Let’s admit it: Britain is now a developing country

by Aditya Chakrabortty via The Guardian


Elite economic debate boils down to this: a man in a tie stands at a dispatch box and reads out some numbers for the years ahead, along with a few micro-measures he’ll take to improve those projections. His opposite number scoffs at the forecasts and promises his tweaks would be far superior. For a few hours, perhaps even a couple of days, afterwards, commentators discuss What It All Means. Last Thursday’s autumn statement from George Osborne  was merely the latest enactment of this twice-yearly ritual, and I bet you’ve already forgotten it. Compare his forecasts and fossicking with our fundamental problems. Start with last week’s Pisa educational yardsticks , which show British teenagers trailing their Vietnamese counterparts at science, and behind the Macanese at maths.

Or look at this year’s World Economic Forum  (WEF) competitiveness survey of 148 countries, which ranks British roads below Chile’s, and our ground-transport system worse than that of Barbados. Whether Blair or Brown or Cameron, successive prime ministers and their chancellors pretend that progress is largely a matter of trims and tweaks – of capping business rates and funding the A14 to Felixstowe. Yet those Treasury supplementary tables and fan charts are no match for the mass of inconvenient facts provided by the Organisation for Economic Co-operation and Development , the WEF or simply by going for a wander. Sift through the evidence and a different picture emerges: Britain’s economy is no longer zooming along unchallenged in the fast lane, but an increasingly clapped-out motor regularly overtaken by Asian Tigers such as South Korea and Taiwan. Gender equality? The WEF ranks us behind Nicaragua and Lesotho.

Investment by business? The Economist thinks we are struggling to keep up with Mali. Let me put it more broadly, Britain is a rich country accruing many of the stereotypical bad habits of a developing country. I began thinking about this last week, while reporting on graphene , the wonder material discovered by Manchester scientists and held up by cabinet ministers as part of our new high-tech future. Graphene is also the point at which Treasury dreaminess is harshly interrupted by the reality of our national de-development. Briefly, the story goes like this: Osborne funnelled a few tens of millions into research on the substance. It’s the kind of public-sector kickstart that might work in a manufacturing economy such as Germany – but which in Britain, with its hollowed-out industry and busted supply chains, has proved the equivalent of pouring money down a hole. One university physicist described how this was part of a familiar pattern of generating innovations for the rest of the world to capitalise on, then sighed: “One day, we’ll stop thinking of ourselves as a major economic power, and realise we’re more like South Korea in the early 60s.” South Korea, by way of comparison, has already put in over 20 times as many graphene patents as the country that discovered it. How can any nation that came up with the BBC and the NHS be considered in the same breath as India or China? Let me refer you to one of the first lines of The Great Indian Novel by Shashi Tharoor , in which a wise old man warns International Monetary Fund  officials and foreign dignatories: “India is not, as people keep calling it, an underdeveloped country, but rather, in the context of its history and cultural heritage, a highly developed one in an advanced state of decay.” Stop thinking of development as a process that only goes in one direction, or which affects a nation’s people equally, and it becomes much easier to see how Britain is going backwards.

Even banana republics have cash: it just ends up in the hands of a very few people – ask the bank managers of Switzerland or the hotel concierges of Paris. In Britain, we have become used to having our resources skimmed off by a small cadre of the international elite, who often don’t feel obliged to leave much behind for our tax officials. An Africa specialist could look at the City and recognise in it a 21st-century version of a resource curse: something generating oodles of money for a tiny group of people, often foreign, yet whose demands distort the rest of the economy. Sure, Britain has iPads and broadband – but it also has oversubscribed foodbanks.

And the concept of the working poor that has dominated political debate since the crash is also something straight out of development textbooks.

Nobel laureate Amartya Sen defined development as “the removal of various types of unfreedoms that leave people with little choice and little opportunity of exercising their reasoned agency”. Yet when it comes to social mobility, Britain now has the worst record of all advanced countries – and will soon be overtaken by the newly rich countries of east Asia. And it’s when wealth is concentrated in too few hands that the forces of law and order get used as a militia for the elite – and peaceful dissent gets stamped upon. That’s why police are now a presence on our business-friendly university campuses; it also explains why Theresa May had the front to try to deport Trenton Oldfield for disrupting a student rowing competition (sorry, the Boat Race). This isn’t a sub-Rhodesian moan about Britain going to the dogs. But as my colleague Larry Elliott said in his most recent book, Going South, the sooner we puncture our own complacency at having created a rich economy for the few, and think of ourselves as in dire need of a proper economic development plan, the better. Otherwise, we’re well set to corner the world market in pig semen . The United Kingdom of spoink.


Map: How the world’s countries compare on income inequality based on The Palma Ratio [via: Washington Post]


Bluer countries have better income equality. Redder countries are more unequal. Data: CGDev, DIIS (Max Fisher / Washington Post)

Bluer countries have better income equality. Redder countries are more unequal. Data: CGDev, DIIS. (Max Fisher/The Washington Post)

The way we measure income inequality is changing. After years of relying on a complicated metric called the Gini coefficient, some economists argue that we should adopt the Palma ratio, which measures the gap between the rich and the poor in a society. My colleague Dylan Matthews explains how the Palma works and why it might be superior (more on that below).

In the map up top, I’ve illustrated the latest data on income inequality around the world, as measured by the Palma. The results are pretty revealing. Bluer countries have greater income equality, according to the metric, meaning that there’s less of a gap between the rich and the poor. Redder countries have more income inequality, meaning that there’s a wider gap. Purple countries are about in the middle — that includes the United States, which is the most unequal of any developed country measured.

The countries that come out looking best include, no surprise, the usual suspects of Northern Europe. Interestingly, Eastern Europe scores quite highly as well, as do some post-Soviet countries in Central Asia. Perhaps that’s a legacy of Soviet-era social programs meant to flatten class divides. But it’s also a reminder that, while economic equality is great, it’s not synonymous with a healthy economy. Some countries are economically equal because everyone is well-off, as in Denmark, and some because most everyone is equally poor.

The countries with the highest income inequality are, by far, those of Latin America and the southern tip of Africa. These countries have been seeing economic growth over the past few decades, but much of the wealth ends up funneling into the top stratospheres of society. This problem tends to be self-reinforcing: The rich are able to secure better education and political access, making it easier for them to stay rich and tougher for everyone else to get a share of the pie.

The United States doesn’t come out of this comparison looking great. It’s ranked 44th out of 86 countries, well below every other developed society measured. It’s one spot below Nigeria, which has some of the worst political corruption in the world and in 2012 saw nationwide protests over perceived income inequality. The United States’ Palma ratio ranks it just beneath Nigeria but above Russia and Turkey — all countries that have experienced heavy political unrest in recent years.

The data offer a reminder that the United States might enjoy greater economic equality than much of the world, but it is at the bottom end of the developed world. And the Palma ratio actually shows the United States in a more positive light than does the Gini coefficient, which ranks it even lower. To get a better sense of how the United States compares to the rest of the world, here’s a map that shows all other countries just relative to the United States. Blue countries are more equal than the United States, red countries are more unequal:

Blue countries have better income inequality than the U.S., red countries worse. Data: CGDev, DIIS (Max Fisher / Washington Post)

Blue countries have better income inequality than the U.S., red countries worse. Data: CGDev, DIIS. (Max Fisher/The Washington Post)

Here’s the story with the Palma ratio, which gave us these data. Two economists with the Center for Global Development, Alex Cobham and Andy Sumner of King’s College London, make the case for the Palma in a recent paper. They explain that it’s much more elegant than the Gini coefficient and better suited at comparing the rich and the poor. The Palma simply compares the richest 10 percent of people with the poorest 40 percent. Their report provides the data mapped out above, supplemented with some numbers from the Danish Institute of International Studies.

If you want to know more about The Palma Ration, please check this paper:





Keynes and National Self-Sufficiency States

Keynes and National Self-Sufficiency States

In the Robinson Rojas web page (databank), we found this interesting article about National Self-Sufficiency by Keynes. It is always interesting come back to the past and review how some ideas and policies could be implemented in the present.

(From The Yale Review, VOLUME XXII (1932-1933), Summer 1933), p. 755-759. As reproduced by Panarchy

National Self-Sufficiency –  by John Maynard Keynes  (1933) 
“…The decadent international but individualistic capitalism, in the hands of which we found ourselves after the War, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn’t deliver the goods. In short, we dislike it and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.”…

I was brought up, like most Englishmen, to respect free trade not only as an economic doctrine which a rational and instructed person could not doubt but almost as a part of the moral law. I regarded departures from it as being at the same time an imbecility and an outrage. I thought England’s unshakable free-trade convictions, maintained for nearly a hundred years, to be both the explanation before man and the justification before heaven of her economic supremacy. As lately as 1923 I was writing that free trade was based on fundamental truths ‘which, stated with their due qualifications, no one can dispute who is capable of understanding the meaning of the words’ [JMK, vol. XIX, p. 147].

Looking again today at the statements of these fundamental truths which I then gave, I do not find myself disputing them. Yet the orientation of my mind is changed; and I share this change of mind with many others. Partly, indeed, my background of economic theory is modified. I should not charge Mr Baldwin, as I did then, with being ‘a victim of the protectionist fallacy in its crudest form’, because he believed that, in the existing conditions, a tariff might do something to diminish British unemployment. But mainly I attribute my change of outlook to something else – to my hopes and fears and preoccupations, along with those of many or most, I believe, of this generation throughout the world, being different from what they were. It is a long business to shuffle out of the mental habits of the pre-war nineteenth-century world. But today, at last, one third of the way through the twentieth century, we are most of us escaping from the nineteenth; and by the time we reach its mid-point it is likely that our habits of mind and what we care about will be as different from nineteenth-century methods and values as each other century’s has been from its predecessor’s. It may be useful, therefore, to attempt some sort of a stocktaking, of an analysis, of a diagnosis, to discover in what this change of mind essentially consists.

What did the nineteenth-century free traders, who were amongst the most idealistic and disinterested of men, believe that they were accomplishing?

They believed – and perhaps it is fair to put this first – that they were being perfectly sensible, that they alone were clear sighted, and that the policies which sought to interfere with the ideal international division of labour were always the offspring of ignorance out of self-interest.

In the second place, they believed that they were solving the problem of poverty, and solving it for the world as a whole, by putting to their best uses, like a good housekeeper, the world’s resources and abilities.

They believed, further, that they were serving not merely the survival of the economically fittest but the great cause of liberty, of freedom for personal initiative and individual gift, the cause of inventive art and the fertility of the untrammelled mind against the forces of privilege and monopoly and obsolescence. They believed, finally, that they were the friends and assurers of peace and international concord and economic justice between nations, and the diffusers of the benefits of progress.

And if to the poet of that age there sometimes came strange feelings to wander far away where never comes the trader and catch the wild goat by the hair, there came also with full assurance the comfortable reaction :

I, to herd with narrow foreheads, vacant of our glorious gains,

Like a beast with lower pleasures, like a beast with lower pains!

(Locksley Hall, by Alfred Tennyson)

What fault have we to find with this? Taking it at its surface value – none. Yet we are not, many of us, content with it as a working political theory. What is wrong?

To begin with the question of peace. We are pacifist today with so much strength of conviction that, if the economic internationalist could win this point, he would soon recapture our support. But it does not now seem obvious that a great concentration of national effort on the capture of foreign trade, that the penetration of a country’s economic structure by the resources and the influence of foreign capitalists, that a close dependence of our own economic life on the fluctuating economic policies of foreign countries, are safeguards and assurances of international peace. It is easier, in the light of experience and foresight, to argue quite the contrary. The protection of a country’s existing foreign interests, the capture of new markets, the progress of economic imperialism – these are a scarcely avoidable part of a scheme of things which aims at the maximum of international specialisation and at the maximum geographical diffusion of capital wherever its seat of ownership. Advisable domestic policies might often be easier to compass, if, for example, the phenomenon known as’ the flight of capital’ could be ruled out. The divorce between ownership and the real responsibility of management is serious within a country when, as a result of joint-stock enterprise, ownership is broken up between innumerable individuals who buy their interest today and sell it tomorrow and lack altogether both knowledge and responsibility towards what they momentarily own. But when the same principle is applied internationally, it is, in times of stress, intolerable – I am irresponsible towards what I own and those who operate what I own are irresponsible towards me. There may be some financial calculation which shows it to be advantageous that my savings should be invested in whatever quarter of the habitable globe shows the greatest marginal efficiency of capital or the highest rate of interest. But experience is accumulating that remoteness between ownership and operation is an evil in the relations between men, likely or certain in the long run to set up strains and enmities which will bring to nought the financial calculation.

I sympathise, therefore, with those who would minimise, rather than with those who would maximise, economic entanglement between nations. Ideas, knowledge, art, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national. Yet, at the same time, those who seek to disembarrass a country of its entanglements should be very slow and wary. It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction.

For these strong reasons, therefore, I am inclined to the belief that, after the transition is accomplished, a greater measure of national self-sufficiency and economic isolation between countries than existed in 1914 may tend to serve the cause of peace, rather than otherwise. At any rate the age of economic internationalism was not particularly successful in avoiding war; and if its friends retort that the imperfection of its success never gave it a fair chance, it is reasonable to point out that a greater success is scarcely probable in the coming years.

Let us turn from these questions of doubtful judgement, where each of us will remain entitled to his own opinion, to a matter more purely economic. In the nineteenth century the economic internationalist could probably claim with justice that his policy was tending to the world’s great enrichment, that it was promoting economic progress, and that its reversal would have seriously impoverished both ourselves and our neighbours. This raises a question of balance between economic and non-economic advantage of a kind which is not easily decided. Poverty is a great evil; and economic advantage is a real good, not to be sacrificed to alternative real goods unless it is clearly of an inferior weight. I am ready to believe that in the nineteenth century two sets of conditions existed which caused the advantages of economic internationalism to outweigh disadvantages of a different kind. At a time when wholesale migrations were populating new continents, it was natural that the men should carry with them into the New Worlds the material fruits of the technique of the Old, embodying the savings of those who were sending them. The investment of British savings in rails and rolling stock to be installed by British engineers to carry British emigrants to new fields and pastures, the fruits of which they would return in due proportion to those whose frugality had made these things possible, was not economic internationalism remotely resembling in its essence the part ownership of the A.E.G. of Germany by a speculator in Chicago, or of the municipal improvements of Rio de Janeiro by an English spinster. Yet it was the type of organisation necessary to facilitate the former which has eventually ended up in the latter. In the second place, at a time when there were enormous differences in degree in the industrialisation and opportunities for technical training in different countries, the advantages of a high degree of national specialisation were very considerable.

But I am not persuaded that the economic advantages of the international division of labour today are at all comparable with what they were. I must not be understood to carry my argument beyond a certain point. A considerable degree of international specialisation is necessary in a rational world in all cases where it is dictated by wide differences of climate, natural resources, native aptitudes, level of culture and density of population. But over an increasingly wide range of industrial products, and perhaps of agricultural products also, I become doubtful whether the economic cost of national self-sufficiency is great enough to outweigh the other advantages of gradually bringing the producer and the consumer within the ambit of the same national, economic and financial organisation. Experience accumulates to prove that most modern mass-production processes can be performed in most countries and climates with almost equal efficiency. Moreover, as wealth increases, both primary and manufactured products play a smaller relative part in the national economy compared with houses, personal services and local amenities which are not the subject of international exchange; with the result that a moderate increase in the real cost of the former consequent on greater national self-sufficiency may cease to be of serious consequence when weighed in the balance against advantages of a different kind. National self-sufficiency, in short, though it costs something, may be becoming a luxury which we can afford if we happen to want it. Are there sufficient good reasons why we may happen to want it?

The decadent international but individualistic capitalism, in the hands of which we found ourselves after the War, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn’t deliver the goods. In short, we dislike it and we are beginning to despise it. But when we wonder what to put in its place, we are extremely perplexed.

Each year it becomes more obvious that the world is embarking on a variety of politico-economic experiments, and that different types of experiment appeal to different national temperaments and historical environments. The nineteenth century free trader’s economic internationalism assumed that the whole world was, or would be, organised on a basis of private competitive capitalism and of the freedom of private contract inviolably protected by the sanctions of law – in various phases, of course, of complexity and development, but conforming to a uniform type which it would be the general object to perfect and certainly not to destroy. Nineteenth-century protectionism was a blot upon the efficiency and good sense of this scheme of things, but it did not modify the general presumption as to the fundamental characteristics of economic society.

But today one country after another abandons these presumptions. Russia is still alone in her particular experiment, but no longer alone in her abandonment of the old presumptions. Italy, Ireland, Germany have cast their eyes, or are casting them, towards new modes of political economy. Many more countries after them will soon be seeking, one by one, after new economic gods. Even countries such as Great Britain and the United States, though conforming in the main to the old model, are striving, under the surface, after a new economic plan. We do not know what will be the outcome. We are – all of us, I expect – about to make many mistakes. No one can tell which of the new systems will prove itself best.

But the point for my present discussion is this. We each have our own fancy. Not believing that we are saved already, we each would like to have a try at working out our own salvation. We do not wish, therefore, to be at the mercy of world forces working out, or trying to work out, some uniform equilibrium according to the ideal principles, if they can be called such, of laissez-faire capitalism. There are still those who cling to the old ideas, but in no country of the world today can they be reckoned as a serious force. We wish – for the time at least and so long as the present transitional, experimental phase endures – to be our own masters, and to be as free as we can make ourselves from the interferences of the outside world.
Thus, regarded from this point of view, the policy of an increased national self-sufficiency is to be considered not as an ideal in itself but as directed to the creation of an environment in which other ideals can be safely and conveniently pursued.

Let me give as dry an illustration of this as I can devise, chosen because it is connected with ideas with which recently my own mind has been largely preoccupied. In matters of economic detail, as distinct from the central controls, I am in favour of retaining as much private judgement and initiative and enterprise as possible. But I have become convinced that the retention of the structure of private enterprise is incompatible with that degree of material well-being to which our technical advancement entitles us, unless the rate of interest falls to a much lower figure than is likely to come about by natural forces operating on the old lines. Indeed the transformation of society, which I preferably envisage, may require a reduction in the rate of interest towards vanishing point within the next thirty years. But under a system by which the rate of interest finds, under the operation of normal financial forces, a uniform level throughout the world, after allowing for risk and the like, this is most unlikely to occur. Thus for a complexity of reasons, which I cannot elaborate in this place, economic internationalism embracing the free movement of capital and of loanable funds as well as of traded goods may condemn this country for a generation to come to a much lower degree of material prosperity than could be attained under a different system.

But this is merely an illustration. The point is that there is no prospect for the next generation of a uniformity of economic systems throughout the world, such as existed, broadly speaking, during the nineteenth century; that we all need to be as free as possible of interference from economic changes elsewhere, in order to make our own favourite experiments towards the ideal social republic of the future; and that a deliberate movement towards greater national self-sufficiency and economic isolation will make our task easier, in so far as it can be accomplished without excessive economic cost.
There is one more explanation, I think, of the reorientation of our minds. The nineteenth century carried to extravagant lengths the criterion of what one can call for short the financial results, as a test of the advisability of any course of action sponsored by private or by collective action. The whole conduct of life was made into a sort of parody of an accountant’s nightmare. Instead of using their vastly increased material and technical resources to build a wonder-city, they built slums; and they thought it right and advisable to build slums because slums, on the test of private enterprise, ‘paid’, whereas the wonder-city would, they thought, have been an act of foolish extravagance, which would, in the imbecile idiom of the financial fashion, have ‘mortgaged the future’ ; though how the construction today of great and glorious works can impoverish the future no man can see until his mind is beset by false analogies from an irrelevant accountancy. Even today we spend our time – half vainly, but also, I must admit, half successfully – in trying to persuade our countrymen that the nation as a whole will assuredly be richer if unemployed men and machines are used to build much needed houses than if they are supported in idleness. For the minds of this generation are still so beclouded by bogus calculations that they distrust conclusions which should be obvious, out of a reliance on a system of financial accounting which casts doubt on whether such an operation will ‘pay’. We have to remain poor because it does not ‘pay’ to be rich. We have to live in hovels, not because we cannot build palaces, but because we cannot ‘afford’ them.

The same rule of self-destructive financial calculation governs every walk of life. We destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable of shutting off the sun and the stars because they do not pay a dividend. London is one of the richest cities in the history of civilisation, but it cannot ‘afford’ the highest standards of achievement of which its own living citizens are capable, because they do not ‘pay’.

If I had the power today I should surely set out to endow our capital cities with all the appurtenances of art and civilisation on the highest standards of which the citizens of each were individually capable, convinced that what I could create, I could afford – and believing that money thus spent would not only be better than any dole, but would make unnecessary any dole. For with what we have spent on the dole in England since the War we could have made our cities the greatest works of man in the world.

Or again, we have until recently conceived it amoral duty to ruin the tillers of the soil and destroy the age-long human traditions attendant on husbandry if we could get a loaf of bread thereby a tenth of a penny cheaper. There was nothing which it was not our duty to sacrifice to this Moloch and Mammon in one; for we faithfully believed that the worship of these monsters would overcome the evil of poverty and lead the next generation safely and comfortably, on the back of compound interest, into economic peace.

Today we suffer disillusion, not because we are poorer than we were – on the contrary even today we enjoy, in Great Britain at least, a higher standard of life than at any previous period – but because other values seem to have been sacrificed and because, moreover, they seem to have been sacrificed unnecessarily. For our economic system is not, in fact, enabling us to exploit to the utmost the possibilities for economic wealth afforded by the progress of our technique, but falls far short of this, leading us to feel that we might as well have used up the margin in more satisfying ways.

But once we allow ourselves to be disobedient to the test of an accountant’s profit, we have begun to change our civilisation. And we need to do so very warily, cautiously and self-consciously. For there is a wide field of human activity where we shall be wise to retain the usual pecuniary tests. It is the state, rather than the individual, which needs to change its criterion. It is the conception of the Chancellor of the Exchequer as the chairman of a sort of joint-stock company which has to be discarded. Now if the functions and purposes of the state are to be thus enlarged, the decision as to what, broadly speaking, shall be produced within the nation and what shall be exchanged with abroad, must stand high amongst the objects of policy.
From these reflections on the proper purposes of the state I return to the world of contemporary politics. Having sought to understand and to do full justice to the ideas which underlie the urge felt by so many countries today towards greater national self-sufficiency, we have to consider with care whether in practice we are not too easily discarding much of value which the nineteenth century achieved. In those countries where the advocates of national self-sufficiency have attained power, it appears to my judgement that, without exception, many foolish things are being done. Mussolini may be acquiring wisdom teeth. But Russia exhibits the worst example which the world, perhaps, has ever seen of administrative incompetence and of the sacrifice of almost everything that makes life worth living to wooden heads. Germany is at the mercy of unchained irresponsibles – though it is too soon to judge her capacity of achievement. The Irish Free State, a unit much too small for a high degree of national insufficiency except at crushing economic cost, is discussing plans which might, if they were carried out, be ruinous.

Meanwhile, those countries which maintain, or are adopting, straightforward protectionism of the old-fashioned type, refurbished with the addition of a few of the new plan quotas, are doing many things incapable of rational defence. Thus, if the Economic Conference were to achieve a mutual reduction of tariffs and prepare the way for regional agreements, it would be matter for sincere applause. For I must not be supposed to be endorsing all those things which are being done in the political world today in the name of economic nationalism. Far from it. But I seek to point out that the world towards which we are uneasily moving is quite different from the ideal economic internationalism of our fathers, and that contemporary policies must not be judged on the maxims of that former faith.

I see three outstanding dangers in economic nationalism and in the movements towards national self-sufficiency.

The first is Silliness – the silliness of the doctrinaire. It is nothing strange to discover this in movements which have passed somewhat suddenly from the phase of midnight high-flown talk into the field of action. We do not distinguish, at first, between the colour of the rhetoric with which we have won a people’s assent and the dull substance of the truth of our message. There is nothing insincere in the transition. Words ought to be a little wild, for they are the assault of thoughts upon the unthinking. But when the seats of power and authority have been attained there should be no more poetic licence. On the contrary, we have to count the cost down to the penny which our rhetoric has despised. An experimental society has need to be far more efficient than an old-established one, if it is to survive safely. It will need all its economic margin for its own proper purposes and can afford to give nothing away to softheadedness or doctrinaire folly.

The second danger – and a worse danger than silliness – is Haste. Paul Valéry’s aphorism is worth quoting – ‘Political conflicts distort and disturb the people’s sense of distinction between matters of importance and matters of urgency.’ The economic transition of a society is a thing to be accomplished slowly. What I have been discussing is not a sudden revolution, but the direction of secular trend. We have a fearful example in Russia today of the evils of insane and unnecessary haste. The sacrifices and losses of transition will be vastly greater if the pace is forced. This is above all true of a transition towards greater national self-sufficiency and a planned domestic economy. For it is of the nature of economic processes to be rooted in time. A rapid transition will involve so much pure destruction of wealth that the new state of affairs will be, at first, far worse than the old, and the grand experiment will be discredited.

The third risk, and the worst risk of all three, is Intolerance and the stifling of instructed criticism. The new movements have usually come into power through a phase of violence or quasi-violence. They have not convinced their opponents; they have downed them. It is the modern method – to depend on propaganda and to seize the organs of opinion; it is thought to be clever and useful to fossilise thought and to use all the forces of authority to paralyse the play of mind on mind. For those who have found it necessary to employ all methods whatever to attain power, it is a serious temptation to continue to use for the task of construction the same dangerous tools which wrought the preliminary house-breaking.

Russia, again, furnishes us with an example of the blunders which a regime makes when it has exempted itself from criticism. The explanation of the incompetence with which wars are always conducted on both sides may be found in the comparative exemption from criticism which the military hierarchy affords to the high command. I have no excessive admiration for politicians, but, brought up as they are in the very breath of criticism, how much superior they are to the soldiers! Revolutions only succeed because they are conducted by politicians against soldiers. Paradox though it be – who ever heard of a successful revolution conducted by soldiers against politicians? But we all hate criticism. Nothing but rooted principle will cause us willingly to expose ourselves to it.

Yet the new economic modes, towards which we are blundering, are, in the essence of their nature, experiments. We have no clear idea laid up in our minds beforehand of exactly what we want. We shall discover it as we move along, and we shall have to mould our material in accordance with our experience. Now for this process bold, free and remorseless criticism is a sine qua non of ultimate success. We need the collaboration of all the bright spirits of the age. Stalin has eliminated every independent, critical mind, even when it is sympathetic in general outlook. He has produced an environment in which the processes of mind are atrophied. The soft convolutions of the brain are turned to wood. The multiplied bray of the loud speaker replaces the inflections of the human voice. The bleat of propaganda, as Low has shown us, bores even the birds and the beasts of the field into stupefaction. Let Stalin be a terrifying example to all who seek to make experiments. If not, I, at any rate, will soon be back again in my old nineteenth-century ideals, where the play of mind on mind created for us the inheritance which we are seeking today to divert to our own appropriate purposes.
(The Yale Review, VOLUME XXII (1932-1933), Summer 1933), p. 755-759). As reproduced by Panarchy

Read also “John Maynard Keynes: a vision for the future or a ghost from the past?.- by Richard Ebeling – June 8, 2012

The End of Poverty

This documentary of 2008, is an explanation of how the poverty has reached the levels that we have today. It explores from the colonization until the present days.
Quite interesting for those who are not economist and want to understand what processes triggered the poverty in the worlds.

Albert Einstein: Why Socialism?

I just found this interesting political perspective from Albert Einstein.
Source: http://monthlyreview.org/2009/05/01/why-socialism

“Is it advisable for one who is not an expert on economic and social issues to express views on the subject of socialism? I believe for a number of reasons that it is.

Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of the conquered country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.

But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called “the predatory phase” of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.

Second, socialism is directed towards a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and—if these ends are not stillborn, but vital and vigorous—are adopted and carried forward by those many human beings who, half unconsciously, determine the slow evolution of society.

For these reasons, we should be on our guard not to overestimate science and scientific methods when it is a question of human problems; and we should not assume that experts are the only ones who have a right to express themselves on questions affecting the organization of society.

Innumerable voices have been asserting for some time now that human society is passing through a crisis, that its stability has been gravely shattered. It is characteristic of such a situation that individuals feel indifferent or even hostile toward the group, small or large, to which they belong. In order to illustrate my meaning, let me record here a personal experience. I recently discussed with an intelligent and well-disposed man the threat of another war, which in my opinion would seriously endanger the existence of mankind, and I remarked that only a supra-national organization would offer protection from that danger. Thereupon my visitor, very calmly and coolly, said to me: “Why are you so deeply opposed to the disappearance of the human race?”

I am sure that as little as a century ago no one would have so lightly made a statement of this kind. It is the statement of a man who has striven in vain to attain an equilibrium within himself and has more or less lost hope of succeeding. It is the expression of a painful solitude and isolation from which so many people are suffering in these days. What is the cause? Is there a way out?

It is easy to raise such questions, but difficult to answer them with any degree of assurance. I must try, however, as best I can, although I am very conscious of the fact that our feelings and strivings are often contradictory and obscure and that they cannot be expressed in easy and simple formulas.

Man is, at one and the same time, a solitary being and a social being. As a solitary being, he attempts to protect his own existence and that of those who are closest to him, to satisfy his personal desires, and to develop his innate abilities. As a social being, he seeks to gain the recognition and affection of his fellow human beings, to share in their pleasures, to comfort them in their sorrows, and to improve their conditions of life. Only the existence of these varied, frequently conflicting, strivings accounts for the special character of a man, and their specific combination determines the extent to which an individual can achieve an inner equilibrium and can contribute to the well-being of society. It is quite possible that the relative strength of these two drives is, in the main, fixed by inheritance. But the personality that finally emerges is largely formed by the environment in which a man happens to find himself during his development, by the structure of the society in which he grows up, by the tradition of that society, and by its appraisal of particular types of behavior. The abstract concept “society” means to the individual human being the sum total of his direct and indirect relations to his contemporaries and to all the people of earlier generations. The individual is able to think, feel, strive, and work by himself; but he depends so much upon society—in his physical, intellectual, and emotional existence—that it is impossible to think of him, or to understand him, outside the framework of society. It is “society” which provides man with food, clothing, a home, the tools of work, language, the forms of thought, and most of the content of thought; his life is made possible through the labor and the accomplishments of the many millions past and present who are all hidden behind the small word “society.”

It is evident, therefore, that the dependence of the individual upon society is a fact of nature which cannot be abolished—just as in the case of ants and bees. However, while the whole life process of ants and bees is fixed down to the smallest detail by rigid, hereditary instincts, the social pattern and interrelationships of human beings are very variable and susceptible to change. Memory, the capacity to make new combinations, the gift of oral communication have made possible developments among human being which are not dictated by biological necessities. Such developments manifest themselves in traditions, institutions, and organizations; in literature; in scientific and engineering accomplishments; in works of art. This explains how it happens that, in a certain sense, man can influence his life through his own conduct, and that in this process conscious thinking and wanting can play a part.

Man acquires at birth, through heredity, a biological constitution which we must consider fixed and unalterable, including the natural urges which are characteristic of the human species. In addition, during his lifetime, he acquires a cultural constitution which he adopts from society through communication and through many other types of influences. It is this cultural constitution which, with the passage of time, is subject to change and which determines to a very large extent the relationship between the individual and society. Modern anthropology has taught us, through comparative investigation of so-called primitive cultures, that the social behavior of human beings may differ greatly, depending upon prevailing cultural patterns and the types of organization which predominate in society. It is on this that those who are striving to improve the lot of man may ground their hopes: human beings are not condemned, because of their biological constitution, to annihilate each other or to be at the mercy of a cruel, self-inflicted fate.

If we ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible, we should constantly be conscious of the fact that there are certain conditions which we are unable to modify. As mentioned before, the biological nature of man is, for all practical purposes, not subject to change. Furthermore, technological and demographic developments of the last few centuries have created conditions which are here to stay. In relatively densely settled populations with the goods which are indispensable to their continued existence, an extreme division of labor and a highly-centralized productive apparatus are absolutely necessary. The time—which, looking back, seems so idyllic—is gone forever when individuals or relatively small groups could be completely self-sufficient. It is only a slight exaggeration to say that mankind constitutes even now a planetary community of production and consumption.

I have now reached the point where I may indicate briefly what to me constitutes the essence of the crisis of our time. It concerns the relationship of the individual to society. The individual has become more conscious than ever of his dependence upon society. But he does not experience this dependence as a positive asset, as an organic tie, as a protective force, but rather as a threat to his natural rights, or even to his economic existence. Moreover, his position in society is such that the egotistical drives of his make-up are constantly being accentuated, while his social drives, which are by nature weaker, progressively deteriorate. All human beings, whatever their position in society, are suffering from this process of deterioration. Unknowingly prisoners of their own egotism, they feel insecure, lonely, and deprived of the naive, simple, and unsophisticated enjoyment of life. Man can find meaning in life, short and perilous as it is, only through devoting himself to society.

The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor—not by force, but on the whole in faithful compliance with legally established rules. In this respect, it is important to realize that the means of production—that is to say, the entire productive capacity that is needed for producing consumer goods as well as additional capital goods—may legally be, and for the most part are, the private property of individuals.

For the sake of simplicity, in the discussion that follows I shall call “workers” all those who do not share in the ownership of the means of production—although this does not quite correspond to the customary use of the term. The owner of the means of production is in a position to purchase the labor power of the worker. By using the means of production, the worker produces new goods which become the property of the capitalist. The essential point about this process is the relation between what the worker produces and what he is paid, both measured in terms of real value. Insofar as the labor contract is “free,” what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists’ requirements for labor power in relation to the number of workers competing for jobs. It is important to understand that even in theory the payment of the worker is not determined by the value of his product.

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

The situation prevailing in an economy based on the private ownership of capital is thus characterized by two main principles: first, means of production (capital) are privately owned and the owners dispose of them as they see fit; second, the labor contract is free. Of course, there is no such thing as a pure capitalist society in this sense. In particular, it should be noted that the workers, through long and bitter political struggles, have succeeded in securing a somewhat improved form of the “free labor contract” for certain categories of workers. But taken as a whole, the present day economy does not differ much from “pure” capitalism.

Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers’ goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.

This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.

I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.

Nevertheless, it is necessary to remember that a planned economy is not yet socialism. A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured?

Clarity about the aims and problems of socialism is of greatest significance in our age of transition. Since, under present circumstances, free and unhindered discussion of these problems has come under a powerful taboo, I consider the foundation of this magazine to be an important public service”.

Albert Einstein



Governmental role in reconstruction: A Comparison of post-earthquake in 1985 and 2010 in Chile

by Francisco Vergara


The context is a study of government actions in response to catastrophic earthquakes, particularly referring to reconstruction plans. The approach is based on a comparison between two seismic events in Chile: the first was on March 3rd,1985 during the dictatorship of the General Augusto Pinochet, and the second was on February 27th, 2010 during the last week of Michelle Bachelet’s government at the beginning of Sebastián Piñera’s administration. The aim is the role of the government as a manager of the postdisaster recovery process, focusing on the reconstruction strategies and policies adopted, primarily during the first year after the catastrophe, and interpret which are the political implications of these plans.

This essay tries to clarify if Chilean government has a policy for post disaster, or if the reaction is just in the hands of the current administration, which deals with the catastrophe in their own way. Furthermore, the study of these two cases, which occurred 25 years apart under two different governments with similar political goals, allows for critical analysis about the readiness of the state in order to respond effectively in case of an earthquake.

Chile is the most seismic country in the world (ECLAC, 2010) due mainly to its location along the “ring of fire” in the Pacific Ocean, an area of intense volcanic and earthquake activity. Every day of the year there is a seism topping 4.0 on the Richter scale in some place within Chile. The country is located on the boundary of the Nazca and South American tectonic plates. Consequently, there have been 13 earthquakes since 1971 with magnitude greater than 7.0 on the Richter scale, which qualifies as mega-seismic events. This phenomenon allows for interesting research to be conducted of the actions that the Chilean government has implemented in order to deal with this seismic condition.

It is interesting to examine how a neoliberal country in the global south faces these events. Since 1983, Chile uses the market to deal with the necessities of people, including social housing and essential infrastructure (MAYOL, A., 2012). The state shifted from being a developer of public buildings and social housing, to being a facilitator of projects to the private sector, detaching from its responsibilities a guarantee of quality. This change leads to an interesting analysis of the government role in dealing with catastrophic events. The predominance of the market as a producer of built environment was tested with these earthquakes. The capacity to respond and particularly the role of the government in the management of the private sector responsibility before a national crisis like a mega seismic event is of importance and critical to postdisaster policies.

This paper looks at this role through the scope of the two disasters and then reflects on how the Chilean government should deal with earthquakes in the future, in the view of preparation of fast and efficient response to catastrophes. This paper is not looking to analyse the specificity of each decision from each administration after the earthquakes, or criticise the technicality of the plans; the idea is a critical perspective about the attitude assumed and strategic actions developed by each government with similar contexts.

Facts and context about the earthquakes

The earthquake of March 3rd, 1985 had a magnitude of 7.8 Mw according to the Seismological Service of Chile. The epicentre was located on the coast approximately 20 km west of the town of Algarrobo. The quake lasted about 2 minutes. The regions most severely affected by the earthquake were O’higgins, Valparaiso, and the Metropolitan area of Santiago, covering a surface of 22.500 km2. According to Consolidate Report No. 1 dated September 2009, issued by the National Office of Emergencies (ONEMI), the death toll stands at 177. This report states that 142,498 houses were severely damaged and 75,724 destroyed. The loss in infrastructure was valued at about US$1.639 millions of dollars (ONEMI, 2009).

The earthquake of February 27th 2010 had a magnitude of 8.8 Mw according to the United States Geological Service. The epicentre was located on the coast, nearly 8 km to the west of Curanipe. This earthquake lasted about 160 seconds. The regions most severely affected by the earthquake were O’higgins, Valparaiso, the Metropolitan area of Santiago, Maule, Concepcion and the Araucanía, distributed across 98.100 km2. The Situation Report No. 6 dated March 2010, issued by the United Nation Office for the Coordination of Humanitarian Affairs (OCHA), put the death toll at 507 with about 370,000 houses severely damaged, many of which were destroyed (ECLAC, 2010). The amount of loss in infrastructure was about US$24 billion. Both quakes were long in time length, and with a longer frequency time of the undulant movement, the destruction of built structures without proper design becomes hard to prevent.

Other relevant factors are the quality of the new buildings. Many damaged ones were built after than Directive 433 of 1966, which regulates construction to ensure quakes resistance up to the magnitude of 9.5 Richter. In addition, the neoliberalization of the production of infrastructure and buildings reduced the capacity of the government to supervise and ensure the accomplishment of that directive. This situation meant that several new buildings were not up to code and were also damaged during both earthquakes.

The media reaction permits one to understand the impact of these events in the life of the Chileans, particularly the central zone. In a centralized country like Chile, if some hazard strikes Santiago, the rest of the country starts to fail. The press notes of each event related scenarios of desolation and crisis, reflecting on the fragility of life in a country used to be hit by this type of undesired situations. In some way, that fragility expressed by the press should be discussed with the government strength and readiness. That is the moment where people need their leaders to demonstrate their integrity and strength.

In the media, Pinochet’s government talked about promises of reconstruction without an institutional framework or even a plan to support the speeches. He created ‘aldeas’ (small villages) with temporary shelters and slowly made the earthquake topic disappear from the media, in order to turn back to calm and resume the government. In contrast, the Piñera’s administration and the way how they dealt with the reconstruction appears almost every day in the media. The problem is that many of that information comes from official sources, which have a distortion of the reality of the people whose houses were destroyed. Therefore, what appears in the media have no direct relation with the life of the people in shelters, producing confusion and undermining the credibility of the government.

Titular de El Mercurio Sismo Grado 8 Muerte y Destruccion

Image 1: The main newspaper of Chile the day after the earthquake of 1985, in this cover page entitled: Death and Destruction. (FORAL, W., 2010)

LA tercera terremoto y tsunami enlutan a Chile en el Bicentenario

Image 2: The newspaper of Chile 2010 entitled in: Earthquake and Tsunami put in mourning Chile on the bicentenary year (FORAL, W., 2010)

Government reaction after the tragedy

It is true that an earthquake is a huge tragedy for a country, and ensuring the welfare of the victims suffering effects of the tragedies is necessary for the state. The institutions are obliged to manage this chaotic scenario, and must prove how prepared they are to act.

“The reconstructions are opportunities for institutional learning” (VALENZUELA, N., 2012). In this line, the role of the government to respond efficiently to the problems of the society faces an interesting test how to put into practice their post-disaster strategies. Considering that Chile is the most seismic country in the world, one would hope that the state has a pertinent action plan.

About opportunities to encourage the presence of the government with the people, there are examples of evident contradiction. “Pinochet ignored the significant of the damages caused by the seism of 1985, gave scarce help to affected and did not stimulate research about the causes that triggered the fail or total collapse of the structures” (LAWNER, M., 2011).

The truth is that, in 1985, the application of the seismic norm for the building was in the hands of the private actors, and not regulated by the government (Ley General de Urbanismo y Construcciones, 2012). That was the cause why several buildings built in the last 2 years collapsed during the quake. Even worse, the government did not analyse the origin of the problem. It was a group of scholars at the engineering Department of the Universidad de Chile who critically and technically analysed the causes and then upgraded the Directive 433, about seismic resistance structures, from their own initiative.

Compared to the weak reaction of Pinochet in 1985, the recently elected president Sebastian Piñera, understood the situation of the earthquake of 2010 as a highly valuable opportunity to show the capacity of his new government. With a political team formed by several collaborators of Pinochet in the 80s, it seems they learned from their experience in 1985. Under the promise of the reconstruction completion by 2014, they began to create public-private alliances to accelerate the process of temporary shelter delivery within the first 3 months after the disaster, and then the reconstruction of definitive houses within the next 4 years.

Unexpectedly, however, the popularity of Piñera decreased progressively during his first two years of government as well as his credibility. The promise of government excellence in its ability to finish the reconstruction in four years (as Piñera declared in public (CHARPENTIER, D., 2010)) raised the expectations of the people, which then in turn fell into restlessness because the definitive houses in many cases were just a promised and not delivered.

One point of comparison that reveals the way to proceed is the financial strategy of recovery plans. The Pinochet government based the 70% of the total invested funding of the reconstruction process on international donations with just 12% of government contribution (ONEMI, 2009). The reconstruction process in Piñera’s administration is funding 100% with government fiscal contribution (MINISTERIO DE DESARROLLO Y PROTECCION SOCIAL, 2010).

The principal difference in the financing decisions between one administration and the other is that Pinochet did not change any law. Even he did not created particular economic tools to deal with the reconstruction. Piñera, however, changed the tax rates on different products and activities, modified the Copper Reserved Law to get money from the mining exploitation, and created the Reconstruction Fund to receive donations and manage the costs of reconstruction.






USD 34.000.000


12 %

USD 50.000.000

Chilean Companies

18 %

USD 200.000.000

International Donations

70 %


USD 19.000.0000.000


100 %

Table 1: Funds to finance the reconstruction process. Based on ONEMI, 2009 and MINISTERIO DE DESARROLLO Y PROTECCION SOCIAL, 2010.

The aim of this essay is not to analyse the financial strategy of each government, but these are demonstrations of completely different post-disaster policies. They also indicate the contradicting roles in responsibility assumed by the different governments of Pinochet and Piñera. However, in both cases these strategies were temporary.

Perhaps the widest difference between one process and the other is in the planning of the post-disaster recovery. This topic is hard to compare because Piñera’s administration has an extensive plan of reconstruction addressing many issues to resolve, from technical analysis of the problems to a reformulation of the regulatory plans for each city. On the other hand, Pinochet’s administration only produced a list of priorities and aims without even a mention about the issues of housing. This issue was in private actors hands, and the government did not get involved in it, taking distance from the problem.

However, a common lack among the two processes of reconstruction, is that none considered the creation of a technical body able to coordinate different ministries in case of emergencies to replace the weak and questioned ONEMI (National Emergency Office). There is a lack of the institutional frameworks in Chile, considering the number of hazards that occur each year. Therefore, it is necessary to have an institutional mechanism of response.

Effects and consequences

With the earthquake of 1985, for the first time since 1929, several new buildings were destroyed. The state control over the building processes was abolished to facilitate the investment of private actors in the city. Consequently, the application of Directive 433 was just a criterion, which not all builders were considering. This lack of control was evident after the seismic event.

On the contrary, in the earthquake of 2010 most of the newer buildings had a better reaction, avoiding collapse saving many lives. Even, the collapse of the Alto Rio building in Concepción, cost the life of 8 people despite being full of families, resting that early Saturday morning.


Image 3: Alto Rio Building.

Before the earthquake of 2010 and after. (HUALCHASQUI, 2010)

Because Pinochet’s administration ignoring the impact of the earthquake, offering scarce help and assistance to victims, the people started to create organizations. These were far from the government and in many cases were hidden from the public institutions. This process was assisted by different NGOs whose aims were related to human rights. After years, and with the necessity of shelter, the Chileans were starting to reorganize socially in order to achieve their goals. Probably, the seed of the dictatorship’s defeat in 1988’s plebiscite was planted from the indifference of the government in the face of the people’s needs in crisis times. In particular, due to the lack of post-disaster relief, this was unexpected considering a military administration.

In this topic, the reaction of Piñera’s administration was completely different. It is noteworthy though that he had an advantage: the earthquake occurred 6 days before he assumed the presidency, which was a proper time to get to the head of the country with a contingency plan. The public-private alliance to manage the reconstruction and accelerate the arrival of help to people was fundamental. Just in few days, they proposed a Reconstruction Plan with short, middle and long-term measures. The reaction was quick, and due to chaos in the streets of the central cities of the country the plan received widespread political and social support.

Nevertheless, Piñera’s plan was still a reaction instead a policy of post-disaster actions. The measures in the matter of reconstruction in Chile depend on the current administration and not on a law or an established policy. It is not wrong to say that the reconstruction in Chile is the product of improvisation and the skills of each administration.

Data on the relationship between megaseism events, and political administrations, show that in the 20th century every time one of these destructive events occurred, the current political alliance in charge of the presidency lost the next election. The only exception was with the earthquake of Chillan in 1939, when Chilean president Pedro Aguirre Cerda created institutional changes in order to face the problem almost immediately after the earthquake. This made the people thinks that the government was prepared to handle a catastrophe (LAGOS, R., 2011). For this occasion, even the famous architect, Le Corbusier, offered a reconstruction plan to Chillan, which at the end was declined by the Aguirre Cerda’s administration, preferring a more local strategy (MIRANDA, R., 2010).

If the historical pattern continues along this tendency, it is logical to think on the possibility of a second period of administration headed by the right-wing parties close to Piñera’s government. This considering that despite some problems, mistakes and media confusion; the reconstruction has been correct within an improvisational framework, which the Chilean institutional system offers.


After reviewing the government reactions and decisions in the last two earthquakes in the central zone of Chile, there are some observations and findings about the processes of reconstruction useful in discussing possible policies and institutional frameworks.

Seems to be evident that the role of the Chilean government in the management of disasters is fundamental. This concern should be institutionalized through an agency with the political and technical power to handle disasters. That means that this institution must be able to make management calls and drive reactions whether to tsunamis, volcanic activity, floods, drought, quakes, etc. The ONEMI has shown evident incapacity to address solutions and always depends on the other ministries to make decisions. Nowadays this is just an informational bureau about the situations instead of planning resilient cities.

Furthermore, the government reaction should not depend of the current administration. The decisions and actions must be driven by technical knowledge and not by political convenience. The presence of a procedure to manage disasters and post-disaster situations is urgent. Improvisation should not be allowed in the most seismic country in the world.

The deregulation of the building processes, particularly referring to the private realm should be reviewed and improved. It should not be a possibility that the application of the structural norms is just in hands of the private sector and it is controlled by the same private sector. One of the only ways to lower the fatalities in cases of earthquakes to zero is by increasing the control measures in planning, designing and building, and developing research supported with government funds, in order to avoid biased processes of product-promotion or structural techniques. In a highly seismic country like Chile, the role of the planners, urban designers, architects, and structural engineers is fundamental in order to save lives.

It is clear that the technical skill of the government has been improved since 1985. At the end of this essay, the analysis of both cases is clear and it is demonstrated the incapacity of Pinochet’s government to deal with the crisis. On the other hand, after 25 years, the responses and post-disasters plans are still dependant on the current administration. There is no post-disaster policy. When a natural disaster occurs, the destiny of Chileans is in hands of the ability of each President to make decisions and act properly.

To summarize, the idea of reconstruction as opportunities for institutional learning must be looked also as opportunities to prove institutional effectiveness and readiness. If the political world and governments continue experimenting with people’s lives in order to learn how to react, improvising creative and quick solutions instead of depending on a qualified technical institution, with power to rule decisions in crisis moments, the only consequence of that will be an eternal process of post-disaster institutional chaos, instead a proper reaction.