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- [00:00]
A
Hello and welcome to our online event, Social Unrest in Colombia and Causes and Cures, hosted by School of Public Policy and the Latin American and Caribbean center here at the lse. My name is Andres Velasco. I'm the dean of the School of Public Policy, and I am very, very pleased and honored on behalf of the LSE to welcome former President Ricardo Lagos from, from my own country, Chile, and former President Juan Manuel Santos from Colombia, who is joined, of course, by LSE Director Minouche Shafiq. We're also very, very pleased to have Mauricio Cardenas, a distinguished Colombian scholar and former Finance minister of his country, who nowadays is a visiting professor at Columbia University in New York, to be joining us for remarks and discussion. Before we get going, just a few practical announcements. If you're using Twitter, the hashtag is lsepublicpolicy, with of course, the hash sign beforehand. This event is being recorded and technicalities permitting, it will be turned into a podcast. Sorry. And it should be available. We're going to start with presentations by our guests of about 10 minutes each, followed by a presentation by Director Minutia FIK for another 10 minutes, and then we will turn to Mauricio for his response, after which I will probably take chair's privilege, ask a question or two, maybe try to generate some conversation among speakers, panelists and guests. And then, of course, we will turn to the audience for questions. So without further ado, let me turn it over to President Ricardo Lagos. Mr. President, you've got 10 minutes and again, thank you for being here.
- [02:05]
B
Well, thank you and thank you very much for this invitation, because I understand that the title Social Unrest in Colombia and Chile, and then the question what about the cure and what about solution for that, and why was that? And I will try to see things from a little more than the two countries involved and say that what's going on in the world today is some kind of social unrest. And probably that social unrest is because we are moving from the industrial revolution, that used to be the way to understand social and economic affairs during the last 200 years, on an ethical change, going to a digital age with Internet and all, what that means vis a vis the future. Therefore, when you are having an epoch of change like this, it's normal, I think, to have some kind of social unrest. How are we going to adapt to this new criteria? What elements are going to be so different from the past and visa vis the involvement in now? I wouldn't like to go too much and what that means, but if to that it's already an epoch of change. You are now a crisis because of the coronavirus and the pandemia. That is something much bigger than any other crisis that we have had in this 20 century. Therefore, I think that this is the first problem. I would like to emphasize that the epoch of change means Internet, artificial intelligence. But from the point of view of social policies, politics is becoming much more horizontal. Because in the past, politics used to be horizontal. No, was to be vertical. The leader, speak, political parties, order the members in parliament. And if you wanted to say something, well, probably as a citizen, you are entitled to send a letter to a director of the journal in your country. That's it. But now, while we are having this talk, people looking to what we are saying, I don't want to see what they are going to tell me about the different ways to send some message in today's world. And therefore, the change is also in the way that we address politics in this new world. And therefore everybody feel entitled to tell you the truth. And I think that this is a different way to understand. And this is why I think that in the near future, no matter what criteria, we have some new elements for those that are running a country, the president, the prime minister, a minister or whatever, they will have to start learning how to listen and how to listen. But the people is telling in order to be prepared, in order to be prepared to the kind of social unrest that may emerge in that new circumstances. And this probably will explain to a big extent what's going on around the world and why we have these kind of discussions and how much are we going to be able to save, quote, unquote, democracy, given this new element.
- [05:44]
C
That.
- [05:45]
B
Will have to be considered. After saying that, let me go straight to the question of Chile. In the question of Chile, I would say that we used to have a very successful transition from a dictatorship to a democratic system of government in 1990s, after we won in a plebiscite to the dictator. But in order to defeat the dictator in that plebiscite, we have to use the one element that Pinochet's constitution has that says that after eight years in power, he is going to be in a plebiscite to discuss another eight years in power. And everybody knew that the name for that was going to be the same Pinochet. In other words, we have to accept Pinochet's constitution to defeat Pinochet in that plebiscite. And that is the beginning of the problem. Because in that constitution where the seeds that were to exploit the social unrest later. Because one of the authors of that constitution say, I want to have a constitution that when tomorrow our enemies, in the way that they are thinking about public policies run this country, they are unable to do the policy that they would like. Because this constitution will forbid that which was true in so many occasions in my government, when I was minister of Mr. Elwin or Mr. Frey, I tried to implement particular policies. And everybody said, you cannot do that because you know the government and the state is subsidiary. You cannot do things that can be done by the private sector. That was the criteria. And therefore I think that that is the major element of why we have the problem that we have had in so many cases, either as a minister or president, it was not possible to carry out social policies. Because no, no, no, that belongs to the private sector. Needless to say also that in spite of that we have done successfully. We were able from the year 2000, from the year 1919, in the first 20 years, not 30. The first 20 years is very important in this issue. In the first 20 years we were able to increase almost by three times the per capita income. We were to increase enrollment of students in higher education more than six times of the previous in 30 years previous. In other words, we were able not only to increase per capita income, but also to reduce poverty to a big extent from let's say 40% in 1990 to something around 20 years later to about 10% from 40. Then what explains the criteria, the problems that we have had? That's when you multiply by three per capita, almost three per capita income. There is a new family of public goods that are going to be demanded by those that live behind poverty, has another needs renaissance and they demand for the government. And the problem was, other than a small increase from 50 to 20% of the taxes that go for the government. 20% of the GDP, of course, go for the government, remain exactly in 20% till today. Till today. In other words, can you have and increasing per capita income so huge, but remain the taxes from the government exactly the same in 20%? If you see what's going on in those today developed countries, the way that we're increasing the number of taxes because public goods are going to be higher and higher and more demand. And I think that here is where we have the major problem. And if I explain to you that of those 50% that. Excuse me, that those 20%. 50% of that 20% is the value added tax, the most unfair from the point of view of progressive taxes, of all taxes. And whenever either As a minister or a president, I asked for new taxes in order to be able to finance some new projects. At the very end, the increase in the value added was the only policy that probably was going to be accepted. And let me tell you that the personal income and the income of the personal income tax and the business tax is almost very low. So what I'm trying to say is that it's very difficult when you have an emerging middle classes that demands more. And the government will say no. 1, that for the first time in some particular moment at the university system, look, of 10 university students, seven were first generation Indian families that were able to reach the university. The only problem that you have to pay for that and you discover that it's much easier to solve reducing poverty than making a university available for everybody. So here is where I think the seeds of the problem that we have a problem of where to get the money in order to be able to have social policies that will approach to something like universal income, a basic universal income. I will stop here for my 10 minutes, but I would like also in the discussions to put a little bit another element of why it was this situation in Chile extremely unusual. And the question that we have now is that in order to solve the demands, the solution was to call for a new constitutional assembly to write a new constitution. That's for the second part.
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A
Thank you, Mr. President. I think that's a very good way to lead us into what follows.
- [12:53]
D
Because.
- [12:53]
A
Because let me remind the audience that this is a discussion not only of the causes, but also of the possible cures of citizen unrest. And in satisfaction. And of course, one of the reasons why we're joined here by the director of the LSC is that Minouj recently wrote a book called what We Owe each Other A New Social Contract. So I think one of the questions that underlies this exercise this morning, afternoon, evening, depending on where you are, is how do we go from understanding what happened to crafting a new agreement, a new set of institutions that can fruitfully and peacefully challenge some of that citizen discontent? Lots of things to be said on that. And on that note, Mr. President, let me turn to you. Juan Manuel Santos, former President of Colombia. Again, Mr. President, thank you very much for joining us and we look forward to your remarks.
- [13:55]
C
Well, thank you very much, Andres, and thank you for this invitation. What an honor it is to be by the side of my good friend, Ricardo Lagos, my former Minister of Finance, Mauricio Cardenas. The. The issue, I think is very, very important. Right now people are asking why Are these two countries, Chile and Colombia, that are examples that have been used for many years as successful countries. Why is it that in those two countries, precisely this popular unrest started with such passion, such vigor? And it is an interesting question, and there are many answers. I share with President Lagos his appreciation about the macro change of era. And that has brought many problems among them and many challenges among them, a crisis of what we call representative democracy. There is a crisis in Chile, in Colombia, and I would say worldwide, brought by, among other things, the Internet, social media. The social media, in a way, did away with the political parties. They replaced the political parties. And people started to feel now not represented by political parties, but represented by different ways of expressing themselves through the social media. But nobody has understood exactly how to do it and what is happening. So it's like a circus. President Sanginetti from Uruguay says it's a very. A very interesting circus where nobody knows exactly what is going to happen or what should happen anyway. This I share with President Lagos. Now, in the case of Colombia, we also have similarities with Chile with the increase in the middle class, the expectations of the middle class, and the lack of capacity of the governments to fulfill the expectations of those of that new middle class. In Colombia, for the first time, we had a middle class which is bigger than the poor classes just a couple of years ago. So we share that. But in our case, there are some special conditions that emerged. One of them is the peace process. The peace process and the peace agreement stipulated. And we knew that after 50 years of war, there would be an emergence of people going to the streets and demanding their rights. And it's written. And we said, we need to give that protest a sort of a way out. We need to handle that protest in an intelligent way and to convert that protest into something positive. And that was in the peace agreement. And what happened? There's a new government that was hostile to the peace agreement. So the first protest that we saw in 2018, before the big protest of 2019, was demanding the implementation of the peace agreement. The students, especially the young people, went out to the streets almost like spontaneously. Nobody organize it to demand from the government the implementation of the peace agreement. Then came the big protest, which is more or less at the same time as Chile in November 2019. That was a manifestation of the frustration of many things, and among them the inequality, the lack of opportunities, but especially the inequality. And coincidentally, just yesterday, yesterday the World bank published this study about inequality in Latin America. And Colombia is right now, again, because we used to be. We went out of the list and then came back the second most unequal country in the whole of the region. And that inequality is something that creates a very confrontational attitude among the majority of the people. I think this is a crucial element that explains the protest. Now, the pandemic, in a way, unveiled some other structural problems that we had, but we had not seen so clearly before, and exacerbated many of the problems you all know about, the increase in poverty and the increases in inequality, the lack of effectiveness of the health system. So the pandemic exacerbated the problems, and we're going to see more protests.
- [20:04]
B
In.
- [20:04]
C
The near future because of that. Now, what is the solution? Because we know what is happening. Sometimes we might differ in the interpretation of what is happening, but what is the solution? I agree with you, Andres, that we're very fortunate to have Minouche here with us, because that's what almost all countries are asking now. We cannot build back the saying that we had after the pandemic. Everybody said we have to build back better. But how to build back better? The only way is to have what we call a new social contract. It's a relationship between some institutions that, in the case of Latin America, have completely lost the trust of the people. The institutions have lost the trust of the people and the relation of the institutions with the people. That has to change in order for the institutions to regain trust and. And for the leaders to regain trust. And I finish by saying we not only need to recuperate the trust of the people in the institutions, in the case of Chile, when you're going to have a new constitution, in the case of Colombia, we don't need a new constitution. We have to do other things to recuperate the trust of the people. And also we need a new type of leadership. Ricardo was saying about the vertical type of leadership and the horizontal type of leadership. We need more horizontal type of leadership, and that is what is emerging worldwide and in Latin America. We need it because that's the type of leadership that the people want and the type of leadership that is necessary to recuperate the trust of the people. And I rested my case, as they say, and we will continue discussing. But Manouch has the answer in the sense her book has many of the elements that are needed to fix many of the problems that we have in our part of the region, in our region and in the world.
- [22:26]
A
Thank you, Mr. President. You've made my job easy because you provided the perfect transition. We have lots of answers, and the answers to some of those Questions at least can perhaps be found in Minouche's recent book and on some of the work she's long been doing on a new social contract. So I don't mean to put you on the spot, Minouche, but with that over to you, thank you very much.
- [22:51]
E
Thank you, Andres. Well, it's a huge honor to be on a panel with Presidents Lagos and Santos and I feel quite humbled and I would like to lower your expectations a little bit. But what I could do is at least I'm not an expert on Latin America, but I do think that the current unrest we see in Colombia and Chile reflects what happens in a society when the social contract has failed. And in some ways I would argue that the social contract in Latin America has never really been completed. There's very little consensus on what we owe each other in society. And if we owe anything to fellow citizens, the current consensus is that we owe each other very little. In my book I talk a lot about the importance of pre distribution investing in the future so that people can earn an income and that you don't need to do redistribution. But in Latin America and Chile and Colombia in particular, I think you need both. We need redistribution and pre distribution in some ways. The French sociologist Bourdieu talked about the right hand side of the state, which is the military, the police, the control apparatus. And in Colombia and Chile that's well developed. But the left hand side of the state, which is essentially the welfare state, the caring part of the state is still very underdeveloped. And I think President Lagos made the point about taxation. It is impossible to develop the less left hand side of the state without a higher rate of tax receipts. And in many cases the rate of taxation is high, but collection is low and there are too many exemptions in the tax system so that it doesn't generate the kind of revenues that are required to meet the growing demands of the middle class in both countries. And let me turn a little bit to some of the solutions, because many of the solutions are actually homegrown. Brazil and Mexico invented conditional cash transfers. And that was the beginning of the creation of a safety net, not just in Latin America, but it's spread around the world. Chile invented pension reform, but a comprehensive debate about what social insurance and protection would look like, I think in both countries is long overdue, both in what's expected from the state in terms of the level of public services and how risks should be shared in society. Let me just throw out a few ideas from my book about what that could look like? I think they fall into two categories. Changes in the social contract that provide people with more security because people are feeling very insecure and that's why they're out on the streets. The second is how do we create a set of reforms that provide more opportunity in society? UN security expanding cash transfers. Perhaps we should move to unconditional cash transfers in many countries and use that system to provide a cushion below which no one should go in the book. I'm not a big fan of universal basic income because I think it's economically inefficient and I think it goes against the spirit of the social contract in which able bodied adults should contribute in the middle of their life and be looked after when they're young and they're old. So I would prefer cash transfers targeted to the poorest. And both Chile and Colombia have the capacity to target. And I would explore things like wage subsidies or earned income tax credits for workers who are earning very low wages and can't sustain a decent standard of living. I think the other advantage of earned income tax credits is that it would incentivize formalization. Too many workers, in both cases, countries are in the informal sector, outside of the tax system, outside the benefit system, and one needs to find a way to bring them into the formal sector. I would also say that the current structure of labor markets in both countries in some ways is the worst of both worlds. You have very dualistic labor markets. The formal sector has very low flexibility and very high protection, very difficult to fire workers, very high taxes on those workers who are in the formal sector sector. Meanwhile, the informal sector is completely unprotected, neither in terms of job security or in terms of benefits in the book. I'm a very big fan of what's called flex security, which is a sort of Nordic Danish model in which you have flexibility. In fact, in those countries people get fired all the time. There actually aren't restrictions on firing. You don't get severance when you're fired from your job. And labor turnover is the highest in Europe. The difference is it's very easy for employers to let go of workers depending on economic circumstances. But once they lose their jobs, they get generous unemployment and are quickly retrained and reskilled to get back to work. So I think that sort of model where one would try and unify the labor market, bring more people into the formal sector, reduce the protections of some of those formal sector workers, and increase protections for some of the informal sector workers. I think the other thing that's a really Interesting thing to look at is portability of benefits. Chile, of course, enabled pension portability, and that was a huge policy innovation. But I think as we move into the digital world, and I think President, I think both President Santos and President Lagos mentioned, we're moving into a digital economy in which flexible working is going to become much more normal. The old model was people worked for a few employers in their lifetime. The new model is people will work for many employers every week, every month. And to make that model more humane, we need portability of benefits. So just as many countries now allow you to take your pension with you from one employer to another, we should do the same for sick pay, for health insurance, for unemployment benefits, and that everyone you work for should contribute to your portable benefit pot. We can do that now digitally. It's not that complicated. And I think mandating that employers have to pay into the benefit pots of all workers, whether they're formal sector workers or informal sector workers, in proportion to how much they work, would be a way to provide security to everyone while enabling our labor markets to adapt to a more digital world. And then finally on security, clearly more investment in health and education is an important part of providing more security and opportunity in both countries. I think the final thing I'd say is around on opportunity. I think one of the big sources of social tensions is, is that both countries not only have very high levels of inequality, but terrible levels of social mobility. In Chile, it takes six generations to go from the bottom of the income distribution to the middle. In Colombia, it's 11 generations. That basically means that you have no hope that either your children or your grandchildren or your great great grandchildren could possibly be middle class. And I think one has to think about it as a set of policy interventions that increase social mobility. In the book, I argue that actually the most cost effective and impactful interventions are early years education, which equalize opportunity for children who are born into poor families. But of course, more investment in education and skills is a key part of that, along with a labor market that is a lot more meritocratic and encouraging more formalization. Another piece of the puzzle, of course, would be child care provision to tap into the talent of all of the educated women in both countries whose labor force participation is still very low because they're not supported to stay in the labor market. So those would be a kind of just a set of possible solutions. I'm sure there are many more and many better options ideas. But at least to start the debate about what a better social contract might look like in Chile And Colombia.
- [31:17]
A
Thank you very much, Minouche. Lots of food for thought there. Lots of things with which at least I agree. Let me just stress three before we turn to Mauricio, which I think are very important for the Chilean Colombia debate. One is the difference between. Between inequality and volatility uncertainty. A lot of the discussion in both of our countries has been focused on whether the countries are unequal. And of course they are. But even for those families whose lot in life has improved, they remain exposed to a lot of volatility. Unemployment insurance is not great. Health insurance is not great. They send their kids to school and one parent gets sick. And of course a kid has to leave school because a lot of the school is fee paying, et cetera, et cetera. So protection in that sense, insurance in that sense is key. Second distinction that you make, that's very important. It's not new, of course, but it's very relevant to both of our countries is the pre distribution versus redistribution debate. Post protests in both countries, a lot of the discussion, unsurprisingly, is about taxes and transfers, and that's fine. But as you correctly point out, there's a lot more that is required than simply taxes and transfers to make sure that the society is run reasonably well and that outcomes are reasonably egalitarian. Last but not least, and this is more contentious in the big debate between UBI universal Basic Income and wage subsidies. I think that for these two countries, my personal preference would certainly be wage subsidies. Completely agree with you. I don't know about Colombia. Maybe Mauricio can tell us. In the case of Chile, there is a nascent system of sort of negative income tax which began in the first administration of Michel Bachelet and which has been expanded since. I think it's a lot of promise in that, but it's very, very promising. Okay, let me relinquish the floor because I'm seizing it and having difficulty let go. So I will now turn over to Mauricio. And again, Mauricio, thank you very much for joining us and we look forward to your remarks.
- [33:37]
D
Thank you, Andres. It's a pleasure to be with Minouj and President Zlagos and Santos. I've learned a lot by listening to them. And also in the previous panel there were some very interesting contributions. So let me kind of like share with you my two cents on how I see this. This is an exercise in comparative politics because we're trying to draw some lessons by comparing Chile and Colombia, the recent social unrest and especially the potential solutions, the cures, which is really, what, what's most important about this conversation? So I would say first that there is a global pattern and that has to do with the changes that we're seeing, not just in this region, but in the world as a whole. I would begin by quoting Albert Hirschman, who said that everything in the development is relative. We made a lot of progress in Chile and Colombia, there's no doubt about that, especially in the last two decades, but not enough relative to the rest of the world, and certainly not enough given the increased level of communication in the world, so that everyone everywhere could see what was happening in every corner of the world. So the youth in our countries is much aware now of what are the opportunities elsewhere. So they can be a lot better than their parents, but they're certainly not better than the youth in other parts of the world. So point number one, this is global. Point number two, our two countries have long standing grievances that certainly found a way of being voiced in a louder way in recent years, because more political participation, of course, social media as well. So grievances have been there, but now are taking center stage. And as President Lagos said, you don't need to send a letter to the editor of the newspaper, you just post a tweet and that's it. The interesting thing about this social explosion is that it caught governments off guard. Governments were not expecting this and they were not prepared. And I think this is showing that the status quo, the system as we know it, is less resilient than people, I guess, thought previously. Governments responded by trying to introduce last minute policies that were, generally speaking, progressive, like increasing pensions or the minimum wage in Chile. In Colombia, the government decided to bring free tuition to public universities, things of that nature, but that did not resolve things. So this is not about patches, this is about something more structural. Where some differences arise is in the scapegoats. So in the case of Chile, the idea of drafting a new constitution is very appealing because that's kind of like the vehicle through which a new social contract can be written. The constitution is not really an issue in Colombia. On the contrary, I think we Colombians, with time, our constitution is 30 years old. We're becoming more and more appreciative of our constitution. Our constitution has one very appealing aspect, which is its flexibility. It's a constitution that is constantly interpreted by the court. The constitution can accommodate social changes in issues like abortion, consumption of previously illicit substances, or issues like adoption of same sex couples. Things of that nature have changed in the last 30 years with the same constitution, by the way, the Colombian constitution gets a lot of negative press in Chile, and it should not. It is actually a very good example because that constitution actually helped Colombia deal with conflict. It's with the same constitution that President Santos was able to negotiate a peace agreement. And it's under that constitution that it's framed. So it is actually an asset, not a liability. But in Colombia, we don't have the scapegoat of the constitution. But we all know very well that in Colombia, part of the problem today is the lack of adequate implementation of a peace agreement. Because the peace agreement made these grievances more visible, gave voice to sectors that had been excluded, but has not been able to channel that, because some of the issues that are important in the peace agreement have not been implemented. Let me mention one where I think is the greatest difference between Chile and Colombia, which is state presence. State capacity in Chile is much greater than in Colombia. The state is present everywhere, in every region, in every country of the country. Whereas in Colombia, the state has been absent in many parts of the country where conflict was more intense, where poverty is higher, where you have more insecurity, where you have essentially much more inadequate provision of public services. So the number one issue of the peace agreement is to bring the state to those regions. And that, of course, has not been the case. And that showed in the recent social explosion in Colombia. So my final thinking about this is we all need a new social contract. But this is a very urgent thing because if you look at the polls from Chile and Colombia, it is this right wing form of Trumpism that is trumping in the elections. And it's the right wing populism that is essentially adopting a policy or an attitude against immigrants. It is the right wing that is protectionist. Those aspects are really taking an upper hand relative to reform to the construction of these new social contracts. So Minouche mentioned a lot of the ingredients that the new social contract has to include, and they are about better policies. But we also need better politics in this new social contract. And I would just mention to add to that list that in this new world, the winner should not take it all. You cannot govern our countries with all your classmates from your university. You have to have a diverse government, you have to form coalitions, you have to include people, because otherwise the lack of inclusion is going to exploit, explode in the streets. So politics are very important. And I guess in the case of Chile, there's an opportunity with the new constitution. But the new mindset has to also think about new ways of changing our politics, because Otherwise, we're not going to be able to deliver what's necessary. I'll go back to point. What was mentioned by President Lagos and also echoed by President Santos and Minouch, which is our population is demanding more public goods and services. That's obvious. But there are no resources to do that because the political system has been reluctant to adopt those changes. So we need a political system where the government can deliver greater public services, but at the same time where tax decisions that have been so difficult to make in the past are viable. And that is an element, for me, that's a fundamental element of these new social path. So I'll stop there.
- [42:02]
A
Thanks, Mauricio, for a very rich set of remarks. Lots of good observations there. I am having difficulty relinquishing the floor. And before we move to Q and A, sorry, I will take the liberty of asking each one of the presidents and my boss, Minouche, one question, if I may. The question for both presidents is the following. In the previous panel, we had some disagreements. We had two very distinguished political scientists, one from Colombia and one from Chile. But there was one item on which everybody agreed that a very striking fact about both countries is the complete collapse in trust and the trust that citizens report they feel about institutions. Survey after survey says we don't trust the government. Political parties, Congress, judges, Ministerio Publico, the police, any institution that's connected to the state. People just don't believe in those institutions anymore. And in some countries, maybe Chile, northern Colombia, also non state institutions, people don't believe in the church and the media, in labor unions and business associations, et cetera, et cetera. And this is, I think, important because Chile and Colombia did not become unequal yesterday. We've been unequal for the better part of three or four centuries. And as a result, we need a story that emphasizes why it might be that the inequality that was tolerated once became intolerable all of a sudden. The only story that I can think of is politics. The state had the capacity to mediate and govern those demands. And suddenly political parties and politicians and congresses and other institutions seem to have lost that capacity. So my question for both President Lagos and President Santos is what happened in the politics within the Latin American context? You know, our countries were countries of pretty strong institutions in the political sphere, pretty strong political parties, particularly Chile, along with Costa Rica, Uruguay. We were, you know, political scientists, used to single out Colombia and Chile as countries with good politics and good institutions. You know, post return to democracy. Of course, in the case of Chile, what happened and to what Extent this political problem may have been the trigger of the of the protest and the social unrest.
- [44:38]
B
I think that to answer that question, why political institutions lost the trust of the people. I think that the only answer is because political institutions were postponed during so many years. What were the real issues? Let me give you one example about pensions. We used to have a pension system by which you were supposed to finance your own pension in the future. And this idea was a wonderful idea. But the only exception was the only problem was that all what you were Saving was only 10% of your income. And I do not know any that with 10% you are going to have the right pension system. No pattern in the world. Nevertheless, from the point of view of the opposition in Chile, the pension system was not possible to do nothing with that was perfect. I tried to do it. Forget about, forget about. I introduce unemployment benefits and for me, for normal, who is going to administer that employment insurance? Well, the government answer of the right wing, Mr. President, I think it's a good idea to have some insurance with regard to employment if you also need to have something when but one condition. The money we collected to buy for the insurance for those that lost employee the employment has to be private. Has to be private. Why? Well, because the public we don't trust. So if you have the insurance, one condition has to be administered by the property. I'm not saying this is good or bad. What I'm saying is I wanted to have a and insurance policy for employment and therefore I have to set that. That's the way to make things. And when we had a discussion about that it's impossible to solve a pension system with only 10% of your income, no matter if that income is paid by the worker or by the employer. Because always I think that this is nonsense because it's going to be by the employer. Probably the employer is going to increase the price of the product if it's going to be paid by the employee, well, probably they will need to have a strike in the near future so that somebody will pay for that part that they are taking from your salary. So let us face it, when you're going to go for an insurance if you lost employment, well, who's going to pay for that? The same thing. If you're going to pay for who is going to pay for your pension? In short, what I'm trying to say is we postponed that 10% forever and all of us knew but it was not a problem to discuss with the. At the very end, at the very end, at the end of My administration, I decided that was going to be necessary to a pillar that was a solidary pillar, paid by the government, but it was not possible. At the very end, they put some money with Minister of Finance. Veraco knows better than me what happened with that. But what I'm trying to say is this. Never we are able to address the real issues. And that is the reason why there was a loss in confidence in the institutions, because the problem has been postponed and not solved. And this is because, well, there is no agreement in what is the fundamentals. And I think that to a big extent in Chile also there were some problems in terms of who is going to make the decision, how you're going to report. In other words, because you didn't take the right measure and you postpone, then at the very end, people thought that the Congress, for instance, was people discussing many things, but not the real ones. And the real ones were postponed. And at the very end, well, this is the reason why now we are in a problem, because now, at the same time we have, and I want to mention them later in the discussion, if possible, the very unusual fact that because of the virus and the pandemia, we have to postpone the election of the assembly that is going to write the constitution. And now we have the problem that we are going to be writing a constitution and at the same time electing new authorities with the old constitution, the one that is existed today. And then the big issue is going to be when the new authorities or the new elements of the new constitution are going to be put in practice. But that was another discussion.
- [50:03]
A
Thank you, Mr. President. President Santos, we've just heard President Lago say that the politicians came into disrepute because they didn't get economic and social policy right. Might it not be that they also got some of the politics wrong? Mauricio was saying that there's a problem that, you know, we all went to the same schools and come from the same city. You know, might a more open politics have made a difference? And of course, I would love to get your reactions also, Mr. President, to some of the things Minouche put on the table. You know, which. Which elements of this new social contract do you think would be useful in addressing some of the grievances in Colombia?
- [50:49]
C
Let me start by saying that institutions are what the people who conform those institutions want them to be. And usually these institutions are led by politicians which are supposed to be the intermediary between the people and the institutions. And what we have seen is that slowly but surely the trust as you very well mentioned, Andres, the trust of the people in the politicians, therefore in the institutions, have been weakening and is now lost. And why is that? Because there is a complete disconnection between the institutions and whoever leads those institutions and the people. They don't communicate, or if they communicate, they communicate in the wrong way. I will give you two examples. One of a successful process of recuperating the trust of the people, which were the Colombian armed forces. The Colombian armed forces were probably the institutions that had the worst favorability from the people. But through delivering results and good communications and good policies, the armed forces of Colombia became the most appreciated institutions of any institution in Colombia. More than the media, more than the Catholic Church, more than any other institution. Why? They delivered, they communicated and they respected when people were wanting. And it was a permanent communication that was a delivered policy. I'll give you a different example. We just saw it here with the Pandemia, a president of a country who goes to the national television every single day for one hour trying to sell a reality that the people did not see. And after a year, people simply did not believe. Neither what was happening with the pandemic, but what the government was saying in every other issue, they lost the trust. So we have to recuperate the trust by delivering, by connecting with the people, by hearing the people. And with the social media today, it's more difficult, but it's absolutely necessary. Now, going to what you asked about the specific points that Minouche mentioned for the cases of Colombia, Chile or the region, I would say that most of what she said is applicable to Colombia, to Chile. Mauricio was saying about the implementation of the peace process. And there's a specific issue there that would, for example, in the case of Colombia, would be the solution to part the problem of inequality and poverty, which is the number one point of the peace process that has to do with a rural agenda, rule reform. Colombia has the worst distribution of the land in the whole world. That is something which is astonishing, but it's the truth. And we have a lot of land. We can be a source of food for the world. The FAO says that Colombia is one of the five countries with more potential to increase food. And we can distribute food, land all around, and that is in the peace process. But for political reasons, this has not been implemented. You implement that and you solve, not entirely, but you solve a lot of the problems. We have Colombia mentioning about, of course, education and health. And this is a sort of a given. You invest in education, you invest in health and you receive a return if you do it well. Now, do it well is I think what also Mauricio was saying, that there's a problem of maybe sometimes bad policies or sometimes good policies that are implemented in the wrong way. We need a lot more a better government, a better state, a more efficient state. And this is, I think, transversal to all of Latin America. Policies that can really affect the lives of the people positively, and that will, in a way, be a necessary condition for the people to trust again, the policymakers and the institutions that are responsible for. For implementing those policies. So it's like recuperating a virtuous circle, getting out of the vicious circle and going into the virtuous circle. With many of the policies that Minouche mentioned, for example, early childhood, this is something extremely important because that's where inequality starts. Or giving access to women in different type of jobs so they can participate much more. In our countries, there's a tremendous difference between the access of women to jobs and how much they get paid. And those are the type of problems that I think we can also solve in the short run. But to summarize, I think many of the points that Minouche mentioned are perfectly applicable to Colombia, to Chile, and to Latin America as a whole.
- [58:01]
A
Thank you, Mr. President. Minouche, your reactions on that. And if I may just add one thought that I'd love to get your comments on. You know, there is a danger that we all look to our countries and think and rest here has unique causes. But of course, as everybody on this call knows, the same year that Colombia and Chile had social protests and street violence, nearly 40 countries around the world in Latin America, but also very far away in Hong Kong or Iran or the Philippines had similar processes going on. So we economists are used to thinking about financial contagion. Are we having a protest contagion of some sort? And if so, what are the transmission mechanisms?
- [58:53]
E
Yes. Okay, let me just say something briefly about the politics. Even though I'm not a politician, but I make an observation that countries that have political systems that are run by proportional representation tend to have better social contracts than presidential systems. And I think that's because in proportional representation, you get. You have to make more compromises, you have to have a coalition, you have to take care of more groups, you tend to get less. You know, I think it's what President Lago said, more you get more horizontal politics with PR systems than you get with vertical winner takes all systems that you get with presidential systems. So I don't know whether you know, since you're rewriting your constitution, it's a bit of a chance to think about the. How institutional bargaining is set up in a country and how that might deliver a better social contract. Just a thought on Andres point about this is clearly universal. And you know, populism is universal in some ways. Latin America also invented populism, but it's grown, it's been a very successful export, and it's developed and grown in many, many different ways. But I think, actually, I think President Lagos put his finger on it in the beginning. What's driving much of this global protest is technology. Both because of the way technology is changing work and making jobs more insecure and making people more uncertain about the future, but also technology in the form of social media and how that's spreading discontent and making politics much, much more challenging and much more, you know, power is much more distributed now. It's very hard for even politicians, very powerful politicians in very powerful countries to do what they want. They have, you know, there's much more, much more consensus building required. I mean, in some countries, I've become a bit of a fan of citizens assemblies as a new political tool better suited to our age. You know, the Irish have now used this for many very controversial issues where they bring in 100 representative citizens who debate an issue for a year publicly, and the debate is public, and they bring in expert witnesses and they have a discussion. And then at the end of that, there's a national referendum to make a decision. It's a risky idea. And in some ways, the assembly that Chile has pulled together to do the constitution is an example of that. And I gather it's complicated, it isn't going perfectly smoothly, but it is an interesting model for solving some problems which achieves more horizontal consensus and might have more legitimacy and trust than some of our existing political instruments. Just a thought.
- [61:58]
C
Can I just add something to what Minou is saying and illustrated with an example? I come from the world of journalism. I was a journalist for many years in the world of journalism, and that was the source of information for everybody. There were some hierarchies. The editor of the newspaper, the director of the newscast, chose what he thought would be the most interesting and most important news. There was some intermediary there that in a way, use their criteria, their own criteria to choose what the people had to know. Well, today that role disappeared. The editors don't choose what they think is important, but what is a trending topic? And they say, oh, this news is a trending topic. That a cat fell from an eighth floor and survived. And that's the front page that has changed completely the relations between the public, the media, which in a way are the intermediaries, the politicians. And that is something that we have to cope with because we're not going back to the old world, but we don't know how to invent a system that works better. I just wanted to emphasize on that.
- [63:38]
A
Thank you, Mr. President. I'm going to turn it to Mauricio briefly before we open it up to the floor. But before I do that, Mauricio, let me just remind people out there, I'm sure in Colombia, Chile and the UK but many other countries as well, please don't be shy about putting your questions in the chat or, sorry, not in the chat, in the Q and A function, and I will do my best to convey as many of those questions as possible to our guests today. We have about half an hour, so we're not doing too badly on time. But before we do that, Mauricio, any thoughts or reactions to the things you've been hearing?
- [64:19]
D
Just one quick thought. I think the conversation is turning towards the negative, the problems that we have, the difficulties, and rightly so. I mean, we're living through several crises at the same time. There's a social, there's an employment crisis, there is a fiscal crisis, there is, in the case of Colombia, security crisis. But we must not forget that these two countries that we're talking about have done a lot of things right. Because if we don't highlight that, then this pessimism, it's going to turn into not just populism, but populism in the shape and form of caudillos, caudillos that offer solutions to everything, solutions that at the end of the day would only aggravate things. Whereas we have to go back to those things that we have done right, where we have built the right institutions, where we have actually use leadership, invested political capital to say, for example, build better infrastructure or to deliver more benefits to early childhood programs or things of that nature in which Colombia and Chile are good examples of how to do things. So I just published a book called Loosely Speaking, How Does Colombia Progress, highlighting all those aspects. And in that discussion, I also say that one of the worst things that happens is that you can actually go backwards. Nothing is assured. Things can actually go in the wrong direction. So let me mention this. Let me illustrate this with an example. After decades of effort, Colombia had being able to introduce a wealth tax. What can be more important than a tax on the wealthy Individuals, not corporations, wealthy individuals, progressive. It helps build state capacity. Well, now it was scrapped. It was scrapped in the midst of these crisis, and it's hard to explain why that happened. So why is it easier to raise the VAT rather than raise personal income taxes? I think that's a key question. I provide answers to that question in this book.
- [66:46]
B
Thank you.
- [66:47]
A
Mauricio, may I add something? Yes, of course.
- [66:52]
B
In the real world, I think that the essential is how are you going to be able to recover confidence, to recover trust, that the analysis has to be very careful. Let us take the situation now because of the Pandemia. Well, all the question has been how long will it take to recover economic activity? And the question has been, how are we going to be able to recover? Nevertheless, I think that now personally, the question not to cover economic activity that is granted, is granted, given the size of Manita has been using in order to solve the problems of those that need most. And the amount of expenditures has been enormous. Therefore, we are recovering our gross domestic product that we have at the beginning of the Pandemia. There's no question. What is the question is that to recover economic activity doesn't mean that we are going to solve now the unemployment issue that we have now in Chile, because the problem that we have is employment. But then the second problem, not any kind of employment, we would like to have employment, decent employment, employment with higher productivity. And therefore, if we are going to have investment, because investment is coming in energy sectors, in mining, in infrastructure, anywhere, how can we make that investment go in the right direction to create jobs? Economic activity is already there. Therefore, if you don't are able to make a diagnosis that is correct, we can miss the point. And now, for instance, we try to make an example, saying, look, if we're going to make investment in mining, in energy, in infrastructure, in housing, how can we make in such a way? Because the major problem that we will have is with regard to women and young people, can we address to solve those problems of employment for that particular group? And if you are able to do that, then you are going to go straight to where the point is, because you can recover economic activity but still have 1 million children with losing your jobs. And this is the real issue. And that depends what kind of investment, where and what we do. And this, I think is essential. And let me tell you, it's a big difference, one thing or the other. And it's a big difference also in terms of distribution of income and in terms of if you know that women are the most affected what particular jobs are going to be created for those women? And that is very important and impossible to. To do it if you know how you're going to address. In short, I think that from this point of view, it's very important not to miss what is the real issue to raise. Economic activity is granted, the job creation is not granted unless the investment is made taken in account that you wanted to solve the problem with regard to employment. And this, I think, is possible to do it as long as you make the right diagnosis. And I think that many cases, this is the case. And therefore people think that I don't get anything because I'm still unemployed. And this is the real issue. Thank you.
- [70:49]
A
Thank you, Mr. President, for reminding us that there's going to be no sustained improvement in chemistribution unless we have good jobs. And that is a pretty basic idea, but one that gets forgotten very, very often in these debates. Minouche also emphasizes the role of employment, especially women's employment, good jobs and good wages. In her book. I'm looking at the Q and A function here and we certainly have quite a few questions. What I'm going to do is, rather than taking each question separately, given that we have about 20 minutes, I'm going to read three or four out and I'm just going to offer the floor to any one of our speakers who would like to take a crack at those questions. They are on different subjects. Some are country specific, but most of them are not. So here we go. Juan David from Colombia would like to know how it is that we generate the public goods necessary to tackle poverty and inequality without hurting investment and consumption with harmful taxation. So can we have it all, higher taxes and economic growth? Hector Ulloa from the Norwegian Students and Academics Assistance Fund says much of the social unrest in both countries would seem to be linked to unequal access to higher education. Should the governments in the region have a stronger stance against for profit universities? Very hard issue in number of countries, certainly in Chile. Hector Rios from ucl. Question for President Lagos. Is there anything that. The Concertacion, of course, was a center left coalition which the president here was one of the creators of, and I was also a member of that coalition. Is there anything that the Concertacion could have done differently to redefine the social contract so that we could have avoided today's events? Maria Jose from the LSE Development Management Program asks how might upcoming political leaders contribute to the building of this new social contract if right wing leaders bring more unrest? Well, some left wing leaders bring economic instability. Might it not Be that we need a politics of the center. Last but not least, Juan Silva from LSE says that Minouj mentioned that citizens are demanding a more horizontal politics. What kinds of political structures exactly should we build? Make sure that we have these horizontal politics that people seem to be keen on. We have a few more questions, but why don't we start with those floors open to any of our panelists who would like to take a crack at those questions, one or all, Mr. President? Yes, yes, of course. Lagos raised his hand first. So Lagos, I suppose, has the floor, then Minouche and then President Santos. Don Ricardo, all yours.
- [74:16]
B
Take the issue with regard as consultation what kind of rectification with regard to the social contract. And I would say that from my point of view, the way to address stronger that is going to be necessary to have a better taxes for the government in order to certify the emerging public goods. Because when you are talking about what about higher education for those that are arriving finally to the university system, it's true that's essential. But in order to provide good scholarship for those that deserve that, that's a lot of money, it's very expensive. And therefore, if you wanted to address the issue of allowing university entrance for those that would like to do it and have the categories and the elements abilities to do good student at the university level, well, you have to have the means to finance that demand. And I think that this is essential part. And therefore there's no question, because the people is increasing, you need to increase the money that the government has to take to satisfy those new demands. And those new demands are there. In short, what I do think is essential now and to define the social contract for the future is that you are going to have to increase because the country is growing. And if the country is growing, the demands on the government will also be growing. And therefore you need to have the income taxes going to the government being increased, period. Number two, I think as important as the previous one is to be able to discuss very well what is going to be the next demands. And then the question is, how are you going to be able to anticipate what is going to be the next demands? Because normally politics are rather conservative. If you are being in power and being very you think that you are doing very well, nevertheless, how you're going to be able to listen before what are the new demands coming? And this I think is so essential because if you are doing very well, that means that that society is changing very rapidly and therefore you have to change also for the future. Demands of the society that is doing well. How can you explain that for people that have to pay the new taxes, but that's the only way to do it. In other words, if the country is going then taxes are going to be increasing in order to certify the new public goods. That's very elementary. But I think that how you're going to be able to do that, and this I would like to emphasize a little because now we are in the middle of a presidential election, but at the same time we are writing a new constitution. It was supposed to be that the new constitution was going to be written already and the Presidente Pinera term. But the Pandemia make that all the election that has to be made has to be postponed. And now we are in a very difficult situation because you are going to be at the same time writing a new constitution that will start when, since you are going to be a new president during the next couple months. It's difficult, don't you think so? That means that you have to have a new election. You have to wait for four years to introduce the new constitution. My goodness, that's a very good issue. Very difficult issue to tackle. But as soon as we are able to find the ways to a good solution for when we are going to have the new constitution, one that is ready in port implanted in Chile. And this I think is a new element that I think it's necessary to add to the questions. Thank you.
- [78:38]
A
Thank you, Mr. President. Director Shafik, over to you.
- [78:46]
E
I just wonder whether part of the answer to the questions was around thinking more creatively about the role of independent institutions. And for example, can we afford to raise the taxes to pay for the new public services that citizens are demanding without crowding out investment? Well, you know, it depends. I think President Santos said this. You know, these are investments, they'll generate returns. We know globally the average rate of return to investments in education is about 10%. That's a very high rate of return if you do it well. But people don't really believe that it will be done well. And I just wonder what the role is for. For independent verification, transparency around budgets, entities that audit, the way spending occurs to reassure citizens who are paying those taxes that the money is being well spent and to potentially be a way to restore trust in government. I think it's the same about other aspects of the social contract. President Lago talked about the pension reform and how 10% was never going to deliver a decent pension. Or the debate about university tuition, for example. You know, if A society decides we want to have a private pension system, that's fine. If that's the social contract in that society and that's what people want, that's fine. But then we have to be real about what the contribution rates are that are required, what the administrative charges are, how financial sustainability is achieved. And again, can we find independent institutions, institutions that are, that might find a way to inject evidence and realism into citizens debates and also be a trust enhancing mechanism? It's just a thought, but I think that might be part of the answer to many of these questions of how do we mediate a new social contract?
- [80:43]
C
Mr. President, very briefly on the question of taxes and poverty. Well, they're not mutually exclusive. I mean, you need to have much more resources in order to have the capability of making good social policies. And this is something that in Chile and Colombia we need to raise fiscal revenues in order to be able to satisfy the growing demand on public goods. Under the specific question of private universities and public universities, again, they're not mutually exclusive. If you have good public universities, that's great. You have good private universities, that is great. And you have the two, that is even better. And I think the world has been showing this, but I want to make a point here. We have been talking about the two countries and the future and the region for one hour and 20 minutes and we have not mentioned one single time the most challenging problem that we have right now, which is the environment. How are we going to introduce in this new social contract that peace with nature, that new relationship with nature. And this is going to be determinant in all the other policies that in Chile, in Colombia, all, all around the world, we're going to have to make after the pandemic is over. This is a very, very important element which also has to do with something that we have not mentioned here is the crisis of the multilateral system in the world right now. Next week they are meeting in Glasgow. Everybody wants a result. Hopefully there will be a result. But it's going to be a result in very peculiar, difficult circumstances. We don't have global leadership, we don't have strong multilateralism. And we have a problem that is growing every day and that will determine in every country in Chile and in Colombia, many of our other policies. And so there must be a connection of whatever we do with these two aspects, the environment, nature and.
- [83:37]
E
How the.
- [83:37]
C
World is going to be managed. Multilateralism.
- [83:43]
B
What I think what you just mentioned is extremely important and particularly in Chile, when we are talking about the new constitution And I think that in that new constitution there is going to be a whole chapter devoted to that issue simply because it's the issue in today's world. And I think that President Santos is correct. The problem that we have also is our crisis of the multilateral system and needless to say that we in Latin America now are not speaking to each other as we used to speak in the past. And this is a tremendous problem for the region to exist. Unless we are able to speak with one voice, nobody will listen. What would like to say and particularly the issue of climate change? Well, the only thing that is in favor of us is that the paradigm will be changing. The paradigm will say, what is your per capita income? And then the next question, what is your per capita emissions? And I think that that per capita emissions is going to be a drastic how civilize your country? And I think that here, these two issues, at least I think are being relevant in the actual discussion in Chile. I'm rather optimistic from that point of view, not optimistic as President Santos know better than me what is going to be in Glasgow, because apparently the goals for Glasgow are not going to be fulfilled. But that's another story.
- [85:13]
A
So two themes seem to be emerging here. One is clearly the environment is present in all these discussions and we should not forget it. The other one is institutions, whether at the local and national level, as Minouj suggested, or at the global level, as President Santos mentioned. I'm going to read a couple more questions, then I'm going to turn it over to the panelists, beginning with Mauricio. And I will ask everybody to keep the remarks to a couple of minutes so that we can finish reasonably in time, understanding that the Latin American definition of reasonably is an elastic one, but not infinitely elastic. So we do have to bring it to a close reasonably soon. But just to make sure that other voices are heard here, let me see questions that I have not yet read. Yes. Maria Antonia Bravo from the LSE says with elections in Colombia coming up and given how polarized politics in both countries have become, how can elected politicians and candidates. Sorry. Overcome the issues of trust and bridge some of this polarization? Catalina Olguin, also from Colombia, I am guessing, although she, she doesn't say so. She says the problem in Colombia is in order to create a welfare state, you need resources. I'm sure Mauricio would agree with this. How do you convince people to enlarge the tax base? And Catalina, an LSE student, is asking would the adoption of a German political system, I imagine she has in Mind the very peculiar but also very interesting German electoral system. Help with Colombia's and particularly with Chile's polarization. Two more and I will end from the LSC says for President Lagos. What is the biggest change you would expect in Chile as a result of the new constitution? And finally, Juan Paulo Velez would like to hear from both presidents. If you could rewind history, tell me one thing you would do differently in office. Okay, a million questions, but not a million minutes. I'll turn it back to the panel. And let me begin with Mauricio.
- [87:41]
D
I'll try to keep it very brief. The issue of resources is coming up again and again. The issue is not tax rates, as has been mentioned. The issue is tax evasion. We have a serious problem with tax evasion. Recently the Pandora Papers were published. And if you look at the regional distribution of the cases of the Pandora Papers, Latin America gets more than its fair share. So we do have a problem there. We began this conversation by talking about digital technologies and how digital technologies had unsettled the system. Well, digital technologies are going to come to rescue us because we need more digital technologies to deal with tax evasion. Of course, we need political will as well. But digital information is going to be crucial, as was revealed by the Pandora Papers. And digital technologies are going to come also to help us with dealing with one of the, I guess, more fundamental drivers of the lack of trust in the region, which is corruption, a word that has not appeared in this conversation once. Corruption is really at the core of the unrest. And digital technologies can also help us a lot in dealing with this problem of corruption. So I guess my last thought is where we began. But this is going to help us dealing with the problems of the future.
- [89:24]
A
That's a very timely reminder. As a Chilean, I cannot forget that right now, as we speak, two former heads of the uniform police, one former head of the civilian police, and two former heads of the Chilean army are under trial for all kinds of malfeasance. So not surprising that people are not pleased. If I may, I'm going to turn back to Minouche, then to President Santos, and then to President Lagos.
- [89:53]
E
I would just make one point that all the evidence shows and all the research shows, when I was at the imf clearly experienced that people pay taxes if they believe other people are paying their taxes. Compliance is about fairness, of burden sharing. And so until one achieves a system whereby everyone believes everyone else is paying, you get very high compliance if you reach that point. And I think that is the key issue of. So I will just endorse what Maurizio said. That is the onset to building a more effective revenue base. And social contract is to enforce compliance among the rich and powerful and wealthy who are pretty good at evading taxes. And I agree with Maurizio, Digital provides all sorts of opportunities, opportunities and there are all sorts of, you know, land taxes. It's pretty hard to run away with your land, and it's a huge source of inequality and pretty easy to tax, actually. And so, you know, I agree that VAT too, heavy reliance on VAT income and wealth taxes need to be a much bigger part of the story. If you look at, if you look at Chile or Colombia or like, you know, the distribution of their revenues, the obvious thing that pops out is that income and wealth taxes just don't play a big enough role. And that's got to be part of any better social contract.
- [91:20]
A
Very important point. And I would add property taxes generally. If you buy a house in the United States, the first thing you think about is property taxes. You buy a house in Colombia and Chile and that's a third order consideration. Big, big difference. President Santos.
- [91:38]
C
A compliment on what Minutes just said. Not only is it important for people seeing that other people pay taxes in order for them to pay taxes, but also to see the results of those taxes, which has to do a lot with the problem of corruption. But I want to address very shortly and very briefly the issue about polarization. How are both societies, the Chilean and the Colombian society, and the political environment is so polarized? And this is a big problem because polarization, in a way impedes democracies and governments to be more effective. When there is no consultation, no dialogue, and it's either black or white, then the art of governing becomes very difficult. How do you reverse this trend towards more and more polarization? It's like a peace process. You need to start thinking of your political adversary as somebody that you can talk to, you can have a dialogue and you can reach agreement without renouncing to your principles, to your way of thinking. But you must, and we need to establish bridges, dialogues between the extremes of our societies. Otherwise the solution of any problem would be extremely difficult. I will close with a specific example. In Chile, you are having right now a lot of trouble with your indigenous communities because they have been. They believe that they have been neglected for the last 200 years. Something similar we have in Colombia. And you need to create special channels of communication and feel them, for them to feel that they are being taken into account and they have a voice. I thought it was extraordinary that the chair of the assembly was a Mapuche. I said, my God, this is a very good step in the right direction. And we need those type of signals on a daily basis in order to neutralize this polarization. Because we don't do that. It doesn't matter who is elected president. If it's the left or right, they will not be able to govern. Thank you.
- [94:46]
A
Thank you, President Santos, President Lagos. We're four minutes over already, so I'm going to hand it back to you. But please keep in mind the time constraint.
- [94:56]
B
Well, yes, because of the time horizon. I would like to say about the question from the point of view of the. What I would like to see in the political new constitution in Chile. I would like to see some political institution that will make possible for the President and Congress to listen what the Chilean people are thinking about. In other words, if they create political institutions to learn to listen, then I hope that the trust and confidence in the institution will increase. If those in power are able to listen what the people is sending to them as their particular choices, if you have that political institutions, then it's going to be a contribution for the digital age. Because it's the digital age that will allow you to be able to listen what the people would like to tell. Thank you.
- [96:01]
A
Thank you, Mr. President, for that important point. I think that jives quite naturally with Minouche's earlier point that we need to think of how we change institutions so that they would be more open, more legitimate and more transparent. I think everybody on the call will agree that this has been a rich, wonderful discussion, a difficult subject. I cannot say that we have found all the answers, but I would like to think at least we've had a chance to ask the right questions and maybe provide some hints as to where the solutions and future policies ought to be going. On behalf of the lse, on behalf of the School of Public Policy, let me again thank Mauricio Cardenas, to thank President Lagos, President Santos and of course, Baroness Minou Shafik. And I look forward to seeing all of you at a new School of Public Policy LSE event sometime soon. Good afternoon. Good evening, everyone.
- [97:03]
B
Bye bye.