The most popular post by far on this blog describes why Chile is the best country to move to, mainly because the constant flow of terrible news about the economies of Europe and the fall of the United States drives some people to seek an alternative; but, relocating to Chile is a poor choice for many people.
The biggest problem with Chile is that it is difficult for a foreigner to find work, and the available jobs outside the mining industry pay substantially less than in the USA and Europe. Humans are a tribal species and every country subscribes to the false idea that foreigners take jobs from locals without spending money to create demand for local goods and services. Chile does not allow foreigners or Chileans to easily open businesses and the government forces companies in Chile with more than 25 employees to hire at least 85% Chileans, leaving little room for foreigners (Article 19 of the Labor Code).
A prudent migrant saves enough to stay in Santiago for a year, as that is the amount of time that may be required to secure employment. The good news for foreign women is that companies prefer foreign to Chilean women. The government requires companies to take care of Chilean women who become pregnant so most companies avoid or are reluctant to hire young women. Foreign women are expected to be independent so companies are more willing to hire them.
Many foreigners teach English, as Chileans highly value native speakers, but the pay is low. Emily gives tips on finding a job in Chile that you might find useful. If you have any other tips, add them to the comments in her post or this one. Most people avoid commenting so anything remotely useful is appreciated by readers all over the world. Jim Karger makes great suggestions for foreigners to earn a living in Mexico that are mostly applicable to Chile, too.
Chile also makes it absurdly difficult to start a business. According to Nathan Lustig, who has lived in Chile for 3 years, it takes 9 weeks and costs $4260 to start a business in Chile. He is underestimating the cost; he doesn’t count the value of his labor in coping with the functionaries. And, if you’re a Unitedstatesian dismayed that your nosy government has been snooping on every phone call made in the country during the last 7 years, Nathan reports that Chile requires fingerprints to open a bank account and “these barriers to business creation shield the elites and entrenched interests in power and prevent competition and entrepreneurship.” The same process takes $185 and 30 minutes in the USA and requires no fingerprints.
However, the government recently removed some obstacles, according to Mary O’Grady of the Wall Street Journal (WSJ):
The country’s rank in the World Bank’s Doing Business survey deteriorated from 2006 to 2010 but the decline has been reversed in the past two years, with Chile moving up to 39th from 53rd. Other Piñera objectives include reducing waiting time for environmental impact studies, eliminating regulatory redundancies, cutting import tariffs and opening sea and air ports to foreign competition. The number of days it takes to start a business is down to seven from 27 and will soon be reduced to one.
Sebastian Piñera is the current President and his predecessor was Michelle Bachelet. She is likely to succeed him for 4 years and reverse much of the progress because Chile is skeptical of capitalism. O’Grady of the WSJ continues:
A “temporary” corporate tax increase to 18.5% from 17% in the aftermath of the 2010 earthquake is now being raised to 20% and made permanent. Tax cuts for individuals meant to offset those increases may not pass in Congress because Mr. Piñera’s coalition does not have a majority.
The tax increase, a strong economy, and more borrowing have sharply grown government. It is unclear whether it will grow fast enough to strangle the economy.
Investors are losing confidence in Chile, causing a decline in the IPSA index of stocks in 2012-13 after soaring for 20 years. Many countries prosper for two decades but only Hong Kong, South Korea, and Singapore maintained growth for 50 years. Chile might grow at a slow rate or stagnate in the future, especially if they continue to be complacent, allowing the government to expand and strangle the economy.
Chile has enacted restrictive labor laws that hinder businesses; at least one foreign investor is waging a capital strike against Chile.
The most common complaint about Santiago is that it is polluted in winter. According to UrbanPeek, pollution in Santiago is higher than every city in the world except Beijing and New Delhi. The Bellas Artes neighborhood near the Santa Lucia hill is so polluted that real estate costs less than other parts of the city, even though it is attractive and sports narrow streets that are easy for pedestrians to navigate. However, Nathan Lustig believes that the adjacent Lastarria neighborhood suffers the same air but streets are quieter and real estate values higher, suggesting that air pollution does not cause decreased housing demand.
Santiago pollution is caused by several factors: the surrounding mountains, heavy vehicle use in a densely populous city of 6 million, industries such as the power plant south in Rancagua, powering copper mine refining using coal rather than nuclear at El Teniente, one of the largest mines in the world.
Mary and I reckon that the pollution during the southern hemisphere summer is similar to cities in the western USA such as Los Angeles, Denver, and Phoenix. If air pollution repels you, the coastal city of Viña del Mar warrants consideration. A bigger problem for non-smokers like us is air at restaurants in Santiago, polluted with so much cigarette smoke that it is nearly impossible to find an outdoor table on Friday and Saturday nights; one must eat in non-smoking indoor areas. Chileans are the heaviest smokers in the Americas; 39% of men smoke daily compared to 20% in the USA and 10% in Costa Rica. I Love Chile describes Santiago pollution:
During environmental alerts, when the air contamination is higher than 300 micrograms by cubic meter, some emergency measures that are applied include the restriction on vehicles that do not have a catalytic converter and restrictions on some industrial activity. The city also has a Decontamination Plan, which includes requiring filters on all public transport, regulation of wood heaters and standardization of the other heaters as well as reduction of nitrogen oxides emissions by the industries…
Last week, after four consecutive days of environmental alerts, the issue of the parameters for these emergency signals caused controversy. The Senator Guido Girardi, a member of the health committee, criticized the way the calculation is done and the alerts are set, which should also include thin particulate materials that are harmful to human health. In several interviews with the Chilean national media he affirmed that the data given by the government should be more transparent and that the levels to decree environmental alert should be stricter. During an interview with CNN Chile he said, “It is evident that if more environmental alerts are decreed in Santiago, it will paralyze industrial activity. And there is an industrial lobby who makes sure this does not happen.”
The cost of electric power in Chile is double that of the USA, so most people in Santiago live in homes without air conditioning, even though the city is as hot as Denver in summer. People cope by swimming in pools, taking cold showers, and vacationing on the coast.
Chile is as expensive as Denver, Phoenix, and Austin, although it is cheaper than Europe, New York, and California. Mexico and Panama are better destinations for people seeking economical value in a pleasant climate.
Chile insults foreigners by throwing us out of the country every 90 days and refusing to allow us to open bank accounts, forcing the use of ATM machines, where the banks chisel us with fees. Bankers are crooks that run politics in every country, and it’s revolting to subsidize their incompetence. Chile wants to increase population not by encouraging immigration but by bribing Chilean women to bear more children ($200 for their third child, $300 for their fourth and $400 for their fifth). Apparently, legislators believe that it’s preferable to risk having a native on the dole than for a skilled foreigner to carry his own weight.
It’s difficult to be a tenant or landlord in Chile. The meddling government forces landlords to suffer deadbeat tenants in rental units for 4 months prior to eviction, so most landlords require tenants to find a cosigner who is responsible for the rent if the tenant doesn’t pay. As a result, I was rejected 3 times for apartments and it took a month to find one, although one of the landlords would have accepted me as long as I paid 12 months rent in advance. Not only does this make it difficult to be a renter, but real estate is also a primary option for foreigner investors who want to avoid the risk of buying a small business.
Julia Thiel of the Chicago Reader reports that Chileans were the worst roommates she ever had. After reading her stories, any rational foreigner would avoid living with Chileans. It might be prudent to avoid marrying one, too.
Chile has enjoyed a thriving economy protected by a capitalist Constitution for 20 years but capitalism may be losing the battle of ideas. Michael Bachelet and other socialists are threatening to eviscerate the Constitution and drastically expand the government. Forbes magazine fears for the end of the Chilean economic miracle. The Communist Party increased their representation in the main house of the bicameral legislature from 3 to 6 seats of 120 in the 2013 election. The election was the biggest political disaster in Chile of the last 20 years because Chileans are not convinced that capitalism has allowed them to prosper.
Airline service to Chile is poor. Mary and I flew at reasonable cost from Panama the last two winters, but this year the price doubled to $1600. We decided to live winters in Scottsdale, Arizona, Austin, Texas, and Puerto Vallarta, Mexico. We miss Santiago and perhaps we’ll return someday.