How Chile's Rich Got Richer

Marré, Juan Luis & Rosenfeld, Stephanie

While a few conglomerates have gotten fabulously rich from Chile's neoliberal reforms, a full-time job no longer guarantees an escape from poverty. Two decades after free-market reforms were...

...The Pinochet-era "designated senators," who represent institutions (like the military) instead of electoral districts, tip the balance of congressional power in favor of the right, despite the Concertaci6n's ample majorities at the ballot box...
...In contrast the state pension system, with its $4.1 billion annual budget, is expected to run huge annual deficits for the next 40 years...
...An additional charge averaging 3% is levied to cover life and disability insurance, plus the administrative costs and earnings of the AFP...
...They believed that only a radical opening of the economy to international competition and a reduction of the role of the state and politics in society would "free" the economy and liberate Chile Pinochet of their beliefs, and displaced the nationalist sector of the right, which sought a resurrection of traditional agriculture and industry...
...8.Punto Final(Santiago), January 1997, p. 10...
...To deal with this tremendous flow of 25 25 VOL XXX, No 6 MAY/JUNE 1997REPORT ON WEALTH money, a new capital-markets law was approved by Congress, loosening the regulations on investments by AFPs, insurance companies and banks...
...1 5 These changes allowed the Chilean grupos to put together larger investments in Peru, Argentina, Colombia and elsewhere, at times taking advantage of privatization processes in those countries as well...
...The Chicago Boys began their experiment by unilaterally opening the Chilean economy to international trade...
...6 University of Chicago professors, most notably Harberger, taught at the Catholic Univeristy in Chile, and Chilean students were given scholarships to study economics at the University of Chicago, where some of them developed an intense sense of mission, arrogance and belief that for every problem there is a free-market solution...
...General Pinochet's upcoming retirement as commander-in-chief of the army, and the possiblity of future constitutional reform could lubricate Chile's political system...
...Juan Luis Marre is a social-policy consultant at the Chilean NGO Gesti Development...
...131, May 1994...
...The idea now is we HABITAT have to privatize everything, we have to stimulate private enterprise, and STA...
...Chile's traditional elites, still reeling from the agrarian reforms of the 1960s and the interventions of the Popular Unity government, were devastated by the opening up of the economy...
...Today, the masses of Chile's poor are no longer "marginal" to the national economy, but central to the workings of the country's 20NACLA REPORT ON THE AMERICAS 20 NACIA REPORT ON THE AMERICASREPORT ON WEALTH A Chilean couple at a polo club in one of Santiago's wealthy neighborhoods...
...13 (Santiago: PET, January 1996), pp...
...The Concertaci6n has pursued limited redistributive reforms, and successfully negotiated a progressive tax hike soon after the transition to democracy...
...Pensions varied dramatically according to each group's political weight...
...According to Mdximo Pacheco, Carter Holt Harvey's vice president in Chile and an important player in the Christian Democratic Party, CHH's initial $164 million debt-swap investment is now worth $2 billion...
...The AFP system taken as a whole has so far been extraordinarily profitable for stockholders, averaging a 12.3% annual return since 1981, although a negative 2.5% return in 1995-largely due to a drop in the price of energy stocks--caused some concern about the risks inherent in the new system...
...The average monthly pension for retirees in the state system is $204.63 per month, compared to $271.30 for the AFPs, and $608.27 for the military...
...They combined banks, financial and other service companies and natural-resource export industries like fruit, forests and fisheries into huge conglomerates...
...Two decades after free-market reforms were implemented, the Chilean economy works, but it doesn't work for everyone...
...His empire expanded rapidly after the 1973 coup led by General Augusto Pinochet, benefiting from the military dictatorship's privatization fever...
...From 1975 to 1981, the "strategic" banks and industries that were nationalized under Allende were privatized to a small number of grupos, owned and run by the Chicago Boys and their supporters in the business com22 NACIA REPORT ON THE AMERICAS NACIA REPORT ON THE AMERICAS 22REPORT ON WEALTH munity...
...COPEC and many other companies financed or owned by CruzatLarrain and the Banco de Santiago (of which COPEC owned 50%) were taken over by the state...
...In the forest industry, Angelini controls forest-plantation management companies, logging companies, saw mills, pulp plants, and even the ports from which the forest products are exported...
...It was a complicated system with 35 separate funds, or cajas, and 150 different plans according to job category and employer...
...A few Chilean gruposAbumohor-Saieh, Luksic, Matte and Angelini-also got an important share.' 3 [See table 3.] At first, the AFPs mostly bought government debt, including the "recognition bonds...
...free-market economic model...
...Growth has boomed at an average annual rate greater than 7% since 1985-by far the highest in Latin America...
...Santander, became major players...
...The state pays a "recognition bond" to everyone who switches from the state to the AFP system, representing their years of pension contributions to the state, plus 4% interest and adjusted for inflation...
...The freemarket model has also hollowed out the country's middle class...
...Information Agency...
...The AFP system, by contrast, has so far accumulated few retired pensioners...
...Grupo Luksic Aetna Grupo Angelini Grupo Matte Market Sharez 31.3% 19.6% 18.0% 6.0% February 10, 1996...
...Una evaluacion provisoria (1981-1996), Material de Discusi6n No...
...Ultimately, most of the traditional grupos regrouped to participate in the booming finance and export sectors...
...of New York, the Bank of New York, Bankers Trust, the Emerging Markets Chile Fund, the nounces martial law Chile Fund and the Spanish bank posed in 1983...
...The top six grupos now own more than 20% of Chile's capital stock...
...Foreign investors, including many U.S...
...to the free-market model are automatically rejected as "populist...
...15.1995 National Trade Data Bank Market Reports, International Market Insights, June 12, 1995 16.The designated senators include two ex-judges of the Supreme Court, designated by the Supreme Court...
...TABLE 1 Top Economic Grupos in Chile, 1990-1995 Total Assets as a percent of GNP THE GRUPOS 1. LUKSIC 2. ANGELINI 3. ENERSIS 4. MATTE 5. CAP 6. SAID TOTAL 1990 16.0 10.4 10.8 6.6 5.8 4.6 54.2 1995 17.9 12.5 8.7 6.7 4.3 5.5 55.8 Source: Based on data from Superintendencia de Valores y Seguros and Banco Central de Chile, in Luis Riffo P rez and Francisco Ruiz Aburto, Estudio sobre la concentraci6n empresarial en Chile (Chile: CESOC/Biblioteca del Congreso Nacional, 1996...
...Poverty in Chile used to be synonymous with rural landlessness or urban joblessness...
...four ex-commanders-in-chief of the Armed Forces and Carabineros, designated by the National Security Council...
...By 1994, AFP investments made up 70% of institutional investment in 1,206,809 the Chilean stock market, pumping in $2 billion a year in new funds.14 79,000 Source: ' Superintendencia de las AFPs, Departanento de Estudios, March 1997...
...Among the lowest income quintile, 55% cannot make payments.' 0 The only recourse for those who don't accumulate 20 years of sayKey to the new concentration of wealth in Chile was the privatization of the socialsecurity system...
...In 1975, two years after the military coup, the Chicago Boys con- vinced General natural resources...
...Lagos, the Party for Democracy and Socialist Party's challenger to the Christian Democrats for the leadership of the Concertaci6n and the nation, has a market-oriented economic agenda, but would probably push for greater political and redistributive reforms, and take a harder line toward the military than the Christian Democrats...
...Even proponents of the AFP system expect the long-term average rate of return to settle around 6...
...At the time of Chile's pension-fund privatization, the country had an intergenerational transfer system, in which the contributions of current workers paid for the pensions of current retirees...
...And above the professionals were the fabulously wealthy owners of the country's new conglomerates...
...Sergio de Castro became Minister of the Economy in April 1975, and the neoliberal counterrevolution in Chile began...
...COPEC was privatized in 1976 to the Grupo Cruzat-Larrain, then the largest conglomerate in Chile, and the main beneficiary of the first round of privatizations during the dictatorship...
...They are low-paid, temporary workers in the formal sector of the economy...
...The Pinochet dictatorship became the not-so-proud owner of the largest private enterprise in Chile-which it held on to for four years...
...Through the reprivatizations, the grupos were put back together, and the national wealth was again concentrated in a few private hands...
...In 1970, Chile was well known for its public health and education systems, had a substantial professional middle class and a stable working class, and significant comparative advantages in For the "Chicago Boys," only a radical opening of the economy and a reduction in the role of the state would liberate Chile from the threat of Marxism...
...With such a recipe, it is unclear where its proposed "Growth with Equity" is supposed to come from...
...2. Luis Riffo Perez and Francisco Ruiz Aburto, Estudio sobre la concentraci6n empresarial en Chile (Santiago: Centro de Estudios Sociales (CESOC) and Biblioteca del Congreso Nacional, 1996), p.18...
...ket, up from 30...
...In 1985, a new stage of privatization began-this time, the historic state enterprises, including the electricity and telecommunications companies, were put on the block...
...The costs of publicity and sales, along with the profits taken by the AFPs, make the AFP system much more costly than the former state-run system-eating up 16.7% of affiliates' contributions, compared to less than 5% under the old system, and making the rate of return on individual pension accounts significantly lower than the overall rate...
...one ex-minister designated by the President...
...Starting in 1985, the Receiving AFPs began buying shares in the Benefits major state enterprises that were being privatized, especially in energy, telecommunications and 238,448 other highly profitable sectors...
...In the 1982-83 debt crisis, Cruzat-Larrafn went belly-up...
...banks and mutual funds such as Citicorp, Morgan Guarantee Trust Co...
...Many of the new grupos emerged in the late 1960s out of the relationships among the Chicago Boys and the big businessmen who had backed them since the 1950s...
...In 1994, 28.4% of Chileans lived in poverty, compared to 17% in 1970.5 (The poverty rate peaked at 45% in 1987, toward the end of the dictatorship, when a significant part of the middle class had fallen into poverty...
...The new grupos became the new driving force in the Chilean economy...
...Chile's newly privatized pension-fund system-together with transnational financial capital-helped provide the grupos with the resources they needed to pay for reprivatization...
...7 The Angelini Group then canceled part of COPEC's foreign debt through a $164 million debt-equity swap, in which the New Zealand forest-products giant, Carter Holt Harvey, got a 30% share of the company...
...Chile's governing coalition, the Concertaci6n, led by the Christian Democrats in the center with the Party for Democracy and the Socialist Party to its left, claims its economic program will bring "Growth with Equity...
...The transition to democracy in 1990 brought a consolidation of, rather than a challenge to, the free-market model...
...7. Punto Final (Santiago), January 1997, p. 10...
...Embassy in Chile, 1995) FY95, NTIS, p. 47...
...5. 1994 data from the 1994 Survey of National Socio-economic Characterization (Encuesta CASEN) (Santiago: MIDEPLAN, 1995...
...The institutions of "protected democracy" put in place by the dictatorship, including the 1980 Constitution, have created a political stalemate...
...But when Mexico declared an international debtservice moratorium in 1982, and the international bankers stopped providing new money to roll over bad loans, Chile's speculative bubble burst...
...The international financial community's support for free trade, and the seeming lack of alternative models also contribute to the current climate of national consensus...
...After the 1982 debt crisis, workers' AFP savings provided the capital which the bankrupt conglomerates used to rebuild their empires, buying up shares in 16 the 1984-85 reprivatization of the Workers economy...
...14.Country Commercial Guide Chile, (Santiago: U.S...
...As the economy zipped along, a "miracle" was declared, and the dictatorship began to implement its ambitious project to permanently remake Chilean politics, economics and culture...
...from the threat of Marxism...
...In the meantime, workers in the state sector will continue to strike for better wages, while those without the capacity to strike will continue to struggle to survive as they develop new strategies to regain lost rights...
...All new entrants to the workforce must affiliate with an AFPassuming they have a work contract, and that their employer actually passes their deductions on to the AFP...
...The average monthly pension for armed forces retirees is higher than the averages in the rest of the state-run and AFP systems...
...In the 1950s, the University of Chicago developed a "special relationship" with the Catholic University in Chile...
...Angelini bought his share of COPEC at half price, four days before the public auction to reprivatize the shares of the oil company...
...The transnationalization of the Chilean economy has also intensified since 1990...
...They blamed the 1925 Constitution, the political-party system and state-centered import-substitution industrialization (ISI) policies for the growing role of the state in the Chilean economy...
...1 6 The priority placed on stability after the trauma of the dictatorship, as well as a reserve of fear and perhaps self-blame among some leaders of the left, are also factors...
...As one Socialist Party economist recently put it: "The intellectual who AFP proposes redistributive policies is treated as if he were antiquated and PROVIDA obsessed, proposing policies that failed in the past...
...12.lnstituto de Normalizaci6n Previsional, Statistics Section, March 1997...
...When they convinced Pinochet of their beliefs, Chile's neoliberal counterrevolution had begun...
...It now stretches from fishing companies in the north, including the nation's largest, Pesquera Iquique Guanaye S.A., to Celulosa Arauco y Constituci6n, the giant forest-products company in southern Chile...
...Ex-presidents who served six or more years in office become senators-for-life, thus excluding Patricio Aylwin, who was elected to a four-year term in 1990...
...VOL XXX...
...Unlike their debt-shy predecessors, many of the new grupos started with few Gen...
...Breaking up the old cajas which had evolved hand-inhand with labor unions and professional associations, the AFP system undermined the existing class-based organizations and identities--except in the case of the armed forces and police, whose cajas were never privatized...
...Neoliberal ideology has SUMMA become so pervasive, even among part of the left, that major reforms to ' CENDA, Data Base, the free-market model are automati- 2 Based on data from Ruiz Aburto, Estudio cally rejected as "populist" and infla- Congreso Nacional, 1 tionary...
...Banco Central Hispanoamericano...
...Augusto Pinochet, surrounded by members of his cabinet, an in the wake of street demonstrations against austerity measures im assets, relying on easy petrodollar loans and the privatization of the banks for capital...
...Sympathetic Chilean businessmen collaborated with the "Chicago Boys," as they came to be known, in the design of a free-market economic program for Chile...
...So the Chilean economy works, but it does not work for everyone...
...The history of the Chilean oil company, COPEC, is illustrative...
...Traditional industry fell into ruin under the pressure of international competition, and in 1975 GDP dropped 14...
...A systematic approach to "ideological transfer" was supported by the Rockefeller and Ford Foundations, and the U.S...
...3 The radical redistribution of national wealth to a few conglomerates like Grupo Angelini coincides with a decline in the percentage of national income going to wages, from 42.7% in 1970 (just before Salvador Allende's Popular Unity government) to 33.9% in 1993.4 It also coincides with an overall rise in poverty...
...Controlled By' Grupo Abumohor-Saieh Citicorp...
...As the heavily indebted grupos made speculative real estate and other investments, incestuous and highly unregulated relationships between the grupos and their own banks left the Chilean economy extremely vulnerable...
...The privatization of Chile's social-security system has put workers' savings under the control of a few U.S.based insurance companies and Chilean grupos, which have used the funds to rebuild their bankrupt empires...
...Chilean investment abroad also shot up, financed by Chile's private pension-fund system and "yanqui bonds"--corporate bonds sold on Wall Street...
...Historically, Chile's middle class grew along with the expansion of the state...
...one ex-rector of a university, designated by the President...
...13.Mario Marcel and Alberto Arenas, Reformas a la seguridad social en Chile, Monograph Series #5 (Washington, D.C.: InterAmerican Development Bank, 1991), p. 31...
...largest insurance company, Cruz del Sur, and the nation's fourth-largest pension-fund administration company, AFP Summa S.A...
...AFPs are now allowed to invest 37% of their assets in the stock marNeoliberal ideology has become so pervasive, even amonc sectors of the left, that major reform...
...When the AFP system began, the old cajas were consolidated under the administration of a state-run agency, and the old system was closed to new entrants...
...9. Patricio Rozas and Gustavo Marin, 1988: El "Mapa de la extrema riqueza" 10 ahos despues (Santiago: CESOC and PRIES-Cono Sur, 1989...
...This is because the state got stuck with all existing pensions, the pensions of the workers who stayed in the state system, the publicassistance pensions for the needy, as well as the stateguaranteed minimum pension for those who fail to accumulate enough money in their AFP plan upon retirement...
...11.Jaime Ruiz Tagle, El nuevo sistema de pensiones en Chile...
...But free-market reforms were used to radically concentrate wealth and power in the hands of a few, destroy labor's bargaining power by undermining its base in traditional industry and the state, and strip away existing social guarantees...
...These savings have funded the investment which has fueled Chile's economic boom-and given a few pension-fund administration companies (AFPs) significant control over the Chilean economy...
...In pursuit of freer trade, the Concertaci6n has reduced import tariffs, privatized many remaining state-owned enterprises, and aggressively pursued bilateral and multilateral freetrade agreements, including entrance into NAFTA...
...His holdings include numerous investment companies, business-services companies, Chile's Stephanie Rosenfeld is a Research Associate of the Institute for Food and Development Policy (Food First) and author of the forthcoming Democracy in Chile in the 1990s...
...The Concertaci6n's commitment to free trade and privatization, together with the political stability since the transition, has translated into increased foreign investment...
...This allowed the dictatorship to shore up its economic and political projects against pressure from the nationalist right based in traditional agriculture and industry, which wanted to break with neoliberal policies, and the center and left opposition movements, which also wanted a break with neoliberalism and demanded a return to democracy...
...At the same time, a new middle and upper-middle class of professionals emerged in connection with the boom in finance and services...
...In the late 1970s and early 1980s, the Chicago Boys were flying high...
...No 6 MAY/JUNE 1997 23 m I I z r I VOL XXX, NO 6 MAY/JUNE 1997 23REPORT ON WEALTH In 1986, Grupo Angelini acquired COPEC at bargainbasement prices in the dictatorship's second round of privatizations...
...3. Mapa Actual de la Extrema Riqueza: Grupo Angelini, Working Paper #3, (Santiago: Centro de Estudios Nacionales de Desarrollo Alternativo (CENDA), 1996...
...The economy collapsed, and GDP again plummeted 14...
...It is unclear what will happen to stock values, and therefore the values of workers' pensions, when the AFPs start selling off large amounts of stock to pay for pensions in decades to come...
...In the energy sector, Angelini controls Cocar, the coal mining company which sells coal to Chilgener, the second-largest electric company in Chile, in which Angelini himself is a major shareholder...
...Superintendent of the AFPs, Department of Research, March 1997...
...Subsequently the social-security system was reprivatized, and Citicorp and Aetna gained control of most of the pension-fund system...
...With the further privatization of major state-run industries, COPEC in turn acquired a diverse collection of finance, forestry, fishing, commerce and mining companies...
...Low wages now mean that even a job in the formal sector is no guarantee of escape from poverty...
...International investment in Chile rose from $1.5 billion in 1990 to $2.8 billion in 1993, and then skyrocketed to $4.3 billion in 1995...
...But the government rejects reforms that would make the labor market less "flexible," and the overall thrust of its program is to promote economic growth, and wait for the benefits to trickle down...
...one ex-Comptroller, designated by the Supreme Court...
...When state and stateenterprise employment was drastically reduced during the dictatorship, and wages for teachers and other remaining state-sector workers declined, the traditional middle class became impoverished and insecure...
...Singledigit inflation, moderate unemployment officially in the 5-6% range, and a vibrant export sector make Chile's macroeconomic performance the envy of every finance minister in Latin America...
...Chile's incomparable macroeconomic performance has produced an "if it ain't broke, don't fix it" complacency among most of Chile's political leaders...
...Like the economic collapse of 1974-75, the 1982-83 depression provided the Chicago Boys with another opportunity to restructure the economy...
...Chile's traditional industries like textile, garment and shoe production collapsed under import pressure when the dictatorship's neoliberal policymakers opened the economy in the mid-1970s...
...2 1NP, Secci6n Estadisticas, March, 1997 3 Caja Previsional de la Defensa Nacional, March 1997...
...2 [See Table 2.] During the 1982-83 financial crisis, the AFPs went bankrupt along with the grupos, and fell into state custody...
...8 At an estimated worth of $2.3 billion, Anacleto Angelini is the richest man in Chile...
...ings in an AFP is the state subsidy for the elderly poor-- $51 a month in 1997...
...The rush of pensionfund money into the stock market has driven up stock TABLE 2 State Pension System and AFP Affiliation, 199 Workers Paying In AFPs 1 Private funds INP 2 State-run system CAPREDENA 3 State-run system for armed forces 5,571,482 (3,121,139 contribute monthly) 258,899 80,000 prices, further driving up the AFP's annual returns...
...The Angelini empire alone accounts for 5% of Chile's exports...
...International capital got the upper hand, using debt-for-equity swaps to pick up dominant positions in profitable state enterprises...
...4. Central Bank of Chile, Balance de sies anos de las politicas sociales, 1990-1996 (Santiago: Ministry of Planning and Cooperation (MIDEPLAN), 1996), p. 78, tables 21 and 22...
...the Superintendencla de AFP, 1995, in Luis Riffo Perez and Francisco sobre la concentracidn empresarial en Chile (CESOC/Biblioteca del 996...
...Angelini emigrated to Chile from Italy after World War II, and amassed a medium-size fortune in the fish, forest and construction industries...
...In fact, Chile's much-touted "jaguar" economy may be less like the wild cat and more like the British automobile-a symbol of both luxury and unreVOL XXX, No 6 MAY/JUNE 1997 21 VOL XXX, No 6 MAY/JUNE 1997 21REPORT ON WEALTH liability...
...Control over workers' pension funds has allowed Chilean grupos, like the Grupo Angelini, to rebuild their bankrupt empires...
...By 1965, the Chicago Boys were in control of the Catholic Uni- versity's school of economics...
...6. Juan Gabriel Valdes, Pinochet's Economists: The Chicago School in Chile (Cambridge, England: Cambridge University Press, 1995...
...10.CASEN 1992, cited in Pigina Econdmica de los Trabajadores (Santiago: Programa de Economia del Trabajo PET), No...
...Many of the Chicago-trained Chileans, such as Rolf Luders, Alvaro Bard6n and Sergio de Castro, returned to the Catholic University to become economics professors, shaping a new generation of economists in the Chicago mold...
...MARIA hopefully we will all be entrepreneurs...
...Job instability and poverty C a Nt4CIA REPORT ON THE AMERICAS 24REPORT ON WEALTH wages make it impossible for many workers to earn a pension--a full 39% of the workforce does not make monthly pension payments...
...Twenty-five percent of affiliates change AFPs each year, despite the fact that, thus far, the AFPs have quite similar rates of return...
...Conflict within the Concertaci6n at the beginning of the Frei administration, expressed as a debate between prioritizing the "political agenda" (the Socialist Party's demand for constitutional reform) or the "socio-economic agenda" (President Frei's emphasis on economic growth and the modernization of the state) may resurface in the year 2000, around the likely presidential candidacy of Ricardo Lagos...
...Moody's Investors Service, New York, 1995...
...The Chicago Boys used the economic crisis of 1975 as an opportunity to restucture the economy to their liking...
...The grupos fell apart...
...The economic restructuring of the past 20 years has transferred national wealth and power to a small number of these Chilean grupos and their transnational partners...
...REPORT ON WEALTH How Chile's Rich Got Richer 1.Punto Final (Santiago), January 1997, p. 10...
...At the time of the big switch, workers were bombarded with major publicity campaigns, as AFPs fought for market share by promising higher pensions and encouraging workers to switch brands...
...In addition, the limit on investment abroad has been raised from 6% to 9%, and AFPs were allowed to invest in non-Chilean stocks-rather than just bonds-in 30 countries...
...26 NACLA REPORT ON THE AMERICAS Many other factors also operate to stifle debate...
...The Chicago Boys believed that the threat of socialism in Chile was linked to political and economic institutions dating back to the 1920s and 1930s...
...Affiliates must automatically deposit 10% of their wages in the AFP of their choice...
...Those who entered the workforce before privatization were given the choice of staying in the state-run fund, or switching to an AFP Under the private pension system, the size of an individual pension is determined by how much a worker has saved, plus the interest he or she has earned...
...9 K ey to this new concentration of wealth was the privatization of workers' pension funds...
...The Chilean state once again became the owner of most of the Chilean economy...
...Doctors, teachers, state workers, municipal employees and railroad workers each had their own cajas, most of which were overseen by the state and run by tripartite boards with representatives of workers, employers and the government...
...Before the Chicago Boys, Chile's traditional economic grupos were family affairs, based in large landholdings, commerce and traditional industries such as clothing and shoes...
...AFP investments must meet the state's criteria for diversification and risk, although the regulations are being loosened as the AFPs accumulate increasing sums...
...Many industrial workers lost their decent-paying union jobs in that period, settling for lower-paid and unstable processing jobs in the fishing, forest and fruit-export sectors...
...Bankrupt companies defaulted on their loans, and the banks then defaulted to the Central Bank...
...1970 data from the UN Economic Comittee on Latin America (ECLA), Division of Statistics and Projections...
...2 From 1990 to 1995, the total assets of the top six grupos grew from an equivalent of 54.2% of GDP to 55.8...
...With an estimated net worth of $2.3 billion, Anacleto Angelini is the richest man in Chile.' He controls Grupo Angelini, the second largest of the grupos--or conglomerates-that now dominate the Chilean economy...
...The Concertaci6n's formula for growth with equity has been to embrace the free-market, export-oriented economic model imposed during the dictatorship, but also pay significantly more attention to poverty and social policy than the dictatorship ever did...
...The so-called "Seven Modernizations" included a new Constitution, the "regionalization" and decentralization of the state, the privatization of state-owned industries and services, a new system of labor legislation, and the municipalization and privatization of state-run health, education and social-security systems...
...The forced savings of Chilean workers are a key factor behind the country's remarkably high national savings rate of 30% of GDP...
...He also owns hydroelectric plants, petroleum and natural-gas production and distribution companies, a chain of homeappliance stores, a tourism company and a broad range of agriculture, livestock and real estate interests...
...While the traditional grupos sought majority ownership, the new ones built their empires by leveraging small, controlling shares of interrelated companies...
...The ongoing processes that perpetuate the concentration of wealth in Chile are largely the result of the neoliberal revolution in economic policy implemented during the Pinochet dictatorship by a group of Chilean economists who had studied with freemarket proselytizers Milton Friedman, Frederick von Hayek and Arnold Harberger at the University of Chicago...

Vol. 30 • May 1997 • No. 6


 
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