Pinochet's regime with absolute governing powers, guided by a group of economists trained at the University of Chicago under the economist Milton Friedman began a strategy of economic rationalism; returning the state-owned industries to the private sector, labour market deregulation and increasing economic efficiency by winding back the public sector.
The "Chicago Boys" as they were called took strong measures to control inflation, imposing strict wage and price controls, encouraging privatisation of the health and education system, as well as the substitution of a public system of social security benefits for a private regime based on the principle of individual capitalisation.
As Chile experienced unprecedented economic growth after uninterrupted seventeen years of dictatorship and free market economics, it has now become a major player in the round table of a global economy. The "Latin Tiger" is entering the world trade with Mercosur (an economic market bringing together countries in southern cone of South America) and NAFTA (North America Free Trade Agreement) memberships and has created a booming super-rich class with a very high standard of living, able to purchase any quantity and quality of imported goods in an effort to emulate the always coveted western-american life style.
However, as a small number of the upper middle class took advantage of this investment activity (about 5.7% moved to a higher income bracket), a large number of people (including teachers, public servants and health workers) move down with incomes below the national average and poverty line.
The income distribution has continued to widen the gap between the have and have nots. While the 20% of the very rich upper class obtains 57.1% of the national income,the very poor 20% receives only 3.9% ot that income.
Chile still has 30.77% of the population living below the poverty line and another 15.38% of people live just above the line, this represents approximately a total of six and half million people.
The public education and health system cannot cope with the little subsidy given to Local Government to provide these services and about two thirds of the population cannot afford neither the private health, employment, retirement insurance premiums nor can they access services now provided by a plethora of private companies and individuals which have been specifically designed to satisfy the demands of the new rich upper class.
The present industrial system allowing a very low minimum wage (about $50.00 per week) now threatens social cohesion as well as causing individual and family suffering and hardship. A further effect of such a policy has been the large number of teachers, health workers, public and local government professionals who have to survive on a minimum wage when entering these services.
However, the cost of clothing, cars, some food, house furniture, toiletries, children's toys, electric appliances etc. are all much higher than here in Australia. Furthermore, the cost of housing, telephone, electricity, petrol and leisure activities are out of the reach of two thirds of the population with the consequent emergence of a large underclass and reduction of opportunities for the younger generations.
A legacy of two decades of dictatorship and an absolutist style of economic rationalism, has also had a great impact on the perception of democratic rights now being given by newly elected governments.
In a recent survey of Latin America and Spain on the perception of democracy, only 54% of
those interviewed in Chile were satisfied with a democratic system, and 23% indicated that they
would support an authoritarian regime.
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