The Chilean revolution: What it’s not, what it is, what it means for your copper

As Chile plunges into its first general strike in eight years, outside observers can be excused if they are a bit surprised. Chile is supposed to be the stodgy, conservative, institutionality-respecting corner of South America, where nothing ever happens. But this is changing as the public runs out of patience after centuries of being told that if they wait and work hard, someday their children will be better off than they are.

With that said about what is happening, let me tell you what’s not happening, a bit of what is happening, and a bit about why this may pose a long-term risk to copper supply:

– This isn’t just about students. While the students have been the main force marching in recent months, they didn’t start the movement. In fact, the frustration started boiling up with Mapuche activists who were upset at facing Guantanamo-style trials with secret evidence and no chance to confront accusers. Then the owners of Chile’s soccer teams forced out the league president, Harold Mayne-Nicholls. Beloved technical director Marcelo Bielsa threatened to leave if Mayne-Nicholls was ousted, and he eventually made good on the threat. The public perception is that these shenanigans were politial — Bielsa was a leftist and Mayne-Nicholls was pushing for wider access to games and professionalism within the league. The owners include prominent conservatives, wanted to maintain steep prices for TV rights, and preferred to retain the league’s clubbish nature. I don’t know the real story of what happened, but that version is widespread.

After the football fans came the residents of the Magallanes region, who went into open rebellion over an increase in natural-gas tariffs. Then came mass environmental protests over the approval of hydro dams in Patagonia. When the students started to demand an end to profiteering in the education system, there were already wide swaths of society ready to join them.

– It’s not about education, either. The demands from the student groups mostly have to do with education. But at heart, the demands for educational reform are a means to an end. People really want a chance to get ahead. In Canada or Australia, rich fathers pass on “less than 20% of [their] wage advantage … to their sons,” according to a 2010 OECD report. In the USA, that is more than 40%, according to the same study. According to University of Chile economist Dante Contreras, the figure in Chile is 65%. For a perspective, let’s turn to the raging communards at the World Bank:

Despite substantial improvements in living standards and a GNP per capita of US$10,108 at 2008, some 13.7 percent of Chileans live below the poverty line, with many millions precariously just above it. Indeed, annual income for most Chileans remains very low. The distribution of income is among the most unequal of any country in the world, and upward social mobility is scarce.

The OECD report I mentioned is clear that access to decent education is the key to class mobility. Chile has imitated the US system of municipal funding for education, creating a segregated system in which those families who can afford it live in the municipalities (known here as comunas) where public schools are better, while everyone else suffers with mediocrity. But the baseline is lower than in the US, so really decent public schools are a rarity.

– This isn’t about party politics. The Piñera government and its supporters was out speaking with one voice yesterday saying that this call for a strike was all just a ploy by the Communist Party to try and get attention. This is just silly. Almost no one is a member of the Communist Party, their magazines and newspapers are hard to find, and yet more than 75% of the public supports the students’ demands and the biggest labor union is the one calling for the strike. Similarly, you can’t point to either the government or the opposition coalition, known as the Concertación, as being in charge — in fact, public support for those two groups, combined, adds up to less than 45%. More than half the public is opposed to both the government and the opposition, and yet well over half the public supports the students.

People in power love it when they have a single, easily identified opponent to attack. It’s scary when large numbers of people and institutions go into rebellion based on their own thinking. But denying what is happening doesn’t change the reality. The reality is that there are no real leaders in this movement. People are just tired of waiting their turn in broken-down wooden homes with mold in the walls and nothing in the cupboards except credit-card bills, while the country’s most powerful families worry about whether to stick with Gulfstream or to go over to Learjet.

– Why should a gringo care? There are two major issues here: immediate impact on world copper output and a longer-term growth of resource nationalism. In the short term, instability such as strikes can cut copper output here and there. The biggest group of copper labor unions called on workers to respect the strike.

Longer term, the uprising in Chile is leading to a major renaissance of resource nationalism in the country that has long been the continent’s most accommodating to foreign mining companies. I’ll write more about this in the future, but suffice to say that “renationalize the copper” as a panacea for the country’s ills has gone from fringe notion to conventional wisdom in a matter of months. Don’t be surprised if this leads to a major political break in the next presidential election, with some sort of charismatic outsider-y candidate running on a platform that includes resource nationalism and constitutional reform.