The economy is also Politics (with a capital P).
President Kast’s Government seems to have done everything the manuals of economic orthodoxy say should be done to reactivate the economy. It pushed through a mega-reform that gradually lowers the corporate income tax rate from 27% to 23%, reintegrated the tax system, eliminated property taxes on the primary residence for those over 65, and established incentives for donations and the repatriation of capital.
However, something is not working. Citizens have confidence neither in the present nor in the future.
Unemployment reached 9.5%, its highest level since 2021. In six of the first seven months of 2026, the IMACEC recorded negative year-on-year changes, and between January and July economic activity accumulated a decline of 0.4%. Estimates already put the country’s growth for this year below 1%.
So an uncomfortable question arises: if the Government is doing precisely what, according to its economists, should stimulate investment and employment, why is the economy weakening and unemployment rising?
Because the economy does not function solely through taxes, interest rates, incentives, and Excel spreadsheets. It also functions, and to a great extent, through expectations and confidence.
Keynes understood this almost a century ago when he spoke of animal spirits. When a businessperson decides to invest, they do not know the future. They can calculate costs, interest rates, taxes, and expected returns, but ultimately they must make a decision about something that does not yet exist. They invest when they trust that tomorrow will be better than today.
That is precisely the point technocrats seem to forget: expectations about the future are an economic variable.
And those expectations are not built solely from the Ministry of Finance. They are built by observing politics, the ability to govern, the agreements that are reached, the stability of the rules, and the possibility of reasonably anticipating where the country is headed.
President Kast’s government passed tax reform by one or two votes and celebrated the result. But governing does not consist solely of counting votes. It consists of building political and social majorities capable of projecting themselves over time.
The constitutional reform on security promoted by the Government, which has provoked opposition rejection and doubts within the governing coalition itself, sends exactly the opposite signal: uncertainty regarding future rules and the ability to build lasting agreements.
And those who make business decisions observe all of this. Especially small and medium-sized businesses and entrepreneurs, where a fundamental share of private employment is concentrated.
It is not enough to convince ten large business groups. It is necessary to get thousands of small and medium-sized business owners to believe that in the near future they will have customers, reasonably stable rules, and a governable country.
No president can order those decisions from La Moneda. Every businessperson must answer a very simple question: do I trust what is coming enough to risk my money today?
And the majority answer today is no, even among many who may have ideological affinity with the Government. Otherwise it is difficult to explain why the economy continues to weaken and unemployment to rise.
One of the strengths of the thirty years of the Concertación was that Chile offered reasonable political predictability. Government and opposition disagreed deeply, but there was a state perspective, an ability to build agreements, and institutional continuity.
That period was not successful solely because there were good economists at the Ministry of Finance or excellent technicians at the Central Bank. There were political leaders capable of leading, negotiating, yielding, and rallying the country around common purposes. They generated expectations of stability and a future. Stability generated confidence; confidence, investment; and investment, growth and employment.
That is the difference between administering and governing.
Technocrats can design excellent economic instruments, but they cannot replace Politics. You can cut the corporate tax rate by four points, offer tax invariability, and facilitate the repatriation of capital. But no law can force a businessperson to invest or an entrepreneur to hire.
To invest, you have to believe in the future.
And confidence in the future cannot be decreed or included as an article in a tax reform. You build it by doing good Politics.