A small country with big impact, Chile is widely viewed as a model of progress in Latin America. Embracing free-market policies, smart economic management and foreign investment, its formula is touted as an example of regional success.  But, recent political shifts and accelerated social demands have called Chile’s model into question, throwing the country’s national identity into crisis.

On April 13, the Adrienne Arsht Latin America Center, in partnership with the Americas Program at CSIS, hosted an event, Why is Chile in Such a Bad Mood? After opening remarks by Carl Meacham, Director of the Americas Program at CSIS, Chilean Ambassador Juan Gabriel Valdés set the stage by framing the difficult political situation Chilean President Bachelet is in. Valdés emphasized that Chile was not in a constitutional, social or economic crisis, but recognized Chile was going through a tough time.  Following his remarks, Peter Schechter, Director of the Adrienne Arsht Latin America Center at the Atlantic Council, moderated a lively discussion between Felipe Larraín Bascuñán, a distinguished economist and former Minister of Finance under former President Sebastián Piñera, and Eugenio Tironi, a columnist and CEO of TIRONI Asociados.

Eugenio Tironi began the discussion by making the distinction that it is the ruling class in Chile that is unhappy, as they are beginning to witness the end of unjustified privilege. In a rare moment of agreement, Felipe Larraín said that Chileans will not tolerate unjustified privilege, but countered that the current situation is a result of a higher middle income population that now has higher demands.

Peter Schechter turned the discussion to the extraordinary progress in economic growth and poverty reduction Chile has achieved, but asked panelists why high rates of inequality still persist. The former finance minister was considerably more optimistic than Eugenio Tironi when it came to inequality in Chile, and emphasized that Chile was unjustly infamous for inequality. Felipe Larraín reminded the audience that since 2000, Chile’s Gini-coefficient declined from 56 to 49, and also noted that seven Latin American nations were considered to have greater disparity than Chile. Tironi and Larraín engaged in a healthy debate on the impact of tax reform on economic growth and inequality. While Eugenio felt that inequality persists because of politics – and not economics – Larraín emphasized inequality was not purely political but rather hinged on education and families.

In addition to inequality, panelists also discussed education reform, labor reform and prospects for constitutional reform in Chile. Tironi was insistent that education is the silver bullet solution to inequality in Chile, while Larraín challenged that assumption.