Unforeseen Consequences of Chile's "Megareform"

Chile's recently approved "megareform," due to its rapid passage and broad scope, is likely to trigger unintended consequences, a concept first systematized by Robert Merton in 1936. Merton identified five reasons for such policy failures: ignorance of complex effects, superficial evaluation of past successes in different contexts, short-term political urgency overriding future costs, ideological blind spots, and self-defeating predictions due to behavioral changes. The reform's measures, intended to achieve specific goals, may paradoxically lead to opposite outcomes.

For instance, state compensation for annulled environmental permits, designed to protect investments, could make the executive branch more conservative in approving new projects to avoid payouts. This might paradoxically slow down project approvals and increase judicialization. The tax invariability clause, meant to provide certainty, could be challenged by future governments facing fiscal pressures, potentially leading to tax increases and legal disputes over what constitutes a tax change. Exempting seniors from property contributions, intended to protect them, might disincentivize residential mobility and reduce housing supply as people engage in estate planning to exploit the exemption. Furthermore, the tax cut on donations could create loopholes, and regular capital repatriation incentives might encourage rational taxpayers to expect future amnesties, ultimately reducing permanent tax revenue.

The article suggests that a quality parliamentary debate, encompassing substance, form, and adequate time, is the antidote to these potential policy failures. However, the "megareform" has reportedly lacked such thorough deliberation, with parts being approved by transactional majorities and with less debate time than previous reforms. Building broad consensus, the author argues, is the best guarantee for stability and for identifying and minimizing unintended consequences.