Failure to adjust economic policy in Latin America has typically taken some form of appeasement, either to populist demands for government subsidies of industry elites or wage masses, accompanied by authoritarian political controls--and often leading to collapse of the regime altogether by military or other coup and no economic remedy at all. This was the case in Argentina at one end of the political spectrum and Chile at the other end.
Webster (1991) describes the details of the problem in Chile, where after the murder of Allende in 1973 there was much enthusiasm for privatization but insufficient political will. The example of the parastatist mining firm CAP, denationalized by Pinochet's junta, is used. One aspect was that certain entrenched elites did not want to relinquish whatever controls they had enjoyed while basic and strategic industries had been nationalized. Another was that the regime faced pressure for social reforms. Meanwhile, day-to-day management appears to have suffered because of uncertain market forces, regime instability, and the exclusion of masses from equity participation on one hand, or equitable labor settlements on the other. Only in the early 1980s, when CAP's management responded to labor demands for improving working and also allowed workers to purchase shares either through a dedicated retirement share-purchase plan or from the pool of outstanding shares did the company's financial picture begin to improve (Webster, 1991, pp. 12-13; 23). It was an example of diffusion of elite financial power in the form of worker appeasement, but
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