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Bachelet’s return tests a different SA socialism

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The following editorial appeared in Tuesday’s Washington Post:

In recent years Latin American governments have tended to gravitate toward two poles: leftist, populist and authoritarian, in the style of former Venezuelan caudillo Hugo Chavez; and modernizing, free market and democratic, as in Mexico and Colombia. The presidential election Sunday in Chile, which returned the socialist Michelle Bachelet to power, has the potential to soften that split.

For three decades, Chile has been the paragon of successful development in the region, having soared to the brink of rich-world status while consolidating a stable democracy. Still, though it was invited to join the Organization for Economic Cooperation and Development — the developed world’s club — Chile ranks at its bottom in terms of economic equality. Ms. Bachelet, who in a previous presidential term from 2006 to 2010 focused on steering Chile through the great recession, says the time has now come "to start deep transformations" to change that.

The incoming president, a physician who attended middle school in Bethesda, Md., while growing up, is promising to increase taxes by three per cent of gross domestic product — including a 25 per cent increase in corporate taxes. She’ll use much of the funding to offer free public higher education, a demand of the mass student movement that rocked the country with marches and demonstrations during the tenure of the outgoing conservative president, Sebastian Pinera. Ms. Bachelet also wants to rewrite the constitution, which dates to the rule of former dictator Augusto Pinochet; she favors abortion and same-sex marriage, both of which are banned.

Chile is on the verge of joining a new trade pact, the Pacific Alliance, with Colombia, Mexico, Peru and Costa Rica, and it is part of the group negotiating the Trans-Pacific Partnership, a high priority of the Obama administration. Ms. Bachelet has expressed some skepticism about both deals; her campaign platform promises "a perspective that is not exclusive of or antagonistic toward other integration projects in the region." She may be inclined to look for common ground with the left-leaning government of Brazil, which is trying to revive the Mercosur trading bloc, which includes neighboring Argentina.

Ms. Bachelet is a democrat and not a populist, and there’s good reason to credit her assurance that she intends to carry out her reforms "responsibly and with the participation of all." But the new president is likely to be pushed by the former student movement, whose communist leader was elected to Congress. The danger is that she will end up compromising the free-market model that has carried Chile to prosperity and drastically reduced its poverty rate.

At best, Ms. Bachelet could offer an example to Latin American governments looking for a way out of the dead end of Chavista populism. Just as Chile demonstrated to disbelieving neighbours that free markets and free trade could be an engine for rapid growth, it could now show that inequality — the continent’s curse — can be tackled without resorting to reckless populism and authoritarianism. Latin America has seen Chavez’s "socialism of the 21st century" flop; perhaps it will witness a socialism of the 21st century that can work.

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