Chileans, I’m told are the most contradictory and intriguing of Latin American’s peoples. They are inherently careful and cautious, especially with their fiscal policies, yet they have allowed air pollution to threaten tourism and their children’s health.
Monday we met with Claudio Larrain, Managing Director of LarrainVial, a Santiago based investment bank.
All 16 of us were escorted into a state-of-the-art conference room where after introductions we received a one-hour macro view of the Chilean economy by a LarrainVial senior economist.
Chile, following the advice of University of Chicago economists Milton Freidman and Arnold Harberger has had a sound fiscal policy of saving budget surpluses in good years and then spending them in down years.
Despite their penchant for financial discipline, they have not shown the same resolve for a clean environment. Air pollution is a major problem; as cold air moves east off the Pacific Ocean, it traps the warmer polluted air over the city. This inversion effect is most common during the winter months of June, July and August. The ill health effects are widespread and affect thousands of school children and if allowed to continue will threaten the countries tourism trade.
Chile has not yet taken proactive measures to limit CO2 emissions. Private and commercial vehicles are widespread with no limitations other than catalytic convertors. There are no significant government sponsored incentives for reducing GHG’s, and no significant smokestack limitations on industry.