Chile and the temptations of petro-populism

• A version of this post ran on the author's blog. The views expressed are the author's own.

It would be hard to find two countries more opposite within South America than Chile and Venezuela. Excessively rigid rules vs. no rules. Homages to a right-wing dictator vs. homages to a left-wing dictator. Majority white European vs. a rainbow of mestizaje. Wheat, wine, apples, softwoods and salmon vs. oil, rum, mangoes, chemicals, and red snapper.

But there’s one thing everyone can agree on: we want cheap gas, cheap parking, and unlimited road space for our death monsters.

In Chile, yesterday, the government announced new rules for shopping mall parking prices. First half hour free, always round time periods down, post prices. Wait, I get the second parts, as it’s important to know what you’re going to pay, but really? The government is going to force the malls to offer the first half hour free?

You can make the logical arguments if you like: that now, pedestrians, cyclists, and transit riders will be forced to subsidize motorists’ parking. That reduced prices will give the malls an incentive to build only the required minimum number of parking spaces, rather than the number they believe to be necessary. That once the government starts controlling prices for one thing, where does it stop?

Or you can go with the appeal to an extreme case. Coincidentally, Gustavo at Caracas Chronicles wrote today about what happens when parking prices are controlled too hard, for too long.

Meanwhile, Chilean motorists have also demanded the government “do something” about high fuel prices. The government responded with a remarkably well programmed and useless website. The state is now spending its scarce pesos tracking gasoline prices across the country and posting them online weekly. Yes, the government tracks every gas station in the country and helps motorists find the cheaper fuel.

If you go click around over there, you’ll see that the variance from the median in fuel prices is almost never more than 10 percent in any given region. Which is amazing. Almost every region of Chile includes a reasonable-sized city, often with a port, and then an interior that is often rugged, rural, and remote. That fuel prices vary so little – in the Bio Bio region, for example, diesel today ranges from 580 to 648 pesos per liter – shows that there is already intense competition. In fact, the prices are so similar that it’s rarely worthwhile to drive out of the way in the quest for cheaper fuel. The time and fuel cost of the extra distance is hard to justify for at most 68 cents (about US $0.14) a liter.

Meanwhile, this is a country where the market failures are omnipresent. Medicine is a good example. A friend yesterday went and got prices for the same contact lenses at her optometrist and at a glasses shop next door. One offered six months of lenses for 130,000 pesos, the other for 290,000. Similar price ranges exist for every aspect of medicine, from drugs to operations to doctors’ visits. And there is nowhere to look up the prices. Point being, if the government wants to support the free market, why start with gas stations?

It’s not because motorists are especially organized. They don’t have marches or Critical Mass drives. It’s because politicians drive. And there is a huge gap between the perception of driving – open road, freedom, acceleration, efficiency – and the reality of gridlocked streets, being trapped in a box, constantly braking, spending all your money. Rather than following the market signals and getting out of the damn car, politicians who normally carry the mantle of free-market neolibs turn to the state to support their habit. It’s the same thing you see everywhere. Capitalism for thee, socialism for mee.

– Steven Bodzin is the Santiago, Chile correspondent for the Monitor. He also blogs at Setty's Notebook.