President-Elect Boric Aims to Undo Chile’s Economic Progress

His wish list, which includes ending private pensions, would destroy Chile’s capital markets.

By Axel Kaiser. Mr. Kaiser is a senior fellow at the Atlas Center for Latin America and a scholar at Adolfo Ibañez University. Excerpts: 

"After Marxist President Salvador Allende was overthrown by a military coup in 1973, a group of economists, called the Chicago Boys for their University of Chicago training, transformed Chile’s economy, making it a model for the developing world. They established pro-market institutions and policies such as privatizing social security and opening the economy to free trade.

Once democracy was restored in 1990, the coalition of center-left political parties known as Concertación threw more resources behind the economists’ efforts. The results were stark: Chronic inflation, which had peaked at over 500% in 1973, fell to below 10% by the 1990s and to under 5% by the 2000s. Between 1975 and 2015, per capita income in Chile quadrupled to $23,000, the highest in Latin America.

From the early 1980s to 2014 poverty fell from 45% of the population to 8%, while life expectancy rose from 69 to 79. The middle class as defined by the World Bank grew from 23.7% of the population in 1990 to 64.3% in 2015, and extreme poverty fell from 34.5% to 2.5%. Between 1990 and 2015 the income of the richest 10% grew a total of 30% while the income of the poorest 10% increased 145%."