The Economic Impact of the Social Crisis

National Crisis, Emergencies, and Natural Disasters in Chile; including the experiences of Chile Forum Members have shared in current and in past crisis, as they have assisted each other and Chile. Things will always go wrong. It is how you deal with it that counts, and that starts with information. When things go wrong, this is the place to come to exchange information about what is going on in Chile.
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PXYC
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Re: The Economic Impact of the Social Crisis

Post by PXYC » Mon Dec 02, 2019 3:48 pm

fraggle092 wrote:
Mon Dec 02, 2019 2:15 pm
PXYC wrote:
Mon Dec 02, 2019 1:58 pm
I strongly believe that if you have a government that can solve the social crisis, and institutions in which chileans can trust, things will go back to normal
Sorry, do you actually live here?
Yes. I believe the government is to blame for these long extreme irrational/emotional form of protesting, which provides undercover for criminal acts such as looting and burning infrastructure, which is the main cause for the halt on private consumption, which is the trigger for these upcoming economic crisis, which tracing back is therefore circunstancially correlated to vandalism, which tracing back is correlated with valid protests, extreme widespread protests that have lasted for more than a month, which tracing back is correlated with whom? Let me answer again: This present government!!, which, by the way, has the lowest approval rate ever, just proving my point..

Chile still has minerals to export? Yes.
Chile still has low public debt? Yes.
Chile still has sea, agriculture, vineyards, extractive industry? Yes. Yes. Yes.
So cards on the table all things that made progress for Chile are still here if protests tone down.

Can Chile have these social discussions without burning things down all the time? Yes. So why don't they? Because they have an irrational hate against Piñera and this government.

Are other governments also to blame? Yes, but like it or not Bachelet's name is not on people's mouth.

This is my understanding of the situation.

Just look up to Uber story, the guy who created it was a genius but the public hated him. What happened? He was fired! Did uber disappeared?

El Ping
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Re: The Economic Impact of the Social Crisis

Post by El Ping » Mon Dec 02, 2019 4:22 pm

admin wrote:
Mon Dec 02, 2019 6:41 am
El Ping wrote:
Mon Dec 02, 2019 3:41 am
Zenth wrote:
Mon Dec 02, 2019 12:08 am
Consumption taxes hit the ones least able to afford it. A poor or lower economic class person spends 100% or more of their salary, much of it subject to IVA. A wealthy person does not spend their full earnings and in effect hides it from IVA.
As I said some time ago..... stop charging IVA on food... that would be a quick and easy boost for poor peoples living standards.

What does the Chilean tax scale look like?
In Australia the minimum wage -- which allows a family to live in 'frugal comfort' ... is about $A740 a week or about $A40,000 a year

The tax scale is .....
Income thresholds Rate Tax payable on this income
$0 – $18,200 0% Nil
$18,201 – $37,000 19% 19c for each $1 over $18,200
$37,001 – $90,000 32.5% $3,572 plus 32.5% of amounts over $37,000
$90,001 – $180,000 37% $20,797 plus 37% of amounts over $90,000
$180,000 and over 45% $54,096 plus 45% of amounts over $180,000

How does that compare ?

GST/IVA is 10%

The economies look much the same.... minerals and agriculture....
That all needs to be converted to dollars. IVA is not income tax.
No, it needs to be converted into Pesos....
Its already in dollars ...Australian dollars.
To convert ...divide by 2 and add three zeros ( thats at a nominal $1/$500 rate...)

Giving the minimum Oz wage lets you compare with rates in Chile.
For a better idea this may help https://www.news.com.au/finance/work/ho ... 270c7aab87
As you can see median income is about double the basic wage... $1200 a week... 600,000 pesos... on which income tax of about 60,000 is paid ... 10% of income.

Using this scale the state manages to provide a means tested pension of half the basic wage for a single person, decent universal health care, good state primary and secondary education, and all the other stuff...

I think the majority of us understand the difference between IVA and income tax.... IVA/GST in Australia was introduced to simplify the sales tax system where different items attracted different rates... and it was easily avoided.

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Re: The Economic Impact of the Social Crisis

Post by gregf » Mon Dec 02, 2019 5:27 pm

https://www.emol.com/noticias/Economia/ ... risis.html

85% increase firings for “business needs” in november. Ouch.

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41southchile
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Re: The Economic Impact of the Social Crisis

Post by 41southchile » Mon Dec 02, 2019 5:32 pm

gregf wrote:
Mon Dec 02, 2019 5:27 pm
https://www.emol.com/noticias/Economia/ ... risis.html

85% increase firings for “business needs” in november. Ouch.
50000 received their final end of month pay packet today or Friday, apparently. Huge amounts of layoffs across the Salmon and fishing industry according to other sources. Services, hotels, restaurants, retail, tourism all taking big hits , the only slight lift was constitution just heard on the radio.
Ignorance more frequently begets confidence than does knowledge: it is those who know little, not those who know much, who so positively assert that this or that problem will never be solved by science. - Darwin

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41southchile
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Re: The Economic Impact of the Social Crisis

Post by 41southchile » Mon Dec 02, 2019 5:46 pm

El Ping wrote:
Mon Dec 02, 2019 4:22 pm
admin wrote:
Mon Dec 02, 2019 6:41 am
El Ping wrote:
Mon Dec 02, 2019 3:41 am
Zenth wrote:
Mon Dec 02, 2019 12:08 am
Consumption taxes hit the ones least able to afford it. A poor or lower economic class person spends 100% or more of their salary, much of it subject to IVA. A wealthy person does not spend their full earnings and in effect hides it from IVA.
As I said some time ago..... stop charging IVA on food... that would be a quick and easy boost for poor peoples living standards.

What does the Chilean tax scale look like?
In Australia the minimum wage -- which allows a family to live in 'frugal comfort' ... is about $A740 a week or about $A40,000 a year

The tax scale is .....
Income thresholds Rate Tax payable on this income
$0 – $18,200 0% Nil
$18,201 – $37,000 19% 19c for each $1 over $18,200
$37,001 – $90,000 32.5% $3,572 plus 32.5% of amounts over $37,000
$90,001 – $180,000 37% $20,797 plus 37% of amounts over $90,000
$180,000 and over 45% $54,096 plus 45% of amounts over $180,000

How does that compare ?

GST/IVA is 10%

The economies look much the same.... minerals and agriculture....
That all needs to be converted to dollars. IVA is not income tax.
No, it needs to be converted into Pesos....
Its already in dollars ...Australian dollars.
To convert ...divide by 2 and add three zeros ( thats at a nominal $1/$500 rate...)

Giving the minimum Oz wage lets you compare with rates in Chile.
For a better idea this may help https://www.news.com.au/finance/work/ho ... 270c7aab87
As you can see median income is about double the basic wage... $1200 a week... 600,000 pesos... on which income tax of about 60,000 is paid ... 10% of income.

Using this scale the state manages to provide a means tested pension of half the basic wage for a single person, decent universal health care, good state primary and secondary education, and all the other stuff...

I think the majority of us understand the difference between IVA and income tax.... IVA/GST in Australia was introduced to simplify the sales tax system where different items attracted different rates... and it was easily avoided.
Just for starters off the top of my head if we want to compare Oz and Chile

Australia,
A country with :
-A professional bureaucracy whereby staff are there due to their qualifications and experience, not through nepotism.
-A strong work ethic, honest days work for an honest days pay
-A history of innovation and productivity and an economic expansion that has lasted 25 years
-A Generally egalitarian society with one of the highest rates of citizens not born in their home country (Australia,) 27 percent apparantly, and a sensible immigration policy creating a dynamic cosmopolitan country .
-Proximity to Asian markets and capital
-English speaking and strategic allies with US, UK etc.
- absence of a relatively recent divisive military coup that created social divisions and animosity between the classes.
-Not many communist or socialist politicians in their parliament.

Chile:
None of the above.

Similarities, they both have minerals in the ground..... but then so does Congo and Bougainville

Maybe that's why the rumors are Piñera has sent his kids to Australia.
Australia the lucky country, Chile 🤔, not sure what their slogan is.
Ignorance more frequently begets confidence than does knowledge: it is those who know little, not those who know much, who so positively assert that this or that problem will never be solved by science. - Darwin

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Re: The Economic Impact of the Social Crisis

Post by admin » Mon Dec 02, 2019 6:57 pm

gregf wrote:
Mon Dec 02, 2019 5:27 pm
https://www.emol.com/noticias/Economia/ ... risis.html

85% increase firings for “business needs” in november. Ouch.
yep, we seen that one coming.

We already got more than a few labor law and contract termination cases fairly early last month from gringos that got shafted by various companies.

Sure that will pick-up in the next 30 days.

The business rule right now is fire first, and ask questions later. Probably does not help that congress is talking about jacking up wages, and reducing work hours. When you fire someone, there is a compensation related to the length of time they have worked for you involved. Bet some are figuring if that is going to happen, best to start fresh with lower wage workers.
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Re: The Economic Impact of the Social Crisis

Post by admin » Mon Dec 02, 2019 7:07 pm

Those stats are interesting. Seems people are trying harder to keep their job. Less firing for cause.

Interesting was the almost double jump in workers for "death". Like 95 in 2018, and 190 in 2019.
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Re: The Economic Impact of the Social Crisis

Post by eeuunikkeiexpat » Mon Dec 02, 2019 7:13 pm

I wonder how having any antecedentes during one's university years of public disturbance or vandalism or looting or assault will affect that one's future job prospects.
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Re: The Economic Impact of the Social Crisis

Post by mem » Mon Dec 02, 2019 9:43 pm

PXYC wrote:
Mon Dec 02, 2019 3:48 pm
fraggle092 wrote:
Mon Dec 02, 2019 2:15 pm
PXYC wrote:
Mon Dec 02, 2019 1:58 pm
I strongly believe that if you have a government that can solve the social crisis, and institutions in which chileans can trust, things will go back to normal
Sorry, do you actually live here?
Yes. I believe the government is to blame for these long extreme irrational/emotional form of protesting, which provides undercover for criminal acts such as looting and burning infrastructure, which is the main cause for the halt on private consumption, which is the trigger for these upcoming economic crisis, which tracing back is therefore circunstancially correlated to vandalism, which tracing back is correlated with valid protests, extreme widespread protests that have lasted for more than a month, which tracing back is correlated with whom? Let me answer again: This present government!!, which, by the way, has the lowest approval rate ever, just proving my point..
I disagree about your point. To me the fork in the road began at looting and burning. That fork was the actual physical and monetary economic destruction road. That is where I lay the blame with those people.

They are not justified. No matter how raw of a deal they had. They chose a not only evil but utterly stupid reaction in that it hurts them and everyone else

We could have had 3 million people truly peacefully protesting for 6 weekends in santiago as well as hundreds of thousands in other cities...truly peacefully protesting...zero looting, burning, rock throwing. Noone starting anything criminal

And not only would we not be seeing the economy and social strata crumbling but they would have been far more effective and been setting an example to other countries. Chile reputation would be benefiting internationally

That is the lawful reaction in any civilized democratic nation.

PXYC
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Re: The Economic Impact of the Social Crisis

Post by PXYC » Mon Dec 02, 2019 10:05 pm

mem wrote:
Mon Dec 02, 2019 9:43 pm
PXYC wrote:
Mon Dec 02, 2019 3:48 pm
fraggle092 wrote:
Mon Dec 02, 2019 2:15 pm
PXYC wrote:
Mon Dec 02, 2019 1:58 pm
I strongly believe that if you have a government that can solve the social crisis, and institutions in which chileans can trust, things will go back to normal
Sorry, do you actually live here?
Yes. I believe the government is to blame for these long extreme irrational/emotional form of protesting, which provides undercover for criminal acts such as looting and burning infrastructure, which is the main cause for the halt on private consumption, which is the trigger for these upcoming economic crisis, which tracing back is therefore circunstancially correlated to vandalism, which tracing back is correlated with valid protests, extreme widespread protests that have lasted for more than a month, which tracing back is correlated with whom? Let me answer again: This present government!!, which, by the way, has the lowest approval rate ever, just proving my point..
I disagree about your point. To me the fork in the road began at looting and burning. That fork was the actual physical and monetary economic destruction road. That is where I lay the blame with those people.

They are not justified. No matter how raw of a deal they had. They chose a not only evil but utterly stupid reaction in that it hurts them and everyone else

We could have had 3 million people truly peacefully protesting for 6 weekends in santiago as well as hundreds of thousands in other cities...truly peacefully protesting...zero looting, burning, rock throwing. Noone starting anything criminal

And not only would we not be seeing the economy and social strata crumbling but they would have been far more effective and been setting an example to other countries. Chile reputation would be benefiting internationally

That is the lawful reaction in any civilized democratic nation.
I agree that the looting and burning is not justified, absolutly not, I kind of disassociated with my leftist chilean friends that tried to justified them, and with protests all together, I don't like seeing my street burning altough me myself and i am left inclined most of the times.
But my point is what caused all that rage. For me it's not only narcos, the government mishandled all this and some interventions instigated the violence.

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Re: The Economic Impact of the Social Crisis

Post by 41southchile » Mon Dec 02, 2019 10:30 pm

Govt going to spend 5.5 billion USD in trying to reactivate the economy Including half a billion or so in fixing the metro .
As an extra bonus the government is promising to pay their Bills on time to small businesses.

I love a good throw around of money as much as the next guy, but there are several questions raised from all this extra spending, and all the new commitments in social spending that are on the way. Perhaps someone with more knowledge might be able to give some insight.

I guess a few main ones are.
Where is the money coming from ?
What happens if copper stays low for the next few years?
As the economy slows right down wont revenue decline with a loss of taxes paid to the government?
What sort of oversights will there be on this splash around of cash?

I understand there is money available , and there are not many options at this stage, but this is clearly kicking the can down the road and will not solve any of the structural or productivity problems of the Chilean economy that have been well outlined by members previously .

Guess that's not an issue this current lot have to deal with, as they will be well gone once the almighty hangover kicks in from all the extra spending and borrowing, and once populist politicians start to promise and spend more and more its game over, yes Chile is well and truly where they belong in Sth America .

En paralelo, se anunció que el Estado comenzará a pagar más rápido a sus proveedores, quienes son principalmente pymes

https://www.biobiochile.cl/noticias/eco ... mica.shtml
Ignorance more frequently begets confidence than does knowledge: it is those who know little, not those who know much, who so positively assert that this or that problem will never be solved by science. - Darwin

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Re: The Economic Impact of the Social Crisis

Post by admin » Tue Dec 03, 2019 7:17 am

looks like the deficit spending is around 9 billion dollars vs. 5.5 over the 2019 numbers. 7 billion will be in foreign bonds (chile has been issuing in euros recently). think i got those numbers straight.

what is not clear if this is inclusive of the allready announced, prior to the riots, 4.5 billion dollar stimulus package that was in the works. most of that was for low income housing, and had already been awarded. did they simply retask that money, or add to it?

https://www.biobiochile.cl/noticias/eco ... mica.shtml

I don't think that is going to break the bank. what will break the bank is not getting the economy growing again. In fact, they are probably going to need to spend more. they say that will create 100,000 jobs, but we need something north of 400,000 to break even after the damage.

there was a quote from scotia bank along the lines of, 2 years of growth disappeared in two weeks.
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