Since emerging markets, and Chile in particular, are currently all the rage among people whose idea of adventure travel is to check out a different bathroom at the multiplex, I give you a little wrapup of recent stories from South America’s only truly serious country™.
Miners keep dying. Chile has now tied its record, making 2010 the most deadly year in mining in at least a decade. With 43 deaths, it equals the mark set in 2008. Let’s hope that the next two weeks are quiet on that front — not for Chile’s reputation, but because it sucks when people go to work in the morning and never make it home. Note that 10 of these deaths have happened since October 6. Recall that on Aug. 25 Chilean President Sebastian Piñera said he wanted there to be “a before and and after” with the accident that trapped 33 miners deep in a copper mine in the country’s north. The new safety focus worked in September, when nobody died on the job in mining. It didn’t last.
Deadly prison fire. Just as the miners were trapped because of a lack of safety preparedness and escape routes, 81 prisoners died in a fire in Santiago last week in part because of a lack of safety preparedness and escape routes. One of the more surprising fatalities was a guy convicted of selling pirate DVDs on the street. Turns out that anyone convicted of a felony has to go to prison, and some of the prisons are real crapholes.
Indigenous rebellion. Earlier in the year it was the Mapuches in the forested south, now it’s the natives of long-since-deforested Easter Island. What they have in common is a widespread sentiment that they never ceded their land to Chile, and a sense of being aggrieved at ongoing resource and tourism exploitation on land that they see as theirs. In Canada, which has a vaguely comparable history, such claims are heard in court, in parliament and in electoral plebiscites, and at times lead to real changes in the country’s geography — as in the creation of Nunavut and the possible creation of Nunavik. In Chile, the powers that be seem to consider unresolved land claims to be water under the bridge, not our problem. A long-running sit-in on Easter Island turned bloody Dec. 3 when the national police sent in special forces to relieve the relatively tolerant local cops.
Persistent predatory lending. Stores in Chile often give sale prices only to users of store credit cards, essentially forcing consumers to apply for the cards. These cards aren’t regulated by the banking regulator, but rather by the consumer affairs regulator. The superintendent of that agency has identified dozens of what he calls “abusive clauses” in the contracts, including that the lender has the right to change rates, repayment schedules and credit limits with no warning. The interest rates are alread high enough that paying over 18 months can result in a consumer paying half again the marked price of an item. Consumer debt in the most recent study I can find (2008 figures) was still well below the levels in the more industrialized world, but with the growth of debt as a portion of income from 36% in 2001 to 69% in 2008, there’s no doubt that individuals are increasingly vulnerable in the case of a downturn.
I’m not saying that any of this shows that Chile is some sort of living hell when it comes to foreign investment. I’m saying that the happy shiny stories in the business press need a bit of a reality check.