How did Chile become more well-off than the rest of Latin America?

by feartrich

Chile regularly ranks at the top of rankings of Latin American countries. Their HDI even beats out some EU countries. A lot of international tourists from Latin America are Chileans. Street View images of Chile also seems to give a good impression relative to nearby countries.

It seems that Chile has generally had an auspicious economic history, winning lots of wars, discovering huge mineral reserves, and generally having a stable fiscal and monetary policy. Is this the primary factor, or are there other things at play?

MsNyara

Generally speaking, development left at about the middle of the 19th century followed a strictly racial pattern. The new nations that declared independence from Spain were already sharply different in development, and usually also income, depending on their racial make up. Argentina and Cuba were the lead with their over two thirds of white heritage, and Chile with sightly above the half not much behind them. Haiti by other hand, with almost a fully black hegemony, at the lowest by a massive gap from the next place. Though some things have changed since then, generally speaking race is still a relevant factor in predicting life standards even in our days.

Now, why the difference based in race? Firstly this is related to colonial policies. The Spanish, Portuguesse and French set a race based legal framework. White people born in European soil had the highest place, Criollos, those white born in American soil, had a secondary but still relevant place, the Mestizo, white and native mixed people, they had some rights, but little more, the Native was meant for ocassional forced labor and lacked most rights, and the Blacks were directly enslaved altogether (though nominal slavery was forbidden in Spanish realm, which lead to not import black slaves at all).

The next factor is education and culture. White people always received European education, which was already the best in the world in every period. Mestizo people received European education from their whitemost parent usually at their best capabilities. Native people received either Aztec, Mayan, Incan or Tribal educations, which for example rarely included literacy in them. Mulatos sometimes received education and sometimes no, and finally Black people received NO education at all aside preparation for their forced labor routines. No wonder Argentina had a higher literacy rate than plenty of European countries for all of its history, whereas Haiti have literacy rates not much different from African standards even today.

The next could be racism directly. Foreign Direct Investment, Bank's willingness to make deals, professional's willingness to emigrate or offer their services like railway expertise, medicine teaching, architecture and etcetera, international diplomacy, trade agreements and so on were directly related to the whiteness of the country. For example Europe and the US imposed an international embargo on Haiti for much of its early history, whereas trade agreements were first written for Argentina. Racism inside each country was also relevant at first and disrupted economic activity, being less disruptive the higher the whiteness was.

Now, I have not talked about Chile specifically yet, but you should understand this context well. Chile is the country that is doing the best in Latin America right now aside a few exceptions, but we should understand that Chile's gap in HDI with Cuba, Argentina, Uruguay or other majority white nations in Latin American is fairly small. Sure, Chile is leading, but the difference is minimal and when income inequality is added to the equation, the average Chilean is NOT doing better than your average Argentinian. For example, Chilean mostly-whites are faring on average the same than Brazilian mostly-whites, it is just Brazil has a big mostly-black proportion who is faring far worst and gets down the nation average, you really don't see white Brazilians often in the fabelas, you know.

Now, the Chilean case specifically. Corruption is importantly lower and this has some roots in colonial times. Usually the colonial institutions were set for forced labor and organized robbery to the host country, with as minimal self-governance as possible. But in the Chilean case, forced labor was extremely rare, because most the population was either Criollo or Mestizo, and the Natives won independence from Spain fairly quickly as the Mapuche League pushed back the Spanish for the whole colonial period. Organized robbery was also at its low point, since Chile, due to its very low population base, had a fairly high % of European born and also a influential Criollo population who tried their best to minimize it. Thus Spanish direct control in the Capitanía General de Chile was minimal and in Chile self-governance insitutions flourished, developed and improved through the centuries, giving a solid self-governance culture to the nascent criollo-based República of Chile later on. Contrast this to Mexican Independence were around the half of the power clique wanted a monarchy altogether.

Economically, during the colonial period Chile never attracted major natural resource robber unlike Peru and others, since the resources Chile had weren't economically desirable before the second industrial revolution for the large part. This, in addition to the very small population density, gave Chile the richest wealth in natural resources for it's population by the time of independence. The Spanish used Chile as a base to make grain, lots of it, to export to Perú and Spain, so Chile had one of the most developed agriculture's infrastructure in the continent by independence's time as well.

Saltpetre in particular gave Chile the uphand and the lead in the region for much of the 19th century until WW1. Saltpetre was required to wage the modern warfare of the 19th century, and while you can also make it by demolishing buildings and stuff, directly extracting saltpetre from Chile was by far the most efficient way to wage war. Chile sold its saltpetre to some very solid prices and used all that free capital to finance plenty of infrastructure, educational development and so on. Chile also had a tactical advantage to wage war themselves, as they had free saltpetre and they had the capability to deprive their enemies from cheap saltpetre as well, forcing them to depend upon shaky reserves and inneficient production. Chile and partly Bolivia were the only countries in the world which owned natural salpetre, so this had a massive tactical advantage. Chile also used its saltpetre in diplomacy, to force favorable trade agreements and so on, as even a mere treat of saltpetre embargo was enough to put in kneels everyone.

It must also be said that the War of Pacific was also won due to Peru's eve on a civil war due to clashing ethnic groups fighting for power and struggles like the Chinese, Mulatos, Mestizos, Criollos, Natives and others. The Chilean state by other hand was fairly homogenous, composed mostly only of mestizos and criollos, with the criollos and whitemost mestizos having an undisputed rule. British support also helped (Saltpetre diplomacy at action) and the fact that Bolivia was an extremely small nation in population terms, so they weren't able to back up a large army for much time before colapsing.

When syntetic saltpetre was invented in Germany during WW1, Chile quickly fell out of grace for a few decades. it had a more developed education, institutions, governance, infrastructure and other things already, but the income fell sharply, making all that development kind of going to waste for a time. But copper minning would begin at the middle of the 20th century, giving more cash in proportion to its population to Chile than oil ever gave to Russia or Venezuela, still, this was a process which took place gradually and for a time Chile wasn't specially above Latin American's standards in income. Funnily enough an important part of the copper was found in the territory won during the War of Pacific, so it was a chain of good fortune.

The Chilean economic policy was also kind of shaky for much of the 20th century until Augusto Pinochet's dictatorship. While previous events and his dictatorship disturbed normal economic activity for a time, he also reshaped the economic policy (as an anti-communist backlash to Salvador Allende's brief goverment) with the aid of the Chicago Boys, a group of Chileans who studied economy at the University of Chicago in the US as pupils of Milton Friedman, an important economist even today. For the large part the economic policy put in place by the Chicago Boys is still running today, with its results being a wide income inequality, but also a fairly stable economic growth (though heavily fueled by copper minning).

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country, with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country ( ), with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country, with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country ( ), with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country ( ), with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country, with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country, with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.

TheGoodDreyfus

Unity among the ruling classes, basically. For most of its history Chile has been a rather small country, with most of its population and efective territorial sovereignity limited to the valley between Copiapo and the Bio-Bio river. In this places the dominant economic activity was agriculture and husbandry, specially, after the XVIII century, grain exports to Peru. As consecuence of this the chilean land-owner class became the dominant social group, with more or less the same core interests and political leanings, while merchants and miners would not became prominent in Chile until the late XIX century.

In a time were democratic politics were non-existent, this ruling elite unity in both geographical space and economic interests allowed for relatively quick in bloodless stabiliation on the country: by the 1830's, some 10 years or so after the Independence from Spain, the basic structure of the republic was stablished (the same constitution until 1925, lasting almost 100 years), and civil war were short and not very destructive. While Peru and Argentinian were still submerged in civil wars, many times thanks to the differences between provincial and local elites vs the oligarchy of their respectives capitals, Chile could dedicate itself to enact policies, build effective governance and to expand. By 1836 Chile was already launching interventions in Peruvian-bolivian politics, aiding Peru to figh off Spain in the 1860's, and when the War of the Pacific started they had a relatively well funded army, with modern rifles, a semi-proffesional officer corps and a large armored navy, which allowed them to steamroll the peruvian and bolivian forces. When the second industrial revolution comes around, chilean exports of silver, then saltpeter, and then copper, contribute to an early industrial linkage, to keep the Chilean State more or less well funded, and with it to develop educated middle classes.

When the Great Depression comes around, political instability translate into short miliary coups, and not civil wars, in part thanks to, again, a unified semi-professional military. A second constitution is drafted in 1925, and last until Pinochet's coup in 1973. Betwen these years Chile is known for being stable and as a "exemplary" democracy. Under Pinochet's military dictatorship modern economic policies are adopted a create relative wealth for chileans.

tldr; chileans institutions and structural advantages are consecuences of succesfully achieving consensus between a homogeneous ruling class, that eventualy allow a more or less swift transition to democratic politics in in the century under a functional state.

Most of my readings would be in spanish, but in english I think that Simon Collier's History of Chile 1808-1994 is a decent introduction.