Over this past weekend, while cryptos were crashing, no one noticed a political earthquake in Chile. Chile, known for it's relative political and economic stability, especially compared to Argentina, had elections over the weekend and elected a Communist mayor of Santiago (where 1/3rd of the country lives) and elected a mostly Left-wing number of delegates to a Constitutional Convention.
This likely marks an end to center-right governance and a lurch to the political Left in the years ahead. This is not good news, but shows how a sluggish, stagnate economy can bring upheaval---just like it's doing here in the US and around the world. Stagnation leads to less non-elite worker pay over time and brings anxiety and frustration to the population as their are fewer employment options and inadequate pay.
This lurch to the Left was a surprise and the previous center-right government was completely routed.
From Yahoo News:
Chile, Latin America's richest country but deeply unequal [Doug here: like America], faces an uncertain economic future after mostly left-leaning independents swept elections to dominate a body that will rewrite the country's free market-friendly constitution...
Much to pundits' surprise, voters in weekend elections flocked to independent candidates with no party affiliation but overwhelmingly leftist or socialist ideas for the new constitution-writing "convention". [Doug here: Oh shit, this is NOT good]
Rightwing parties, in power in Chile and backed by the business sector, were left with less than a quarter of seats.
This means the right will have no veto on the body that needs a two-thirds majority to approve the draft constitution it will put to a national referendum next year, in which voting will be mandatory.
The Santiago stock exchange did not like the election result, opening nearly 10 percent lower on Monday while the peso retreated 2.0 percent against the US dollar.
This is one more example of how stagnating economic growth affects a country. We've certainly seen it in the US and EU and everywhere else. I discussed stagnation across the globe in my recent post; Why There Will Be No "Roaring 2020s" -- In Graphics in the bottom half of that post where I'm discussing the ever-rising cost of both missing GDP and missing Jobs. Even a slowing trend from the prior trend causes big problems and that's what we're seeing.
Here's a few graphs from that post showing the ongoing effects of economic stagnation (lower and lower growth trend):
And it's not going to get better:
Stagnation brings calls for Marxism, Socialism and ever more government (which only causes further stagnation). From Jeff Snider on Realclearmarkets.com
Essentially high growth equals political stability, the kind which further contributes to high growth.
On the flipside, any economy sure can find itself growing but not nearly enough; history providing ample examples. When its rate of change is and remains too low, the torches get lit and pitchforks find their way out of the backcountry barnyards; imperceptibly at first, then increasingly in more detectable even obvious fashion.
I discuss why we're in a long period of economic stagnation in many of my posts: in part because of unaffordable energy supplies, government interventionism and poor demographics across the globe --- which together causes a rising debt problem, which in turn adds to the stagnation problem. But let's be clear that we are suffering a death of 1000 cuts:
- Our Broken Social Contract?
- How the World Got to the Edge of the Cliff
- 1971: The Beginning of the End--Massive Monetary Disorder
- The Economy is Nearing Collapse, Part 1: Exploding Government Desperation
- Economic Stagnation Is Causing Unrest And Leading to Collapse
- Declining Global Money Supply Taking World Economy With It
- The West's Economic and Cultural Suicide
- Everything is Being Destroyed in One Generation: Our Culture, Our Country, Our Money and Capitalism Itself
- Extremes in Unsound Money and Finance Will (Eventually) Lead to Catastrophe
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