Protests in Chile around subway fare price hikes are just another example of how economic inequality has become a global crisis. But there may be an opportunity for a more just system.
AP Photo/Esteban Felix
- Zach Silk is the president of Civic Ventures and a recurring cohost on the "Pitchfork Economics" podcast.
- He says that Chile represents "the tip of the proverbial spear in the fight against income inequality." The protests there have captured the attention of elites through economic erosion and show that people will lash out when they realize they're playing a rigged game.
- For more on this topic, listen to the latest episode of "Pitchfork Economics."
- Visit Business Insider's homepage for more stories.
It's been more than five years since Civic Ventures founder Nick Hanauer made a dire prediction about global economic inequality in Politico Magazine. The piece was titled "The Pitchforks Are Coming ... for Us Plutocrats," and in it Hanauer predicted that after four decades of the poor getting poorer and the rich getting richer, it was only a matter of time before the people rose up in anger.
"You show me a highly unequal society," Hanauer wrote, "and I will show you a police state. Or an uprising. There are no counterexamples. None. It's not if, it's when."
He was right: The pitchforks are here. If you have any doubt as to what this kind of inequality-fueled uprising might look like, Melissa Etehad described it in the Los Angeles Times last month: "From Chile to Sudan, Lebanon to Colombia, mounting anger and frustration over rising economic and social inequality, political corruption, and disillusionment with democratically elected and authoritarian governments have led to a wide array of mass protests in recent months."
Each of these protests started over a seemingly modest matter. Chile's protest began with a few dozen high school girls demonstrating against a small subway fare price hike. A tiny tax on calls to and from the popular messaging app WhatsApp kicked off nationwide turmoil in Lebanon. Iran and Ecuador saw unrest rise over slashed fuel subsidies. In Sudan, it was a one-two punch of fuel and bread subsidy reductions that inspired people to take to the streets. An uptick in the price of onions inspired mass action in India. These protests all began in urban areas and spread like wildfire. People were injured, and even killed, in clashes with law enforcement.
But it's clear now that these uprisings aren't just about a few dimes here and there. They're about an ever-growing majority of the global populace that has become fed up with cost of living increases, low wages, the erosion of public trusts like health insurance and pensions, and a corrupt justice system that protects the wealthiest citizens from the consequences of their actions while penalizing the poorest citizens for smaller and smaller infractions. In Chile, a relatively small 3.75% increase in subway fare was simply the spark that started the fire.
This week on our podcast "Pitchfork Economics," Nick Hanauer and Civic Ventures Fellow Paul Constant interview physicist César Hidalgo about the protests in Chile and what they might mean for the rest of the world. Chile represents the tip of the proverbial spear in the fight against income inequality. It's nearly 65% more unequal than the OECD average. Perhaps that's why the protests have been so much more consequential than in other nations: At last count, some 26 people have died, with untold thousands injured since the first actions on October 18. The chaos has caused over a billion and a half dollars in property damage, and battles with law enforcement have become commonplace.
These protests have inspired uncertainty in Chile's economy, leading the nation's finance minister to lower the annual economic growth for 2019 from 2% to 1.4% and lower next year's forecast by over a full percentage point. In response, Chilean leaders are rolling out a five-and-a-half billion-dollar recovery plan to keep the economy from collapsing. The people, in other words, have captured the attention of the elites who run the nation by threatening them in the only language they understand: money.
Courtesy of Zach Silk
And they've been heard. This coming April, Chile will hold a referendum to decide the fate of the nation's constitution, which was written under a dictatorship. Voters will decide if they approve of launching a new constitution. If so, they'll also decide whether the current government should be in charge of writing the new foundational document or not.
Uncertain times always exact an unthinkable toll from a nation. But uncertainty also brings with it an opportunity to remake things for the better. Hidalgo is helping to shape the discussion as Chile moves forward to a potential new constitution. He's working to develop an online platform called Chilecracia, a kind of Tinder for government on which protesters can rank the policies that mean most to them. The mobile app clearly met a demand with Chileans: Within 10 days of launch, Chilecracia had logged more than seven million votes for and against proposed policies.
"We found that the list [of policies] that people produced made sense very quickly," Hidalgo says on Pitchfork Economics. Within the first week of policy selection, voters prioritized pension reform, for instance - increasing the minimum pension to at least match the nation's minimum wage. Many of the other policies selected "were punitive toward the rich," according to Hidalgo. Chileans want to see prison sentences for wealthy people who commit tax fraud, price fixing, and other forms of corruption.
In the end, Chilecracia seems to confirm this global unrest comes down to a very simple principle: People can tell when they're playing a game that's been rigged in someone else's favor. And if they lose too many times, they're likely to lash out in anger.
These are uncertain times, and no nation is safe from these kinds of populist uprisings. It's impossible to predict exactly which straw will break the proverbial camel's back, but it's obvious that the breaking point is nearer than it's ever been in modern times.
With all this talk of protests and pitchforks, it's important to remember that there's plenty of good news. Thinkers like Hidalgo are creating new technological ways for citizens to be heard in a decentralized, inclusive manner. People around the world are more aware than ever of the problem of income inequality, and demanding bold new ways to address it.
Make no mistake: This is a moment of global crisis. But we also live in a historically unique moment, one in which the nearly instantaneous communication and transmission of ideas is open to everyone. Unlike the revolutions of the past, people today have the opportunity to construct a new, and more just, system without destroying everything that came before. For those of us who believe in the inherent decency and inclusive tendencies of human beings, these protests represent an opportunity to address the mistakes of the past and forge a new path forward with better outcomes for everyone - not just those at the top.
This is an opinion column. The thoughts expressed are those of the author(s).