Destitute no more
Aug 16th 2007 | SANTIAGO
From The Economist print edition
A country that pioneered reform comes close to abolishing poverty
ON ONE of the coldest days in an unusually cold
southern-hemisphere winter, Sara Reyes's house is
warm. Ms Reyes is sewing the clothes that for the
past 18 months have allowed her to support her
two children and a nephew, and sometimes to
employ a sister and two neighbours. Previously
jobless, she obtained her first sewing
machine—she now has three—from Chile Solidario, a
government programme launched in 2002 to tackle extreme poverty.
Her neighbourhood was once one of the biggest and
poorest shanty towns in Santiago, Chile's
capital. Over the past ten years, the roads have
been paved and piped water installed. Most people
now have fridges and telephones and some have
cars. “Defeating material poverty is a mission
well on the way to being fulfilled in Chile,”
says Benito Baranda of Hogar de Cristo, a
charity. Its shelters now cater less for the
destitute than for people with drug or
psychiatric problems. Around 500,000 people still
suffer extreme poverty, but that number is down by a third since 2003.
Poverty has fallen further, faster, in Chile than
anywhere else in Latin America (see chart).
Sustained economic growth and job creation since
the mid-1980s are the main explanation, though it
helps that poorer Chileans are having fewer
children than in the past. In recent years public
policies, such as Chile Solidario, have played a
bigger role. In the 1990s poverty dropped by half
a percentage point for each point of economic
growth, but now it falls by one-and-a-half
points, according to Clarisa Hardy, the planning minister.
Chile Solidario aims to help the poorest support
themselves, by ensuring they take up various
social benefits and keep their children healthy
and at school, and by offering training and a
grant to set up a small business. It is too soon
to tell whether it will be a long-term success:
the first of 250,000 very poor families enrolled
in the scheme are only just graduating from it.
Even so, Chile has a chance of all but abolishing
poverty in the next few years.
Some Chileans argue that the national poverty
line, of $90 a month, is set too low. In Santiago
this buys just four bus fares a day. Income
distribution in Chile is becoming slightly less
unequal. The richest tenth of the population
still take 38.6% of national income, though this
is slightly less than they take in the United
States. Using the relative yardstick favoured in
many European countries, 27% of Chileans would be
poor, according to Juan Carlos Feres of the UN
Economic Commission for Latin America and the Caribbean.
The fact that alternative ways of measuring
poverty are now being discussed is a sign of how
far Chile has come in the past two decades. It is
also an indication of the tasks that still lie
ahead in creating a middle-class society.