Chile has lurched between very different political ideologies in recent years. The latest swing – towards a more market-oriented, right-leaning administration – should be interpreted as a call for a more effective state, not necessarily a smaller one.
In October 2019, Chile appeared to be entering a new political era. A rise in Santiago’s metro fares triggered the country’s largest protests since the return to democracy in 1990. Millions of people took to the streets, demanding dignity, fairness and a new social contract. The protests opened a constitutional process that promised to rethink the institutional foundations of one of Latin America’s most free market economies.
A few years later, Chile moved in a very different direction. After two failed constitutional referendums and amid growing concern about crime, migration, inflation and weak growth, voters elected a right-wing government promising order, fiscal discipline and economic recovery.
At first sight, this looks like a dramatic ideological reversal: from demands for social rights and constitutional change to a conservative agenda focused on security and markets. But the deeper story is not that Chileans moved from wanting ‘more’ to ‘less’ state. Rather, citizens demanded a state that could protect them and then punished a political system that seemed unable to deliver.
Chile’s recent trajectory is best understood as a response to two unresolved demands: the demand for social protection; and the demand for effective government. The country’s politics are not simply swinging between state and market, or between left and right. They reflect a deeper frustration with institutions that have struggled to deliver both economic opportunity and everyday security.
Why were some people left behind during Chile’s development boom?
For decades, Chile was seen as one of Latin America’s economic success stories. Since 1990, the country combined macroeconomic stability, growth, poverty reduction and gradual institutional consolidation. Compared with many countries in the region, Chile built a reputation for credible fiscal policy, independent institutions and openness to global markets.
This record matters. Chile’s economic model delivered real gains. By the World Bank’s national poverty line, poverty fell from 28.7% in 2006 to 8.5% in 2017 and 6.5% in 2022. The middle class expanded, and infrastructure improved. The country became the first South American member of the OECD (OECD, 2025).
But the same model also generated tensions that became increasingly difficult to ignore. Many dimensions of social welfare were organised through markets: pensions, education, healthcare, housing, transport and credit.
For middle- and lower-income households, economic progress often came with high exposure to risk. Families could access better opportunities, but frequently by taking on debt, paying high out-of-pocket costs or navigating private systems whose quality varied substantially. In healthcare, for example, out-of-pocket payments account for 30% of total health spending in Chile, compared with an OECD average of 18%.
Chile also remained highly unequal: in 2021, the average income of the richest 10% was more than 20 times that of the poorest 10%, compared with an OECD average of 8.4 to 1.
But the issue was not only inequality in income. The model also created inequality in economic security. Two households with similar incomes could face very different levels of vulnerability depending on their health needs, pension savings, housing situation, children’s education or exposure to crime.
This distinction is important. People do not experience the economy only through wages and prices. They experience it through the daily institutions that shape their lives: the school, the hospital, the pension account, the bus system, the police station, the municipal office and the labour market. When these institutions work poorly, citizens may conclude that the rules of the game are unfair even in a country that is growing.
This helps to explain why Chile’s protests were so powerful. The metro fare increase in 2019 that triggered them was small in monetary terms, but large in symbolic terms. It crystallised a broader perception that citizens were being asked to absorb the costs of a system that did not protect them sufficiently.
What were the underlying drivers of the protests?
The slogan that came to define the 2019 protests – ‘it’s not 30 pesos, it’s 30 years’ – captured this broader dissatisfaction. The immediate trigger was an increase in Santiago’s metro fare of 30 pesos – a rise of around 4% in peak-hour prices. But the protests quickly became about much more than transport. They were about dignity, unfairness and the sense that Chile’s economic model asked ordinary households to absorb too much risk in education, health, pensions, housing and daily mobility.
This is why the unrest surprised many international observers. From the outside, Chile looked relatively successful. From the inside, many citizens saw a society where growth had not translated into enough economic security or political voice. Many felt that key markets worked against them, that public services were insufficient and that political institutions were too distant from everyday concerns.
Figure 1. Protests in Chile 1990-2025
Source: The GDELT Project
Notes: Counts reflect events in Chile as reported in global news media.
The initial political response was ambitious. Chile launched a process that sought to replace the constitution inherited from the dictatorship era. For many citizens, constitutional change became a way to address deeper questions about the social state, indigenous rights, environmental protection, political representation and the balance between public and private provision.
Even so, the process struggled to build a durable majority. The first proposed constitution was rejected in 2022, when 61.86% voted Rechazo.
A second proposal, drafted under very different political conditions and viewed by many as too conservative, was rejected in 2023, when 55.76% voted En contra. By the end of that process, Chile had failed to produce a new constitutional settlement. Instead, it had revealed the fragmentation of public preferences.
Some voters wanted more social rights. Others worried about institutional overreach. Some wanted recognition and redistribution. Others wanted order, stability and growth. Many wanted all these things at once.
This is the key to understanding Chile’s apparent reversal. The failure of the constitutional process did not mean that the social grievances of 2019 disappeared, but it did change the political question. Citizens were no longer asking only what kind of rights should be written into a constitution. They were also asking whether the political system would be able to solve urgent problems.
What economic and political factors shifted voter priorities?
The rightward shift in Chilean politics reflects several forces that have reinforced one another, as evidenced by the election of far-right politician José Antonio Kast as Chile’s president in December 2025.
First, the protests created high expectations. Constitutional change promised a new beginning. But the process became polarised, complex and, for many citizens, disconnected from their immediate concerns. When ambitious reform fails to deliver visible improvements, frustration can quickly turn into distrust.
The second force is a sense of day-to-day insecurity. Crime has become a central political issue: according to the National Urban Survey on Public Safety (ENUSC) 2024, 88% of people believed that crime had increased nationally over the previous 12 months, while 75% said that it had increased in their municipality. Although Chile remains safer than most countries in Latin America, perceptions of danger have risen sharply, especially in relation to organised crime, drug trafficking and violent crime. Security is a basic function of the state: when citizens feel unsafe, demands for order often become more politically salient than demands for institutional reform.
The third force is migration. Chile has experienced significant immigration over the past decade, including from countries facing economic and political crises. The National Institute of Statistics (INE) and Chile’s migration service estimate that there were 1,918,583 foreign residents in Chile at the end of 2023, a 4.5% increase on 2022; Venezuelans accounted for 38% of this population. While migration has contributed to Chile’s economy and labour force, it has also become entangled in public debates about crime, labour markets, public services and border control. As in many countries, the issue has become a channel through which broader anxieties about state capacity are expressed.
The fourth force is the wider state of the Chilean economy. The post-pandemic period has brought inflation and fiscal pressures, which coalesced with a decade of low growth rates. The OECD’s June 2026 outlook projects growth slowing from 2.6% in 2025 to 1.7% in 2026, before recovering to 2.5% in 2027. Households facing rising prices and uncertain prospects have become less willing to support reform agendas that seem costly, slow or institutionally uncertain. Economic insecurity makes competence and delivery more important.
The fifth force is trust. Chile’s political institutions have faced declining confidence (Figure 2). When trust is low, citizens may be less willing to accept gradual reforms, technical explanations or promises of future benefits. They may instead reward politicians who offer clarity or immediate action.
Figure 2. Chileans’ reported trust in institutions
Source: The Latin American Public Opinion Project (LAPOP).
Notes: Trust in the President first recorded in 2008; the 2021 round omitted the trust battery
Together, these forces have created space for a conservative political response. This should not simply be interpreted as an embrace of a minimal state. The new agenda itself relies on state action: policing borders, fighting crime, reorganising public administration, enforcing rules, controlling spending and attempting to restart growth.
Even a pro-market agenda requires a capable state. This is why the phrase ‘less state’ misses the point. Chileans are not debating whether the state should exist. They are debating what it should deliver – and whether it can.
What is the state capacity challenge for Chile?
The Chilean case illustrates a broader lesson: social contracts depend on the effectiveness of the state as much as the size. A state can promise many rights and fail to implement them, spend more without improving services, and can regulate markets without enforcing rules. Similarly, it can pursue growth while neglecting the risks that households face and cut spending or deregulate in ways that weaken trust if citizens feel abandoned.
The challenge is bigger than simply expanding or shrinking the state. Rather, it is to build a state that can do difficult things well. For Chile, this means at least five tasks.
First, the state must support growth. Without increases in productivity, investment and employment, social promises become harder to finance. At the same time, while Chile does need to restore economic dynamism, growth alone will not solve the legitimacy problem if its benefits are perceived as insecure or unfairly distributed.
Second, the Chilean state must provide better social insurance. Pensions, healthcare, education and housing remain central to citizens’ sense of day-to-day security. The question is whether these systems deliver acceptable outcomes, reduce vulnerability and treat citizens with dignity, as opposed to a simple binary question of public or private.
Third, the state must regulate markets effectively. Chile’s model relies heavily on private provision in key sectors. That can work only if regulation is credible, competition is real and abuses are punished. Weak regulation can undermine trust in both markets and democracy.
Fourth, the state must maintain public order while protecting rights. Security is a key part of the social contract. At the same time, a security agenda that becomes purely punitive can deepen exclusion and weaken legitimacy. The difficult task is to provide safety without sacrificing democratic norms.
Fifth, the state must rebuild trust through delivery. Citizens are more likely to support reforms when they see concrete improvements in their daily lives. This makes implementation central. A reform that is technically elegant but administratively weak may fail politically.
What can the rest of the world learn from Chile’s experience?
Chile’s experience has lessons beyond Latin America. Many democracies face similar tensions. Citizens want growth, but also protection from risk. They want markets that generate opportunity, but not markets that leave them exposed to abuse. They want social rights, but also competent implementation. They want political change, but not permanent uncertainty.
When mainstream institutions cannot reconcile these demands, politics becomes unstable. Voters may swing between ambitious reform and demands for order. They may support a stronger social state in one election and a tougher security agenda in the next. These swings in political preferences reflect the fact that households face multiple insecurities at once.
The danger is that political systems interpret each swing too literally. After 2019, some reformers may have concluded that Chile had decisively endorsed a broad constitutional transformation. After the rightward shift, some conservatives may conclude that voters have rejected social demands altogether.
Both interpretations are too simple. The more plausible interpretation is that Chileans want a state that is both protective and effective. They want better pensions, healthcare and education, but also safer streets, fiscal responsibility and economic opportunity. They want markets that work, but also public institutions capable of correcting market failures. They want democracy to deliver.
What comes next?
Chile’s new government faces the same underlying dilemma as its predecessors. It can prioritise order, growth and fiscal restraint. But if it does not address the social insecurities that produced the 2019 protests, voter preferences may swing again.
Conversely, future progressive governments can promise social rights and redistribution. But if they cannot deliver security, growth and credible implementation, they too will face backlash.
Making the Chilean state more effective means supporting markets where they work, correcting them where they fail and providing citizens with confidence that democratic politics can solve everyday problems. It means recognising that economic development is about the institutions that allow people to feel secure, respected and represented as much as it is about GDP growth.
Chile’s recent political trajectory is often described as a paradox: a country that demanded a new social contract, then elected a government promising order and market-oriented reform. But perhaps the paradox is only apparent. Both moments express the same frustration: the desire for a state that can deliver on its promises.
The wider lesson from Chile is that legitimacy depends not only on what governments promise, but also on what they are capable of doing. A better state, not necessarily a bigger or smaller one, is now the central challenge.
Where can I find out more?
- OECD economic surveys: Chile 2025: An overview of Chile’s recent macroeconomic performance, productivity challenges, fiscal policy and structural reform agenda.
- OECD drivers of trust in public institutions in Chile: Evidence on institutional trust, satisfaction with public services and the relationship between government performance and legitimacy.
- World Bank poverty and equity brief: Chile: recent data on poverty, inequality and multidimensional deprivation.
- AmericasBarometer/LAPOP: Comparative public opinion data on democracy, institutional trust and political attitudes in Chile and the wider Americas.
- The GDELT Project: Global event data used to measure protest activity over time.
- Chile’s Servicio Electoral: Official results for the 2022 and 2023 constitutional referendums and national elections.
