Changing Paths: International Development and the New Politics of Inclusion

6. The Boundaries of Antipoverty Policy: Economic Ideas, Political Coalitions, and the Structure of Social Provision in Chile and Mexico

6 The Boundaries of Antipoverty Policy economic ideas, political coalitions, and the structure of social provision in chile and mexico Marcus J. Kurtz In an era in which international economic integration is accelerating and “market forces” are seen as the inevitable if not the ideal arbiters of distribution , many scholars have highlighted the increasing costs even to wealthy states of attempting to pursue expansionist policies (e.g., Williamson 1994; Garrett 1996). But others have suggested that there might indeed still be quite a lot of room for maneuver for poorer nations even in a world of substantial capital mobility, with respect to both industrial policy (Evans 1995) and social provision (Weiss 1998). There have also been hopeful signs of new and innovative antipoverty strategies in Latin America, despite a continentwide turn to market-based economic organization and a dramatic worsening of poverty levels during much of the 1980s and 1990s. This raises the question of when the possible —poverty relief even in a neoliberal world—becomes the probable. In this chapter, I examine social welfare outcomes in three cases characterized by competitive political systems1—Chile before military rule (1932–73); Mexico (1988–2000); and Chile after its return to democracy (1989–2000). The latter two cases were selected because they evidence wide variation on the dependent variable—social welfare outcomes—but take place in similarly outward-oriented economic systems. The period of inward-looking development in Chile (1932–73) is included as a control that serves to highlight the broad limits that open economy policies place on welfare regimes. Explicit comparison with the period of military rule in Chile or that of unquestioned one-party dominance in Mexico is avoided since the political dynamics accounting for social policy outcomes in those contexts are likely to be quite different from those under competitive conditions. What is the range of variation to be explained, and what accounts for it? To begin, policies that bene‹t the poor are dis139 aggregated by target. Are they oriented toward the production process, or are they subsidies to consumption? Production-side policies are further disaggregated into those that focus on the redistribution of assets and those that focus on the correction of market failures. Consumptionsupport policies are divided into bene‹ts of a highly targeted (or “means tested”) variety and those that are more universalistic in applicability. Different combinations of antipoverty policies can be found in the three cases under consideration in this study (see table 1). In Chile, both before and after the period of military rule, universalistic (or broadbased ) consumption subsidies have been important parts of the social welfare policy. Production-oriented policies focused on asset redistribution in the pre-1973 period. Not only was a large state sector created, but by 1967 a substantial land reform was launched. This would eventually redistribute most of the large farms in the country. After democratization in 1989, production-side policy was refocused on efforts to correct market failures. On the consumption side, policy became quasi-universal in scope. Bene‹ts were raised—though not to the level of the ‹rst case—and extended to a broad swath of society, not simply the “very poor.”2 In Mexico production-side policies have focused on correction of market failures, while consumption-side policies have, since the late 1980s, been more strictly targeted at the poor. After the election of Carlos Salinas in 1988, tentative moves toward democracy were coupled with decisive moves toward a neoliberal economic strategy, culminating in the North American Free Trade Agreement (NAFTA), and a massive and controversial social welfare effort gathered under the rubric of the Programa Nacional de Solidaridad (PRONASOL). This program included both targeted consumption supports and substantial funds for the betterment of human, physical, and social infrastructure among poor communities and marginal producers on the production side. How are we to account for these very different patterns of policy? I argue that they are a result of coalitional dynamics situated within a par140 Changing Paths TABLE 1. patterns of social welfare policy in chile and mexico Consumption-side Production-side Development Strategy Policy Policy Chile, 1932–73 ISI Universal provision Asset redistribution Chile, 1989–2000 Neoliberal Quasi-universal Limited efforts to correct market failure Mexico, 1988–2000 Neoliberal Targeted Extensive efforts to correct market failure ticular developmental model and its ideological underpinnings. Structural features of the developmental model can be economically inconsistent with some antipoverty policies, placing wide but...