Is Chile Losing the Battle of Ideas?

El Mercurio reported recently that Hernán Büchi spoke to legislators of the ruling party in Chile and criticized them because they are losing the battle of ideas. Büchi was Finance Minister of Chile in 1985-89, ran for President of Chile and lost in 1989 and after his defeat, he founded the Institute of Liberty and Development to promote in Chile the idea that free markets are the foundation of the pursuit of happiness and prosperity.

He states that in reality, he didn’t lose the election because the “socialists” retained for 20 years the policies of Pinochet and Büchi that made Chile the economic star of Latin America. Now, it’s the opposite, with the ideas of the “socialist” coalition permeating debate despite the “capitalist” coalition being in power. For example, the government is evaluating the possibility of a tax increase on businesses, accepting the socialist idea that increasing business taxes will combat economic inequality. In reality, businesses are tax collectors, not payers, and it is the customers of businesses, ordinary people, rich and poor alike, who pay.

Büchi urged the ruling coalition to create the wave rather than climbing onto it, and avoid tax increases because that was not part of the published election program. The minority coalition is very powerful in Chile because of the binomial election system, in which each district gets two seats, typically a seat for each of the two largest coalitions, and a coalition can win both seats only by winning two-thirds of the votes. Büchi favors retaining the binomial system, but the government has discussed making changes.

Hernan Buchi – 1970’s Chilean Economic Reforms from Atlas Global Initiative on Vimeo.

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