Experts criticized the debate for lacking concrete proposals and presenting a series of opinions with questionable technical grounding.
The presidential debate that brought together the eight candidates running in the November elections left much to be desired on economic matters. This was the general assessment of economists who followed the event. Although they anticipated that such a debate format would not favor the presentation of more technical arguments, they still emphasized that several key issues were either poorly addressed or left out entirely.
One of the most contentious topics was the state of the labor market. Criticism, as expected, was directed at the government’s candidate and former labor minister, Jeannette Jara. Earlier that same day, the Central Bank had released its Monetary Policy Report, which noted that policies driven by the ministry—such as raising the minimum wage above productivity growth and reducing the workweek to 40 hours—had contributed to the country’s high unemployment.
“The minimum wage for someone without a job is zero,” said Johannes Kaiser, candidate of the National Libertarian Party.
“Unemployment is out of control in Chile, as highlighted by the great professor David Bravo,” added Franco Parisi, of the People’s Party (PDG).
That reference did not surprise Bravo. “I understand that a debate in this format may not be the best space for exchanging specific ideas, but one would have liked to see more precise responses about what to do with employment,” said the director of the UC Center for Surveys and Longitudinal Studies. “I find it very positive that unemployment has become a central issue.
But it would have been better if this had happened two or three years ago, when I had already been warning of labor market problems. That way, we might have avoided mistakes such as the aggressive increase in the minimum wage,” he added.
Parisi then continued, explaining rather confusingly that to deal with “unemployment that is out of control in Chile,” it was necessary to “cut fiscal spending, especially the huge salaries paid to ministers and their friends. That money would allow lowering interest rates, reactivating construction (…)”. Economists watching the debate interpreted this either as a slip or an incomplete argument, since the connection between reducing government salaries, interest rates, and construction activity was unclear.
Another controversial episode, particularly in mining circles, came when independent candidate Harold Mayne-Nicholls confidently stated that “there is a presidential decree whereby when we export copper concentrate, we do not collect payments for palladium, platinum, cobalt, or 14 other minerals, including rhodium, which is worth 300 times more than copper.”
Juan Carlos Guajardo, founder of Plusmining and former director of Cesco and Cochilco Studies, clarified: “That is an incomplete version of the story. It is true that copper concentrates contain traces of many minerals. That is normal, as it reflects the geological components being mined.
But to claim these are given away is simply a conceptual error. These are very small traces, and recovery is costly and complex. It is only done in a handful of smelters worldwide, and only after very significant investments of time and capital.”
Kast vs. Matthei on Public Spending
One of the more engaging economic exchanges took place when Matthei questioned Kast about his proposed fiscal cuts.
“We studied this thoroughly because we wanted to cut more than US$2 billion,” said Matthei. “But we saw it was not possible. So I would love for you to explain to Chileans how you will achieve the US$6 billion in cuts proposed by your team.”
Kast argued, among other points, that the Autonomous Fiscal Council (CFA) had already suggested cutting US$5 billion and now US$6 billion. Matthei replied: “No, the CFA proposed US$2 billion.”
“To cite the CFA, I would recommend reading the report first,” said former budget office director under Piñera, Matías Acevedo. He explained that the report stated a one-time permanent spending adjustment of US$1.129 billion was required, and in the worst-case scenario, US$1.927 billion.
Acevedo noted that confusion often arises because a US$2 billion cut in the first year of government, maintained into years two and three, could be presented as US$8 billion. But this is entirely different from implementing a US$6 billion adjustment within 18 months, as Kast proposes.
“Kast clearly took a hit there,” agreed Ángel Cabrera, economist at Forecast Consultores. “He could not explain how he intended to cut US$6 billion convincingly. Perhaps because these are not his strongest topics, or simply because such a reduction cannot be achieved within that timeframe—or he does not know how it would be done.”
Source: La Segunda