters want substantial change.
His responsibility now is harder than winning the argument that the old system was inadequate.
He has to construct something better.
That means preserving the economic dynamism that allowed Chile to become wealthier while distributing enough of its benefits and risks differently that citizens regain confidence in the system.
If he succeeds, Chile may demonstrate that market economies can reform themselves democratically when inequality undermines legitimacy.
If he fails, the political pendulum may swing again, perhaps more aggressively.
The most important thing about tonight may therefore not be that Chile elected its youngest president or moved to the left.
It is that a country frequently presented as an economic success has forced us to ask a more difficult question about what success means.
An economy exists to improve people’s lives.
GDP helps measure part of that improvement.
It was never supposed to be the definition of it.
