> Victor Espinosa has a small model of Javier Milei wielding a chainsaw on his desk and a plan for Chile that is every bit as radical as the Argentine president’s libertarian policies.
>The economic advisor to Chilean presidential candidate Johannes Kaiser says he would push the budget into surplus in the first month in office, cut corporate taxes, abolish the levy on inheritances and remove the capital gains tax, before introducing a voucher system for education and slashing regulations. And almost as an afterthought, he would privatize the world’s biggest copper company — Codelco — and every other state-owned company in Chile for that matter. Espinosa is nothing if not ambitious.
> The manifesto may seem like an exercise in wishful thinking by Espinosa — especially given Chile’s economic stability compared with Argentina — but Kaiser, a YouTuber and current lower house deputy, has surged in the polls and now sits second favorite. He is unlikely to get a clear majority for such radical policies in Congress though, so he has a team working out which measures would require simple regulatory changes that could be pushed through by presidential decree and which would have to go through the legislature.
> “We’ve got no time to lose,” Espinosa said in an interview at the Universidad de Desarrollo, where he teaches. “We’ve been waiting during more than a decade of economic stagnation. The quality of life for most people is falling. People can’t wait any more.”
>What’s more, he wants the reforms to become permanent. The goal is to modify the Constitution to stop future governments from pushing taxes back up or adding new ones for 50 years, changes which would be protected by an increase in the congressional majority needed to reform the magna carta, Espinosa said.
>But Kaiser and Espinosa have one big problem. Chile is not like Argentina, where Milei convinced voters that only radical change was capable of ending decades of economic chaos and decline.
> By contrast, Chile has averaged economic growth of almost 3% over the last 15 years, annual inflation of 4% — about the same as the rate posted in Argentina each month — and has one of the smaller government debt burdens in the world, equal to just over 42% of GDP.
>For Espinosa though, Chile is going in the wrong direction and needs to change course. He blames tax hikes and increased regulation for hurting the nation’s economy, with its position in the International Institute for Management Development’s ranking of global competitiveness falling to 44th in 2024 from 31st a decade earlier.
>“To prosper, a country must have a market economy where the institutions facilitate entrepreneurship and the accumulation of tech capital and education,” Espinosa said.
>The program starts with massive spending cuts, including a reduction in the number of ministries to nine from 25. The areas of energy, mining, environment, agriculture, fishing and business will all come under the Economy Ministry, for example.
> Espinosa’s team also plans to fire thousands of state workers tapped by the current administration for their political affiliation, without naming replacements from the ranks of their own supporters. Long-standing civil servants will be happy to see their highly-paid colleagues depart, Espinosa says.
>As the government reduces spending, it would also cut the tax rate on large companies to 20% from 27%, and on smaller firms to 12.5% from 25%. After four years, the plan is to further reduce those rates to 15% and 10%, respectively.
>At the end of four years, “we are going to deliver a country growing at twice the rate it has been growing in the last decade,” Espinosa said. “If we include the changes from our tax reform, potential GDP would rise to 4.6%.”
>Espinosa also plans to privatize all state-owned companies, including top copper producer Codelco, through the sale of a 51% stake. Before that though, they will reduce the board of directors from nine to five.
> The money from the sale, as well as mining royalties, would go to a sovereign wealth fund to boost the minimum pension.
>Espinosa recognizes that this change would have to go through Congress, but there are other things they can do by decree. And they won’t step back from using that tool.
>“It is a power of the president. He can change regulations depending on the area with decrees,” Espinosa said. “If other presidents haven’t done it, that is their problem.”
>That would represent a rupture with the consensual policies pursued by Chilean governments since the return of democracy in 1990. The last president to widely use decrees to govern was Salvador Allende, and his administration ended in the military coup of 1973.
JebBD on
> Kaiser, a YouTuber
🫠
caribbean_caramel on
Perhaps this will be the beginning of a “yellow wave” of libertarians in Latin America?
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> Victor Espinosa has a small model of Javier Milei wielding a chainsaw on his desk and a plan for Chile that is every bit as radical as the Argentine president’s libertarian policies.
>The economic advisor to Chilean presidential candidate Johannes Kaiser says he would push the budget into surplus in the first month in office, cut corporate taxes, abolish the levy on inheritances and remove the capital gains tax, before introducing a voucher system for education and slashing regulations. And almost as an afterthought, he would privatize the world’s biggest copper company — Codelco — and every other state-owned company in Chile for that matter. Espinosa is nothing if not ambitious.
> The manifesto may seem like an exercise in wishful thinking by Espinosa — especially given Chile’s economic stability compared with Argentina — but Kaiser, a YouTuber and current lower house deputy, has surged in the polls and now sits second favorite. He is unlikely to get a clear majority for such radical policies in Congress though, so he has a team working out which measures would require simple regulatory changes that could be pushed through by presidential decree and which would have to go through the legislature.
> “We’ve got no time to lose,” Espinosa said in an interview at the Universidad de Desarrollo, where he teaches. “We’ve been waiting during more than a decade of economic stagnation. The quality of life for most people is falling. People can’t wait any more.”
>What’s more, he wants the reforms to become permanent. The goal is to modify the Constitution to stop future governments from pushing taxes back up or adding new ones for 50 years, changes which would be protected by an increase in the congressional majority needed to reform the magna carta, Espinosa said.
>But Kaiser and Espinosa have one big problem. Chile is not like Argentina, where Milei convinced voters that only radical change was capable of ending decades of economic chaos and decline.
> By contrast, Chile has averaged economic growth of almost 3% over the last 15 years, annual inflation of 4% — about the same as the rate posted in Argentina each month — and has one of the smaller government debt burdens in the world, equal to just over 42% of GDP.
>For Espinosa though, Chile is going in the wrong direction and needs to change course. He blames tax hikes and increased regulation for hurting the nation’s economy, with its position in the International Institute for Management Development’s ranking of global competitiveness falling to 44th in 2024 from 31st a decade earlier.
>“To prosper, a country must have a market economy where the institutions facilitate entrepreneurship and the accumulation of tech capital and education,” Espinosa said.
>The program starts with massive spending cuts, including a reduction in the number of ministries to nine from 25. The areas of energy, mining, environment, agriculture, fishing and business will all come under the Economy Ministry, for example.
> Espinosa’s team also plans to fire thousands of state workers tapped by the current administration for their political affiliation, without naming replacements from the ranks of their own supporters. Long-standing civil servants will be happy to see their highly-paid colleagues depart, Espinosa says.
>As the government reduces spending, it would also cut the tax rate on large companies to 20% from 27%, and on smaller firms to 12.5% from 25%. After four years, the plan is to further reduce those rates to 15% and 10%, respectively.
>At the end of four years, “we are going to deliver a country growing at twice the rate it has been growing in the last decade,” Espinosa said. “If we include the changes from our tax reform, potential GDP would rise to 4.6%.”
>Espinosa also plans to privatize all state-owned companies, including top copper producer Codelco, through the sale of a 51% stake. Before that though, they will reduce the board of directors from nine to five.
> The money from the sale, as well as mining royalties, would go to a sovereign wealth fund to boost the minimum pension.
>Espinosa recognizes that this change would have to go through Congress, but there are other things they can do by decree. And they won’t step back from using that tool.
>“It is a power of the president. He can change regulations depending on the area with decrees,” Espinosa said. “If other presidents haven’t done it, that is their problem.”
>That would represent a rupture with the consensual policies pursued by Chilean governments since the return of democracy in 1990. The last president to widely use decrees to govern was Salvador Allende, and his administration ended in the military coup of 1973.
> Kaiser, a YouTuber
🫠
Perhaps this will be the beginning of a “yellow wave” of libertarians in Latin America?