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Making Decent Money Teaching English to Chinese While in Chile

One problem facing non-retired newcomers to Chile is finding a way to earn money in their new environment, especially when they do not yet speak Spanish. However, one thing that native English speakers can do is teach English to Chinese (ages 4 to 60) via video chat or Skype. If you happened to have homeschooled your kids then this job will be particularly easy. Apparently, a college degree is required and some experience teaching children (but homeschooling counts!). That might knock out a few prospects, but there are ways to improvise. Maybe one could sell them on a junior college degree and teaching piano lessons or heading up a boy scout troop can be used as proxies.

There is no prep time and no commuting time; nothing to grade and no department meetings to attend. You work from home and get paid via PayPal. Plus, many advanced Chinese students, which have faced censorship throughout their lifetimes, will gleefully pay you to “free talk” with them about pro-liberty and anti-communist / anti-state books like <i>Animal Farm</i>. The company strongly prefers American and Canadian native speakers, but (from what I understand) British, Australian, South African and Kiwi applicants are not excluded, even though it will be harder for them to land the job. They also do not mind if an employee lives in Chile or any other ex-pat destination. As of October 2017, the company had 6,000 teachers, just over one-half of them filipinos, 1,900 Americans or Canadians, and 1,000 other native speakers.

Resultado de imagen para logo 51talk

The NYSE-listed company is legitimate and I have confirmed that monthly, tax-free fee payments are made to English teachers. If you can get in as a one-on-one instructor, you will start at USD $15 per hour and if you work hard at it you will be raised to USD $20 per hour in just a few months. Eventually you will top out at USD $22 per hour. However, the demand for 4-child group glasses is so high now that they are requiring new hires to go in as group teachers right off the bat at USD $18 per 45-minute class. With some hires, it is not clear that they will ever teach individuals, and thus may not be able to get raises for a longer period. It may be something to negotiate. The company provides all the online teaching materials.

It is decent money for a stay-at-home-job. After one qualifies as a group teacher and starts working, he can then branch off and do extra individual classes. In April 2017, the company had 1,400 teachers. By October 2017, there were 1,900 teachers just from North America , not counting the thousand from other English-speaking countries or the Philippines. The demand for teachers is huge among Chinese parents and adult learners, especially if for Americans or Canadians with experience. Most teachers are women and women are in greater demand than men among the Chinese, but both genders get hired.

You can work as little as 15 hours per week (nine 45-minute small group classes) or full time+ and get to select the hours and times that you work. Actually, For one-on-one teachers, the minimum requirement is that one make himself available “at least 30 hours during peak for a period of 15 days,” which translates to 15 hours per week. Peak periods are 6am to 10am (New York time/EDT), plus 10pm to 6am on Friday and Saturday nights and working all night. Making oneself available does not mean that you will necessarily be teaching or earning money. You probably will (there is a seemingly unlimited supply of Chinese learners), but the requirement is that you be in front of your computer ready to go, while you do whatever other computer work you wish, or perhaps working as a part time proofreader (search for such jobs online or go to www.flexjobs.com). If you distinguish yourself, you might be asked to teach small groups or do training assignments long term, generally working full time, at a rate of pay up to USD $26.40 per hour or more for group classes, which also pay bonuses monthly, quarterly and semi-annually.

While the job is hardly high-paying, the money goes a long way in Chile or other Latin American countries (or places like rural Italy!). One can live (or travel) anywhere with a internet connection of at least 2 mbps download, 2 mbps upload. You need to have a camera, microphone and earphones. If you are interested, please follow this signup link for 51Talk. Make sure you fill out the form completely or you will not be interviewed right away.

Who knows? You might even make some business contacts in China that lead to enriching opportunities to import goods to Chile and export Chilean natural resources to China. What have you got to lose by trying? It is like getting a backup job that you can bring to a boil during times of slow regular employment, and let simmer as a weekend/evening hobby when normal work is going well. It is also an ideal part time job for a housewife and stay-at-home mom who wants to augment family income a bit.

After trying this for a while myself, I am ready to recommend that all non-wealthy newcomers to Chile join 51Talk (or something else similar) prior to coming to Chile. They should work from their home country on the weekend or evenings as a “hobby,” and do enough work to attain the $18 or $20 per hour level (which happens after 100 hours or 325 hours of one-on-one work are successfully completed). Then, whenever they need it, they can turn it on as a full time income source, starting at USD $18-$20, when they get to Chile. It makes a lot of sense. No visa needed. No taxes. Get paid via the ATM.

Again, whenever you do not need it, you can cut back to the minimum availability of 15 hours per week. It is like having an asset in your pocket to be used at any time. That has to be worth something to many newcomers. In fact, it might make the difference between choosing to come or not. Best of all. you can make sure you like it by doing it for a few months in the home country.

P.S. There are hundreds of online ESL teaching companies, especially aimed at China, South Korea and Japan. For instance, this site lists online ESL companies all over the world. Apparently, 51talk is quite competitive. However, this is one standout worth checking on, FastSchool, which apparently pays much more ($40 or $125 per hour). If that rate were true, then more serious money can be made. However, my attempts to get meaningful communication out of them has so far been fruitless. They may not be a serious organization. For teaching Chinese children, 51Talk’s main competitor seems to be VipKid. That company apparently pays more than 51Talk but is harder to get on with. You might try them as well if interested.

P.P.S. For the 51Talk phone interview: The people that interview you do not speak perfect English. They will ask about what your teaching experience is, especially with kids. Mention homeschooling and teaching at church, scouts, whatever. Make it sound to them like you know how to teach. They will never check out anything you have said. Tell them you have a college diploma and that you are a native speaker from America/Canada (or wherever). I am not sure that dress is that important so long as you are business casual or better. Age not an issue, as far as I know. Get your Internet upload speed to at least 2mbps, then take a screenshot of speedtest.net to send them. Upgrade your internet after you get the job if necessary. You will need a résumé of sorts, as I recall. Tell them what they want to hear. How the money works: A student told me that she pays US$13.40 per half-hour (25-minute) class with Americans/Canadians, or 90 RMB Yuan. Teachers get paid as low as $7.50 to start and rise over time to as much as $11 for that same half hour, which is 82% of the class fee. By the way, she wanted to know if it was just for a capitalist to earn that increment and I told her it was. The business owner has to have (in volume) a return on his capital after paying teachers and support personnel and computational setup/expenses. The question came up while she was reading the summary of Marxist ideology in chapter one of <i>Animal Farm</i> with me, particularly old Major (Marx/Lenin’s) speech abut how people are miserable since businessmen allegedly rob them of their true due. Anyway, that is how the money part works. You need not tell the interviewer that you have this information.

P.P.P.S. I suggest that you get a TESOL or TEFL certificate of at least 120 hours of training. It is not required but will help you get the job if you have one. The TESOL is not hard to get and might help for this job or in the future. As of the time of writing, Groupon was offering the course at a 98% discount: only US$9. Click this link to purchase and then get it done. If you have any background in this stuff at all, 120 hours can be done in under 10, if not under 5. 51Talk and other places recommend (or even require) either this TESOL certificate or the TEFL, so it would seem like a good use of time to get it, especially at a 98% discount.

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country.

Dr. Cobin’s updated and enlarged 2017 book, Life in Chile: A Former American’s Guide for Newcomers, Fourth Edition, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $129.

For a brief introduction consider Dr. Cobin’s abridged book (56 pages): Chile: A Primer for Expats ($19), offering highlights (somewat outdated) found in the larger book. Buy Dr. Cobin’s Public Policy books at Amazon.com:

Christian Theology of Public Policy: Highlighting the American Experience (2006)

Bible and Government: Public Policy from a Christian Perspective (2003)

A Primer on Modern Themes in Free Market Economics and Policy (2009)

Note on the First World Status of Chile

Is Chile a First World country? During the Cold War Era, the term “First World” referred to the USA, Canada, Australia, New Zealand and Western Europe, which were industrialized and had a large and growing middle class. The “Second World” referred to communist countries, especially in Eastern Europe, but by extension also in Asia, and even Cuba, perhaps. The “Third World” was basically everywhere else, mostly poor and/or oppressive countries run by a few wealthy families in Africa, southern Asia, Latin America and most Pacific and Caribbean island nations.

Note that in the compounds where the rich live within the Third World, the environment may look like the First World for a few blocks or even several square kilometers. Such is the case in cities within countries like India, Brazil, South Africa, Bolivia, Peru, Panama, Malasia and Thailand. Nevertheless, the limited existence of a high standard of living for those fortunate 1% or 2% of the population does not elevate the country out of its Third World status.

Since the end of the Cold War, the world’s political landscape has changed, and such terminology has fallen out of favor. But I still like using it. Hence, in my writings, I have chosen to hijack the term Second World and redefine it as something in between First World and Third World. The concept was accordingly morphed to refer to those countries that have a lot of urban blight and old or ugly buildings and infrastructure, but also have a significant and growing middle class with some disposable income. As a result, in countries meeting those criteria, there is very little hunger, nearly everyone has shoes, as well as access to technology (e.g., cell phone), education and basic medical services.

An online search for the term First World reveals that the word technically means, “the highly developed industrialized nations often considered the westernized countries of the world.” Beyond this definition, however, Wikipedia actually has a pretty good, embellished meaning that better relates to the modern-day scenario: “the definition has instead largely shifted to any country with little political risk and a well functioning democracy, rule of law, capitalist economy, economic stability and high standard of living. Various ways in which modern First World countries are often determined include GDP, GNP, literacy rates and the Human Development Index.” Obviously, this definition precludes the inclusion of countries like Cuba, China, North Korea, Vietnam, Belarus, etc. However, it also allows for the inclusion of countries like Chile, Israel, South Korea, Singapore, United Arab Emirates, all of which have large and growing middle classes, and possibly even opens the door to soon let in places like New Caledonia, Mauritius, Bahamas, Namibia, Turkey, Mexico and South Africa.

Building on that paradigm, in my book, Life in Chile: A Former American’s Guide for Newcomers, I argue that Chile is (by many standards) a First World country, especially in its central part, which includes Santiago and Viña del Mar-Concón. That rationale does not mean that Chile offers the same standard of living as Japan, Hong Kong, Western Europe, Canada, Australia or the United States. However, Chile does share some common features with them, a fact that is reflected by Chile being the only Latin American country to have qualified for the USA’s “visa-waiver program” and that it is no longer eligible for World Bank or IMF aid (like its neighbors). Chile’s standard of living and quality of life continues to rise, too, along with its amenities and infrastructure quality. Indeed, Chile has great, private inter-urban highways and the strongest, most earthquake-resistant, buildings in the world. Both things are hearty pluses for the country.

The case for Chile’s “first-worldliness” is underscored by its inclusion among the ranks of the formidable 35 OECD countries of the world. The OECD website states,

Today, our 35 Member countries span the globe, from North and South America to Europe and Asia-Pacific. They include many of the world’s most advanced countries but also emerging countries like Mexico, Chile and Turkey.

Excluding small island countries and minor, rich, enclave countries in Europe (e.g., Monaco, San Marino, Andorra), the OECD list basically includes the wealthiest 20% of all countries in the world, in terms of economic, political, social and legal development. Not surprisingly, Chile is ranked 30th in terms of GDP, and enjoys the company of Slovenia, Slovakia, Czech Republic, Portugal, Greece and Estonia just ahead of it, and Poland, Hungary, Turkey and Mexico just behind it. All of those countries, excepting perhaps the last two, are widely considered to be First World countries. Why then should Chile not be?

Chile is certainly not the Third World but, admittedly, most of it would certainly fall into the Second World category if it were carved up. Nevertheless, judging from my travels to OECD and other countries, Northeastern Santiago, Viña del Mar-Concón, Pucón, Zapallar and Puerto Varas would all qualify as First World areas of Chile, with parts of the Concepción and La Serena metro areas making a run for it. That means that the majority of Chileans live in or next to First World environs. By extension, I think it is not unreasonable to place Chile marginally into the First World category.

Stating this fact does not mean that Chile’s standard of living is like that found in countries with much higher GDPs, like the United States, France, Norway, Switzerland, Japan, etc. All First World countries are not equal. One need only to compare most of Italy, Greece and Portugal with the Netherlands, Sweden, Switzerland and Austria to see that reality born out. The same is true with the United States, Australia and Canada, which have vast internal, socio-economic differences: bustling and beautiful major city centers surrounded by pockets of degraded neighborhoods or slums, and many shanties, mobile home parks or rural areas that can only honestly qualify as Second World sectors within First World boundaries.

Not all Americans, for instance, live in Manhattan, Michigan Avenue (Chicago), Boca Raton, Santa Barbara or Beverly Hills and make six- or seven-figure incomes. The great majority of Americans live in small towns, rust-belt, run-down inner-city slums (e.g., Watts, south Chicago, Detroit) and rural areas, mostly in the South or Southwest, where many earn less than a couple thousand dollars per month. American poverty is common and often abysmal in the aforementioned places. Over 20% of Americans receive welfare, not counting Social Security recipients.

The same thing happens in Italy, where large earners live in Turin, Milan and Rome, but myriad small towns and rural areas are chock full of families squeaking by on under 1,500 Euros per month. Such widespread income disparities or pockets of poverty do not disqualify America or Italy from being considered First World countries. The average or per capita measure is used to rank them. The same logic applies to Chile.

Chile is First World, but situated in a lower rung of the group. That fact is not in dispute. Accordingly, newcomers will have to make some adjustments. One newcomer recently remarked to me, “Bottom line–we will have to adjust to the lower standard of living or leave. That’s all there is to it.” Actually, he will learn over time that the upper middle class in Chile actually lives at a higher standard of living in Chile than in the USA or Europe. Here people from that class can afford household servants, private schools for their kids, better-quality vehicles, beach/lakeside second homes, country club memberships and specialized medical care that can only be afforded by the upper class up yonder.

Newcomers simply need to be patient and learn to break into this rung. They cannot see soon after arrival what the benefits will be, but they should ask themselves: “Why is it that the upper classes here do not try to live in North America or Western Europe, even when a great number of them hold American, Canadian and especially EU passports from Italy, Germany, Sweden or Spain, as well as their Chilean ones? It is at least in part because their standard of living and quality of life is higher in Chile than it would otherwise be up yonder. They have goods and services here that they could not dream of up there. That is why so many expats that come to Chile under contract with mining or agricultural firms try to stay on in country after their contract ends.

Anyone who claims that comunas like Las Condes, Vitacura and Reñaca-Concon are not First World has obviously not traveled much, even to non-glamorous parts of the USA or Europe. As an OECD country, Chile is classified among the world’s wealthiest nations, and noticeably more so every year. I see it more now compared to when I first arrived in 1996. If Chile continues to grow the same for the next two decades, it will surpass many other countries on the OECD list. Still, the USA is presently a richer country than Chile; no one is denying that fact. But how many wars, central bank disasters, EMPs, nukes, plagues, etc. is the USA away from facing more widespread poverty? Chile is mercifully free from those threats.

Indeed, Chile has already exceeded most other OECD countries in some things. It has far better internet connection infrastructure than any other country I have been to, including the USA, Spain, Germany, New Zealand and Italy. After ousting the communists in 1973, Chile installed fiber optics everywhere. Other countries are still catching up. Chile also has, hands down, the best and strongest buildings in the world. Indeed, building quality (excluding the finish work) is much better in Chile than in the USA, New Zealand, Australia, Japan, South Korea, Canada and Western Europe. Neither of those credentials are unimportant. In addition, Chile has some of the most modern mining and port facilities in the world. The only place in the Western Hemisphere with superior medical care to the top Santiago “clinics” are the top places in the USA and maybe the Einstein system in Sao Paulo. The same may be said of some spots in the UK and Germany, and perhaps France and Japan, too. That fact is huge. One never knows when he will need good medical care.

Cell phone service in Chile is as good as in Europe and better than in the USA. It is top-notch in Chile. The intercity highways are on par with the richest OECD countries, too. People rightly complain about the poor quality of city streets in Viña del Mar, and rightly so, but their condition does not make Chile less than First World. Bigger First World cities like Naples, Italy have roads that are at least as bad. Supermarkets and super centers or malls are at least as modern in Santiago and Viña del Mar as I have seen in the USA and Western Europe. Santiago has a modern, fast and convenient international airport. These are just a few important indicators. If I were to spend a few hours pondering, I could come up with other things. Chile also copies some of the best things found in other OECD countries, such as magnetic, inclined moving walkways that grab onto the shopping cart’s wheels, and a system of red/green lights over parking lot stalls in larger garages that let drivers know if there are open stalls available in any given row.

Some newcomers complain about air conditioning and heating systems. While air conditioning is largely unnecessary in almost any part of Chile, with the possible exception of west-facing apartments in Santiago, heating is needed in most places. Most modern buildings have central heating but some do not, since locals prefer to use cheaper floor heater units instead. Nonetheless, even in this preference, Chile is not different than many other OECD countries.I have lived in Chile the better part of 22 years and have never needed or wanted air conditioning in either northeastern Santiago or Viña del Mar. Ditto for ceiling fans. If either were needed, Chileans could easily import them.

The Santiago summer heat is possible to beat by just opening the windows in the morning and closing them in the afternoon. (The maids are used to coordinating this effort.) The only apartments that one will see with air conditioning units are directly west-facing ones, which always sell for less on account of this feature. Some apartments are designed without central heating since it is expensive and many people prefer to save the additional cost for central heating and simply bring their own US$250 Toyotomi (Japanese, kerosene) or other portable heater. However, that fact does not mean that apartments in Santiago are without heat. doing without heat is a choice people make. Indeed, I have central heat where I live in Viña del Mar. So, one can get it.

A newcomer once complained, “Outside of Northeast Santiago  there are shanty towns everywhere. Toilets don’t work right (don’t flush the paper). There is no toilet paper in public bathrooms, every house has to have its own dungeon-like security setup. There are homeless dogs everywhere. That’s my definition of Second World.” While some of these aspects admittedly discredit claims to Chile’s first-worldliness, they generally do not. Remember that relatively few OECD countries a perfect in every category of modernity, anti-theft measures, infrastructure, wealth and overall prosperity. Protective gates and fences, for instance, are also commonplace in First World Europe.

He also complained about oppressive relative costs for tolls, energy and other items, generated by taxes or monopolies in Chile. That idea is certainly true when it comes to gasoline and certain regulated monopolies, including notaries, real property recorders, along with electricity, water and natural gas providers. However, any observable relatively higher cost of certain goods and services, whether due to being taxed by government or corporate “tyranny” (even if such a thing did exist in a market economy), has nothing to do with whether a country is First World. Spend a little time in Western Europe, Japan, Singapore or Hong Kong and you will see very relative high prices for things and yet still those places are still very First World. Newcomers that state that high relative prices are part-and-parcel of the Second World are  non-economists using economics jargon in a nonsensical way.

Let me comment further on some of the claims of this newcomer. First, there are shanty towns in Chile, but they are no worse than those found in the rat/drug-infested Bronx, inner-city Detroit, Oil City, Pennsylvania, the miles of slums along the West Virginia/Kentucky border, “rust belt” slums, shanties in many parts along the Mississippi River or in many Arizona/New Mexico Indian villages. Ditto for many places in Europe, especially Portugal, Greece and Italy. Being “First World” does not mean the near absence of shanties, but it does imply far fewer of them over time. What Chile bears is nothing compared to what countries do in the Third World, like Bolivia and Brazil and, other than external appearance, generate not much worse living conditions than the non-seismic-safe, centuries-old edifices in poorer areas of Italy, Portugal and Greece.

Second, homeless dogs are definitely a point against Chilean first-worldliness, although Chileans think that euthanizing them in the other First World counties shows then to be in fact brutal regimes; ditto for abortion other than “in a few exceptional cases.” Third, people steal the toilet paper and that frequent situation is why one must “carry his own” unless he uses a pay restroom (better). Doing so is a total hassle but the absence of toilet paper has nothing to do with whether a country is First World. All public restrooms in pubic places in Europe are paid, too. Note that not being able to flush toilet paper due to inadequate sewer infrastructure (not the toilets themselves) does certainly indicate something less than First World, but it is the only thing on his list that is clearly so. Let’s hope the situation in Chile improves. Until then, we must grin and bear it.

I have done what I can to help my reader understand what to expect in terms of standard of living in Chile. What I said about costs and infrastructure is accurate. I pull no punches with regard to Chile and I have the relevant university degrees and extensive travel experience to back up what I am saying. When Chile needs to be slammed I do so, but I am not going to level untrue or unfounded claims at it based on incorrect definitions of things like “First World” or judgments about the features of the OECD group of countries. Chile has its problems but so does every country.

For newcomers reading this article, I suggest that you just be glad you are in a safe place in the Southern Hemisphere and learn to make the best of it instead of complaining a lot or throwing out sweeping, unsubstantiated claims. You did, after all, choose to come to Chile because you felt considerable uneasiness about living in the old country. As bad as Chile might be, it is probably still much better than a FEMA camp or a false-flag zone, no?

Prewar Germany, England and France were jewels, too. A lot of it soon became rubble, with all the associated carnage among their previously-thriving populations. Do you really think that the same thing cannot happen again in Western Europe or in North America? If you think that the risks of staying in the old country are too high, and have come to Chile to “escape,” then I suggest that you learn to be an optimist and adopt a positive outlook. No one likes to be making a go at something new and difficult, and to be frequently bombarded by whining and nagging people, reminiscing about how things were better in the old country. Chile is going to be what we make it.

I do not worry about being in my Chilean building if and when there is an 8+ Richter Scale earthquake. However, I would be very worried if I were in California or Italy by the prospect of such a large earthquake (and yet they are still First World places, too, no?). My food quality in Chile is better than in other First World places (and yet they are still First World, too, no?).

There are other things that I enjoy in Chile. I get to have an ocean view and can grow organic blueberries in my backyard. I have lots of avocados coming on the tree now, too. I have a gardener that tends to things. My view makes me smile every day. My internet almost always flies (over 170mpbs download and 8mbps upload). I have far more here than I ever had in the land of the free or Italy. I am content with what God has provided and hope to make more improvements. Can you say the same where you live?

Friendly last word to newcomers: Try not to focus on negative things. It does not help to do so. We know they are here in Chile. But there are a lot of positive things, too, right? Do you fear jack-booted thugs breaking down your door by accident one night and shooting you? How about a “terrorist” bombing/shooting/stabbing/vehicular homicide? Or a family court stealing all your assets and filching your children? Is there any concern that the feds might steal your retirement savings? Will the EPA or FCC use you like a guinea pig? Is there a chance that you will be fired for not being politically correct enough at work? How about chem-trails, GMO foods, possible radiation? While, I am not sure about the true extent of any of those threats, I am confident that I do not face them here. It seems to me that all of us in Chile have a lot more to be thankful for than many are willing to admit. I hope you will agree and put on a positive attitude moving forward in our adopted First World country.

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country. Non-wealthy immigrants to Chile should also create a portable income by signing up to be a 51Talk online English teacher. Read more details about the job in my previous post on the subject.

Dr. Cobin’s updated and enlarged 2017 book, Life in Chile: A Former American’s Guide for Newcomers, Fourth Edition, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $129.

For a brief introduction consider Dr. Cobin’s abridged 2015 book (56 pages): Chile: A Primer for Expats ($19), offering highlights (somewhat outdated) found in the larger book. Buy Dr. Cobin’s Public Policy books at Amazon.com:

Note on Cost of Living for Newcomers to Chile

The cost of living is a technical economics term. It means, generally, “the level of prices relating to a range of everyday items, and regular household, educational, tax, insurance and transportation expenses.” Investopedia provides a more complete definition:

Cost of living is the amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes and health care. Cost of living is often used to compare how expensive it is to live in one city versus another locale. Cost of living is tied to wages, as salary levels are measured against expenses required to maintain a basic standard of living throughout specific geographic regions.

Accordingly, newcomers from Paris, London, New York and Hong Kong will find Chile to be relatively inexpensive, albeit with lower salary expectations, while people from places like small town Italy, rural New Zealand and many places in the USA and Canada located outside of major cities will find it to be extraordinarily expensive. The same thing is true when people from those places travel to other spots in the world that feature a significant cost of living disparity.

Sometimes, normally rational people, make rather irrational judgments based on limited data. For example, newcomers to Chile from the USA see that gasoline costs much more in Chile and then extrapolate that the overall cost of living is higher in Chile. This conclusion is false. By the same logic, Venezuela and Bolivia, where gasoline supposedly costs fifteen U.S. cents per gallon, must be extraordinarily cheaper places to live than in the USA, where gasoline is “excessively” expensive. However, this reasoning is erroneous. Other things in those countries are not cheap. Living in the Third World is cheaper for a lot of things but the added costs of bodyguards, criminal threats, political unrest, unsanitary conditions, etc. have to be factored into the equation.

Can I fairly judge that the USA or Finland are excessively expensive for wine since I pay US$4 for the same bottle Chile that people in those countries pay US$25 or US$40? One must look at overall cost of living in Chile verses those other countries without getting caught up in extrapolating on the prices of individual products, whether they be cheaper (e.g., medical care, vegetables, yogurt, pharmaceuticals, maid service) or more costly (e.g., gasoline, peanut butter, boxed cereals, power tools). Also, to be fair and consistent, one should never compare cost of living in small town Italy or Arkansas verses a major metro area like Santiago. Instead, use Atlanta, Charlotte, Houston, Detroit, Philadelphia, Phoenix, Milan, Berlin, Hong Kong, Sydney or Singapore as a baseline. Should anyone be surprised to know that living in Chicago, San Francisco, Munich, Barcelona or Geneva costs more than it does in Mobile, Little Rock, Porto, Cuneo or Salerno?

Some items that make up our standard of living should also be considered within any discussion of cost of living. For instance, what is the value of having an ocean or maintain view from your living room window? What is the value added by having a Mediterranean climate? What is the benefit of having a maid that does all your cooking, cleaning and laundry? Does having a year-round garden appeal to you? How about a much lower probability of being mugged, murdered, drafted, bombed or accidentally shot by cops? Let’s not forget to consider the level of air and water pollution, or overall food quality. Or maybe add the proximity to good medical care, a professional baseball stadium or world-class theater, not to mention living in strong buildings, with great internet service and quality interurban highways all around.

In other words, any analysis is deficient that simply compares only the cost of living in a place without also considering the amenities which influence our standard of living and quality of life. With most of the aforementioned items, Northeastern Santiago and Viña del Mar, Chile provide far more to augment one’s standard of living than can be found in most metro areas of over one million population around the world. The same can be said of Auckland and some other places, but not many others. For many people, it is worth paying more to have a better environment and certain amenities.

Nevertheless, cost of living still serves as a good starting point. After all, newcomers must be able to survive. If they have no accumulated wealth, they can create portable income by becoming a 51Talk online English teacher with a decent salary, most likely tax-free. After having money to spend, they will likely want to avoid paying higher living costs. At this point, many newcomers become frustrated by the price of “little” items. Perhaps the following remarks will help keep things in perspective and alleviate frustrations about living in Chile for the fist couple of years.

One newcomer recently told me, “Prices are by far the most demoralizing thing about Chile.” I suggested that he read the chapter on cost of living in my book Life in Chile: A Former American’s Guide for Newcomers. He needed to get the “big picture.” Many smaller items are more expensive in Chile but many larger budget items are not. His frustrations and worries were based more on emotion than rational analysis. Do not make the same mistake.

It is always good to answer questions and concerns rationally when it comes to the relative cost of products and overall cost of living, especially when the products in consideration make up a small percentage of our overall spending in any five-year period. For instance, how much contact lens solution does one buy a year? Even if it is significant, are there alternative means to get it cheaper? Can you have it shipped to you via Amazon and pay the 25% duty in Chile and still come out ahead? Do the same exercise with peanut butter, pliers, shoes and alarm clocks. It is not more expensive to live in Chile. You simply have to change your way of doing things from what you used to do. Try ordering smaller things online or stocking up on them while on trips to Europe or the USA and even pay an extra suitcase fee to bring them back (you might save enough to cover the costs of the flight!).

A household’s biggest budget items are housing, insurance and taxes. Those costs are all going to be reduced dramatically in Chile, even as a percentage of income, dwarfing any extra costs one has for “little” things. Food, transportation and education are important second category items. Depending on how one handles them (mode, selection, quality, etc.), and where one chooses to live, they will be either a little more or a little less in Chile than where you came from.

Let’s consider another “little” item that tends to be expensive in Chile by USA standards, but is not something you can import: meat. Think about it. How much more does a family spend on meat, continuing to eat it normally in Chile as they would have in the old country? Let’s say it costs an extra US$200 per month or US$2,400 per year. This sum pales by comparison to US$40,000 less in paid taxes alone, once a newcomer starts working his professional job. Until then, he simply has to absorb the cost as part of the price of emigrating. Even so, assuming the family eats lots of fruits and vegetables, there might be savings of US$2,000 per year if those foods are regularly bought in open-air markets. Therefore, look at the big picture rather than individual items. Also remember that we do not eat GMO-fed beef in Chile and the fruits and vegetables are better quality. Again, the cost of living should not be divorced from the standard of living.

A similar thing could be said of electricity costs. A newcomer living in an apartment in Santiago once told me, “I got the electric bill; it is unbelievable. I cannot understand how people can survive here.” Yet they do survive here, and on much less than their American counterparts. Why? They know how to play the game, whereas a tourist does not. After my years in Chile, I am now spending about the same on electricity as I did in the land of the free. In our household, we use electricity for lighting, small kitchen appliances, range hood, oven, washer, dishwasher and things plugged into outlets inside the house. Outside it is used for a sewage pump, lights and outlets (e.g., for the lawnmower). Those that choose to heat with electricity make a mistake. Most locals choose to get one of the Japanese or European kerosene units, like Toyotomi. The cost for heating will thus be much less over the long run than using electricity. Another slightly more expensive but more convenient option is to hook into the natural gas system if it is available.

My (cynical) Chilean wife says that Chileans that heat with electricity have found a way to alter the electric meters and thus rip off the companies. She may be right. Others use some sort of gas heating system. Newcomers should listen to her. She often knows. While in Las Condes, we used the Toyotomi heater instead of the apartment’s furnace heat or electric heaters. We saved a bundle and the heat was better. Also, the maid could help fill up the heating unit, maintain it and the room temperature, which is a benefit that newcomers are likely not accustomed to having.

What newcomers often do not realize is that electricity bills come with whopping surcharges for “overuse.” In Chile, once you go over a basic amount of electricity in winter you get nailed with a rate that is 2x or 3x the normal rate and the bill skyrockets. So, in order to not cross the threshold, one learns to mix into one’s household some natural gas (or propane) appliances for heating, hot water, cooking and clothes drying. Is that inconvenient or a hassle compared to the USA (Europeans are used to such things)? Maybe so. But so what? You do not live in the old country any more. It is just something else to learn, in a new place. Locals know how to optimize energy use. Imitate them. Every government-sanctioned utility monopoly has its own unique way of “ripping off” citizens and tourists. You have to learn to cope here just like anywhere else. Locals know. Newcomers must learn. Why do newcomers expect to know everything the first two months after arrival?

A key point of my book, Life in Chile: A Former American’s Guide for Newcomers, is to inform newcomers of issues as much as possible prior to coming to Chile. Things will be hard enough as it is for newcomers. Yet these folks routinely put off reading it as if the information were optional. They pay the price because of when they arrive unprepared. All newcomers have a hard time, but the more ignorant ones suffer the most. Newcomers should not think immigration will be easy. I have never said it is. However, you can look at my experience and that of many others who have stayed and see that it is more-than-possible to make it. Hard times make for hard choices, but the diligent can succeed.

Consider, too, the cost of using interurban toll roads. For instance, driving from Santiago to the Talca (farm belt) area on the weekend will cost perhaps US$24 dollars in tolls round trip (33% less on weekdays). One might first ask why there is a toll when gasoline (not so much diesel) taxes are so high? In Chile, most interurban highways are private and tolls are paid to a company that has won a monopoly right through a competitive bidding process (one of the “Chicago boys'” innovations stemming from the 1980s). Because of that fact, newcomers will notice that highways are in perfect condition, unlike Chile’s city streets (often rotten outside of Santiago). Fuel taxes are used in part to pay for city roads. Hence, Chile is a case study in why all roads should be private.

Furthermore, before one complains that, “Roads are no better here than in the USA,” he should consider how much he pays in taxes in the USA or Europe to get those good roads. Remember, too, that in New Jersey, Illinois, Pennsylvania and California people pay tolls to the state on top of paying taxes. Also, tolls in Chile are much cheaper than New York and Europe. In those places one already pays high income and fuel taxes. Consequently, one must not judge the cost of living in Chile based on what a tourist pays for things. Once one has a job and pays less in taxes, owns a home and use medical care in Chile, all will become strikingly clear: the savings far outweighs the additional costs for some things.

For example, if one earns US$120,000 in the USA and pays US$45,000 in all taxes, including income, Social Security, car registration, capital gains, property taxes and fuel taxes, in Chile he might pay US$12,000. Europeans will have a similar experience. Given that fact, is it “excessive” to pay US$24 in tolls to go to Talca, especially if one only goes there, say, four times a year? Once again, if one only looks at the cost of the tolls, he is missing the bigger picture.

Newcomers also tend to be myopic in my experience. They might be saving, for instance, 80% on world-class medical care in Santiago (compared to the USA) or procedures like in-vitro fertilization, not to mention the associated high transportation costs of traveling to specialized clinics. Yet they completely ignore those massive savings (that even newcomers can garner) and instead complain about the relatively paltry costs of things like tolls, meat and contact lens cleaner. Doing so is really irrational, if not ridiculous. Those who do so are not yet seeing the whole picture. With the savings in medical care and procedures alone, how much “excess” costs for cleaning fluid, meat and tolls can one pay? Five or ten year’s worth?

Newcomers live as tourists for the first year or two in Chile. The associated extra costs have to be counted as part of the cost of resettling to a new country without a visa in hand. Probably, no one has ever told them that it would be cheap to leave the old country and settle into a new one. Ask yourself: “Is it worth it to me to spend an extra US$25,000 on store-bought products over the next two years in order not to have to stay in my present country?” If so, deal with it.

So many people come to Chile with the unfounded expectation that transactions costs to adopt a new culture and way of life will be low. This thinking is tragically errant, always leading to frustration. An international move, including full immigration to a new country where one does not speak the language, is not easy and is hardly cheap. Why anyone would think otherwise is beyond me. I never make such claims in what I write or on my webinars. Nonetheless, rest assured that over time initial costs do subside. In the meantime, do not be surprised by the transition costs you will face. Try to minimize them, of course. Yet, is it not far worse to live in danger in the old country? Be thankful that you at least have the money to pay to move, Most that want to do so, cannot. That fact is one reason why becoming a 51Talk online English teacher is a Godsend.

Consider, too, that coming to Chile can end up being a career enhancement. No matter what happens, even if one “goes back,” being in Chile provides an opportunity for career growth. Indeed, there is little downside professionally if one plays his cards right. These benefits offset transitional costs. Living productively overseas does not look bad on one’s resume: after a few years you will be able to list such new personal attributes as “bilingual,” “experienced in living in an overseas environment,” “dual citizen” and “cross culturally trained.” How many new opportunities will those attributes create for you? Might it generate a higher rate of pay, too? Thus, the higher transition costs do come with some ancillary benefits. In addition, if one ends up buying real estate while here, Chile is a good place to invest in rental units and a retirement or second home, even if one chooses to leave someday.

Think about it. Base your judgments and conclusions in rationality.

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country. Non-wealthy immigrants to Chile should also create a portable income by signing up to be a 51Talk online English teacher. Read more details about the job in my previous post on the subject.

 Dr. Cobin’s updated and enlarged 2017 book, Life in Chile: A Former American’s Guide for Newcomers, Fourth Edition, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $129.

For a brief introduction consider Dr. Cobin’s abridged 2015 book (56 pages): Chile: A Primer for Expats ($19), offering highlights (somewhat outdated) found in the larger book. Buy Dr. Cobin’s Public Policy books at Amazon.com:

Memorandum to Newcomers

From: Dr. Cobin, Instigator

To: All Newcomers to Chile

Re: Fundamentals, Expectations and Rules of Conduct

Please take careful note of the following:

1. Chile is not the United States (i.e., “We are not in Kansas anymore.”), nor is it Canada, Australia, Japan, South Korea, Singapore or a Western European country–thank God. It is also not New Zealand or Hong Kong,

2. The way things are done in the aforementioned countries is not the only or “right” way to do things. Believe it or not, there is usually a good reason why things are done the way that they are done. You may not know those reasons now or for some time after arrival.

3. People do things differently in Chile than where you come from. That fact does not mean Chile is bad, but rather that Chileans have found different ways of coping with the challenges of their cultural context. “When in Rome, do as the Romans do.” Do not be an ugly American. It is not any fault of Chileans that you have to move.

4. You will pay more to live in Chile for the first 14-20 months than citizens and permanent residents do. This fact should not be surprising since tourists (newcomers) usually pay more than locals in any country of the world. Be prepared for the extra expense (i.e., “get a grip” and “deal with it”). It is part of your cost of emigrating from the “land of the free” or wherever. Over time, you will see that the overall cost of living here is probably lower than where you came from. Reducing costs might require you to change the way you have done things in the past.

5. You will not know everything you need to know about Chile on the day of your arrival, or even a year later. You will undoubtedly learn by the school of hard knocks. However, you can greatly minimize your butt-beating by not being lazy and taking my advice: read Life in Chile: A Former American’s Guide for Newcomers before you land in the Santiago airport. Also, attend as many Escape America Now webinars as you can prior to coming. If you do not read every page of the 1,500+ page book prior to coming, and hence attempt a life-changing, international move in a state of near-total ignorance, you forever forfeit your right to complain. Onlookers might also consider you to be somewhat moronic.

6. Your negativity, worry and complaining have never really helped you before and they will not help you in Chile. No matter how bad things seem, they could be worse. Best to look on the bright side and make the best of it. There are a lot of “bright sides” in Chile. Dwell on them instead, along with all the ugly/nasty/unpleasant reasons that have impelled you to leave “the old country.”

7. Chile is a Spanish-speaking country. Do not expect more than 2% of Chileans, nearly all found in Northeastern Santiago and Viña del Mar-Concón, to speak English. At some point, you will have to begin conducting your life in a different language than your mother tongue.

8. Plan on learning Spanish (starting now). Doing so will be really hard, take you years to accomplish and you may have to spend up to US$1,000 per month, per person for classes or tutors for up to a year. “Get a grip” on this fact. Add the “budget item.” There are a few things you can do from the old country to learn the language prior to getting here. Follow my advice from a decade ago. It is still valid.

9. If you choose to bring a “reluctant wife” with you to Chile, she will not become less so after she is in-country. She will make you ten times more miserable as a newcomer than you would ever have been if you had come alone. Indeed, you will experience rancor, odiousness, grumpiness (maybe even mean-spirited tantrums), resentment and grief like never before. If you are smart, you will think about how to minimize this emotional cost long prior to arrival, and take the proper steps to alleviate the problem. Note: there is a chance that you will not succeed.

10. You will need to spend money in Chile and have an income from somewhere. Put your assets in offshore havens and bring ATM cards with you so you can access your cash from Chile. If you are not wealthy, you should immediately sign up to be a 51Talk teacher and get a few weeks or months under your belt, so that you will have an income upon arrival in Chile. Doing so is also great for older children that accompany you, reluctant wives needing something to do and efficient homemakers. Even if 51Talk teaching ends up only being a stop-gap measure for a couple years until you have a “real job,” it could be a lifesaver. Read more details about the job in my previous post on the subject. Alternatively, you can also bring any other internet-based business with you.

11. Chile may be “somewhere over the rainbow” but no one ever promised you a bed of roses. Grow up. Your life in large part is what you make it.

12. While you may not be responsible for your present circumstances or the need to emigrate, you are responsible to make as wise and thoughtful move as possible. Do not blame me, the instigator, if you do not comply with this directive and prepare as best you can for that life-changing transition. Also, remember that the road to hell is paved with good intentions. Therefore, stop being lazy, fatuous and otherwise complacent when it comes to proper preparation!

cc. general file

moron file

get-a-grip committee

Kansas/rainbow crossing/deal-with-it project

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country.

Dr. Cobin’s updated and enlarged 2017 book, Life in Chile: A Former American’s Guide for Newcomers, Fourth Edition, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $129.

For a brief introduction consider Dr. Cobin’s abridged 2015 book (56 pages): Chile: A Primer for Expats ($19), offering highlights (somewhat outdated) found in the larger book. Buy Dr. Cobin’s Public Policy books at Amazon.com:

Getting Cell Phone Service in Chile

Nowadays, everyone seems to need a smart cell phone with camera and tablet capabilities. In Chile, I have found it optimal to add a 500-minute cell phone-enabled landline onto my VTR internet service package at home (about USD$7 extra), and thus minimize the purchase of cell phone minutes. Consequently, I reduce the overall amount I am required to pay for cell and data service. I realize that other people may have different needs and preferences, but this system works for me since I spend so much time at home. I also make use of WhatsApp (and sometimes Signal) now more than voice communications. It is more convenient, less intrusive and far less expensive.

Newcomers can bring their smart phones to Chile. Just be sure to request that they be unlocked prior to coming (or as soon as one arrives). Companies like Apple and Samsung allow one to manage this feature change (or restriction) online. If  the old country’s phone cannot be unlocked, then a new one can be purchased from the sales representative. If a new phone will be purchased, Samsung is very popular in Chile. For iPhones, find an Apple store in the bigger malls of Santiago and Viña del Mar.

The day after one arrives in Chile, I suggest taking his phone to any Virgin Mobile stand, located in most department stores, many mall walkways, some strip centers, etc. They will help to remove the old company chip and install the Virgin Mobile one. Be sure to bring the Samsung or Apple key! You will be surprised at how easy it is to change cell phone carriers in less than ten minutes.

I have used Virgin for many years now and am quite satisfied with the service and price. They offer many “antiplans” online. An antiplan is not a contractual plan but its price is similar. You must pay every thirty days or your service will expire, much like a prepaid phone. If you leave the country for a few months, when you get back just add more minutes and you will be back in business. The chip will usually have to be replaced after six months of disuse.

As a newcomer, just buy Virgin’s “hablar más” antiplan for 7,000 pesos (USD$11). It will be sufficient for most people’s first few months in Chile. If you know that you will be on the phone more than that, since you already have people to call or you plan to use a lot of data, then get the 15,000 (USD$23) peso antiplan to start. Choose the “navegar más” antiplan if you want to surf more than talk.

With any Virgin antiplan, WhatsApp, Facebook, Twitter and other social media can be used for free, except for voice communication features, without discounting one’s data balance. That fact will make one’s cell phone costs much lower.

Your initial installation at the Virgin stand will come with the first month’s plan fully charged. After that, you will have to purchase more minutes at the website via credit card.

If the international card does not work, which is often the case, you will have to go to any supermarket or pharmacy and present the clerk with (1) 7,000 pesos (or credit card), (2) your phone number and (3) a note that says, “Por favor, recarga mi celular con 7,000 pesos. La empresa es Virgin Móvil.” Be sure to cross your sevens in the middle when you write; otherwise the clerk will think you are writing 1,000. (American sevens look very similar to Chilean ones.) The operation will be done in less than two minutes and then you can go back to the website and activate your antiplan.

You can set the account up to automatic activation, too. Thus, if you pa the clerk before the 30 days expires, your antiplan will continue with uninterrupted service.

Getting good, inexpensive cell phone service is easy in Chile. Newcomers will be surprised. However, without having the foregoing information, the level of stress and complication will rise.

Should you decide later that you prefer another company’s contractual plan, such as Claro or Wom that offer much more data and calling time for around US$30 per month, it will be equally easy to change over to them later without any extra cost. But there is little reason for most people to go this route, especially when just arriving in Chile.

For those coming to Chile under our residency program, we handle cell phone setup for you upon arrival. Just make sure to bring your unlocked phone(s) or be prepared to buy a new phone.

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country.

Dr. Cobin’s updated and enlarged 2017 book, Life in Chile: A Former American’s Guide for Newcomers, Fourth Edition, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $129.

For a brief introduction consider Dr. Cobin’s abridged 2015 book (56 pages): Chile: A Primer for Expats ($19), offering highlights (somewhat outdated) found in the larger book. Buy Dr. Cobin’s Public Policy books at Amazon.com:

Christian Theology of Public Policy: Highlighting the American Experience (2006)

Bible and Government: Public Policy from a Christian Perspective (2003)

A Primer on Modern Themes in Free Market Economics and Policy (2009)

Those Who Can, Cannot and Will Not Come to Chile

I have been a Chile consultant for many years. One thing that has always puzzled me are the ironies seen in the kinds and classes of people that want to migrate to Chile, as well as the turmoil or frustration that so many of them face.

Can and Do

First off, there are those that can and do come to Chile, at least to get a Plan B residence established. They are wealthier people, normally with assets over US$2 million, with some exceptions of single men that can get by on less, or they have pensions between US$5,000 and US$10,000 per month (which is more than enough to live in Chile). They are usually libertarians or constitutional conservatives. They want a freer, saner life than their increasingly beleaguered existence in the “Land of the Free” or some other Northern Hemisphere welfare state. They are not “turned on” by the likes of Obama, Bush, Hillary or Trump. They often have substantial assets out of their home country and thus already have a foot out the door. They are well-studied on the issues and make educated choices about where to immigrate and how to handle life. I will call this fortunate, “will do” group the top 20%. They are wise, as Proverbs 27:12 says: “A prudent man foresees evil and hides himself; the simple pass on and are punished.”

Can but Won’t

Next, there is the group of well-to-dos or upper-middle class folks that toy with Chile or emigrating, but never seem to get around to doing anything about it. They are masterful at making up excuses why they have not and will not act in their best interests to minimize political, economic and violence risk by setting up residence elsewhere in the world. “If the USA goes down, so will every other country in the world” or “I do not want to learn another language at my age” are favorite “reasons” why they would rather stay and perish or fall into an even more crass slavery than they presently find themselves. They dabble in expatriate literature and are genuinely concerned what the world will be like under the regimes to come. But they are not scared enough to actually act; unrealistic optimism always seems to win the day. They are more worried about being near family. Or they just think that maybe things will not be so bad. They are, in a word, “boxcar bait.” Those that can get out at the last minute will end up being “raft people” because there will not be enough seats on airline or boats to get them out when they want to leave. Full of endless excuses and procrastination, I hold out little hope for these people. I will call this mildly-arrogant, procrastinating, “will not” group the middle 50%. Their epitaph will read: “Could have escaped, but failed to do so.”

Would but Can’t

Finally, there is the most tragic case of those that really, truly want to leave but cannot do so. They simply lack the basic resources required for their family size to leave and/or resettle, and have little hope of working in Chile to earn enough to do so. They see the danger and want to flee but are trapped. Their situation is sad. They have often done their homework and want to come to Chile. They call me but, alas, there is little that I can do for them. Why is this (relatively large) group so much more insightful than the aforementioned reluctant group with resources? Who knows?

People from each of the three groups tend to be well-educated. The difference seems to be in courage, logic, sensibility and insight, as well and financial feasibility. People in this last group are willing to do whatever it takes to get to Chile but it is simply not enough: they do not have the Spanish or cultural skill sets to prosper in Chile, nor do they have the capital needed to start a business here. They are stuck on the sinking ship and, worse yet, they know it. The best they can do is keep researching and looking for that windfall that will send them where they want to go or at least open the door to get there. Otherwise, they uncomfortably await judgment day. A lot of grief and hardship are ahead of them. I will call this hapless, doleful, “cannot” group the bottom 30%. As Job said (14:1), “Man who is born of woman is of few days and full of trouble.”

Where do You Fall?

Where do you fit in? Are you satisfied to be in that group? If you want to change, what can you do about it?

The first thing that any of the aforementioned folks should do is get my newly revised book and read it cover-to-cover. Anyone considering coming to Chile for real should devour the 1,665 pages it contains. As a newcomer you simply cannot get enough information about your new country. The new edition is like having six different books on relevant Chile topics in one volume. Sections can be read and re-read as needed. The US$149 will be paid for many times over in efficiency gains alone, not to mention orienting you in the direction which is best for you and thus saving you many hours of research and reducing time-wasting activities that often affect expatriates.

Also posted on Steemit!

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country.

Dr. Cobin’s updated and enlarged 2016 book, Life in Chile: A Former American’s Guide for Newcomers, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $149.

For a brief introduction consider Dr. Cobin’s abridged book (56 pages): Chile: A Primer for Expats ($19), offering highlights found in the two larger books. Buy Dr. Cobin’s Public Policy books at Amazon.com:

Christian Theology of Public Policy: Highlighting the American Experience (2006)

Bible and Government: Public Policy from a Christian Perspective (2003)

A Primer on Modern Themes in Free Market Economics and Policy (2009)

Chilean Cities with Highest Income

One might think that the most attractive places in Chile for newcomers would correspond to comunas with the highest incomes. While this thought is actually a pretty good guide, it has some holes. According to a study by the University of Chile cited by national daily La Tercera, the ten highest income comunas in Chile are:

1. Vitacura
2. Las Condes
3. La Reina
4, Lo Barnechea (which contains La Dehesa)
5. Ñuñoa
6. Providencia
7. Calama (2nd Región)
8. Diego de Almagro (3rd Región)
9. Antofagasta (2nd Región)
10. Magallanes (Punta Arenas, 12th Region)

It is not surprising to see the first six spots going to northeastern Santiago, although it is odd that La Reina is #3, ahead of #4 Lo Barnechea and #6 Providencia, and that Providencia is #6, even behind #5 Ñuñoa. I would not have expected that result. The rest of the list includes mining and natural gas cities, all of which are known for being highly-paid occupations in Chile.

The list goes to show that “money is not everything,” at least when choosing a place to live. For instance, Calama (#7) is the ugliest and most horrid city in Chile, and Antofagasta (#9) is not far behind, even though it has a nice sector amidst so many awful slums. Diego del Almagro (#8) is hardly a town, much less a city, and if the mine were not within its comunal boundaries there would be no attraction. It is certainly no place for an immigrant to come unless he is a miner.

Punta Arenas (#10) is in the extreme south, windy and cold, with very long nights in wintertime and very short ones in summertime. Still, it makes other top ten lists in some studies for being a very livable city, as reported in national daily El Mercurio. I am not convinced it is a good spot for newcomers, despite the history, great restaurants and tax-free zone. On the other hand, there are extensive wealthy suburbs in the Viña del Mar, Concepcion and La Serena metropolitan areas that also have high personal income but are not included in the top ten because of nearby poverty.

In that study reported in El Mercurio, the top thirty comunas with highest quality of living are:

1. Vitacura
2. Providencia
3. Las Condes
4. La Reina
5. Punta Arenas
6. Ñuñoa
7. Santiago
8. Lo Barnechea
9. Colina
10. Curicó
11. Rancagua
12. Valdivia
13. Macul
14. Osorno
15. Viña del Mar
16. Quillota
17. Huechuraba
18. La Florida
19. Chiguayante
20. Peñalolén
21. La Serena
22. San Felipe
23. Puerto Montt
24. Temuco
25. Los Ángeles
26. Quilicura
27. San Pedro de la Paz
28. Calama
29. Puente Alto
30. Coquimbo

I have been to all of these places. There is no way I am going to recommend to newcomers chilling #5 Punta Arenas, ugly #14 Osorno, upper-lower-class #29 Puente Alto, or industrial, smoggy and congested #26 Quilicura. Forget, too, mining town, ugly, high-elevation #28 Calama, and likely not largely Marxist mining enclave #30 Coquimbo. Largely lower middle class agricultural worker towns like #16 Quillota, #22 San Felipe, #9 Colina (especially if Chicureo is included) and #10 Curico all have a certain attraction, and are cheap places do live, but I really doubt they would suit the vast majority of immigrants from North America or Europe.

I have no idea why Viña del Mar is so far down the list (#15) or why neighboring Concon is excluded, unless it was subsumed in Viña del Mar. The same goes for lovely #19 Chiguayante and #27 San Pedro de la Paz, which are some of the nicer parts of Concepción and decent choices for a newcomer that does not mind cool and rain.

All of those places should be in the top ten, in my mind, ahead of #4 Ñuñoa and probably #6 La Reina, and certainly #7 Santiago, which really should not figure in the top twenty. I can see how the other places, especially #24 Temuco and #12 Valdivia, could be on a newcomer’s radar screen that likes smaller cities in the Pacific Northwest of the United States, and does not mind rain.

The Institute for Urban and Territorial Studies at the Catholic University in Santiago produced its “Index of Urban Quality of Life” for 2015, which ranked the 93 most prominent comunas in Chile, spanning ten metropolitan areas and 85% of the country’s population. The index and rankings were based on six variables of labor conditions, business environment, socio-cultural conditions, connectivity and mobility, health and environment, and housing and environment. The following list is the ranking for comuna in relation to the mean, most superior to the mean first.

1. Las Condes
2. Providencia
3. La Reina
4. Puerto Varas
5. Punta Arenas
6. Antofagasta
7. Colina
8. Copiapo
9. Villarrica
10. La Serna
11. Tome
12. Valdivia
13. Quilpué
14. Talcahuano
15. Huechuraba
16. Rengo
17. Temuco
18. San Fernando
19. Osorno
20. Villa Alemana
21. Rancagua
22. Coronel
23. Angol
24. Lampa
25. Calera
26. San Antonio
27. Quilicura
28. Curico
29. Linares
30. Estacion Central

This part of the study may make sense to some Chileans, but from a newcomer or foreign-onlooker point of view, it is pretty weird. Not only are Lo Barnechea (La Dehesa), Ñuñoa and Vitacura missing, having been beaten out by nearby horrid #24 Lampa, mediocre #30 Estacion Central (main bus and train terminal for Santiago), mixed socio-economic bag #15 Huechuraba, and #7 Colina where my former maid lives unless, again, fabulous Chicureo is included. Likewise puzzling is the superiority of scuzzy port town #26 San Antonio over elegant 5th Region neighbors Viña de Mar and Concón, which do not appear at all, while including middle class inland communities of the Viña del Mar metropolitan area like #13 Quilpué, #20 Villa Alemana and #25 Calera. It makes little sense.

The ranking also highlights boring #8 Copiapo, lovely #23 Angol and coal mining slum #22 Coronel, each Marxist hotbeds. Punta Arenas (#5), Rancagua (#21) and ugly Osorno (#19) made the list again, although I am not sure why, and more worker’s farm towns were added like #29 Linares, #25 Calera, #16 Rengo, and #18 San Fernando, but most of the ones on the previous list are not included.

A horrid, smelly naval port #14 Talcahuano is the only representative from the Concepción metropolitan area, displacing Chiguayante and San Pedro de la Paz? Give me a break! I guess there is some bias or stupidity in Chilean university studies. Maybe it was done by leftists?

The only cities listed that make sense, from my perspective, are #1 Las Condes, #2 Providencia, #3 La Reina, #4 Puerto Varas (they definitely got that one right!), and I would agree with #9 Villarrica (but where is Pucon?), #10 La Serena, #17 Temuco and #12 Valdivia being somewhere in the top thirty. However, the study’s rankings themselves are a bit different, even though still bizarre or surprising:

1. Las Condes
2. Vitacura
3. Providencia
4. Lo Barnechea
5. La Reina
6. Ñuñoa
7. Puerto Varas
8. Castro
9. Punta Arenas
10. Concepcion
11. Antofagasta
12. Maipú
13. Colina
14. Machalí
15. Copiapó
16. Talca
17. Villarrica
18. Quillota
19. La Serena
20. Viña del Mar
21. Tomé
22. Vallenar
23. Valdivia
24. Coihaique
25. Quilpué
26. Santiago
27. Talcahuano
28. Concón
29. Huechuraba
30. Puerto Montt
This list makes more sense, except for the curious inclusion of Concepcion over its much nicer suburbs, and the low rankings for #20 Viña del Mar, #28 Concón and #19 La Serena, which would certainly be more desired by nearly all Northern Hemisphere immigrants than mixed middle class #6 Ñuñoa (home of the national soccer stadium and lots of vandals), quaint but puny and remote #8 Castro, barren #9 Punta Arenas, #10 Concepcion, and the rest of the list starting with #11 Antofagasta (with the possible exceptions of #14 Machali, #17 Villarrica and #23 Valdivia for certain people). I know a couple of expatriates that like their farms near #16 Talca, but not necessarily the boring city itself.

According to a study by Centro de Estudios Públicos in 2010, the next highest income comunas of the Metrolpolitan Region are Santiago (centro) and San Miguel. I do know a few expatriates living in San Miguel, and it is a decent place, much less expensive than northeastern Santiago. So, obviously, it is a possible destination for newcomers. However, the third poorest and lowest income place in the region is Alhué, a small farming community that is clearly a lovely, quaint place, that could be of interest to newcomers that want to live in the country but yet not too far from the big city.

Iquique is very high on the personal income scale for Chile, but it is the bottom of the barrel on lists of most livable places in Chile. Yet I know several expatriates that live in Iquique and love it. It just goes to underscore that one cannot judge a comuna solely on the basis of personal income statistics, and probably have to take with a grain of salt the livability rankings as well.

Other examples are regional comunas like Viña del Mar (and Reñaca), Concón, San Pedro de la Paz, Chiguayante (and other parts of metropolitan Concepcion), Zapallar and nearby beach towns, Pucon and Puerto Varas. All of these comunas contain significant First World areas and amenities that make them clear possible destinations for newcomers. Yet the poorer neighborhoods that they contain, for example Forestal in Viña del Mar, are significant enough to drag down the median income figures. The same is true for Santiago comunas like Huechuraba and Peñalolen, which have significant First World areas within a sea of poverty. All of these places, especially the provincial ones, are much cheaper to live than the top comunas in northeastern Santiago and should be on the list of relocation spots under consideration by newcomers,

If we can trust Wikipedia GDP statistics for Chilean regions, they might add something to the discussion about where newcomers might be most comfortable.

1. Santiago metropolitan area (GDP US$101.7 billion)

2. 2nd Region, Antofagasta and includes Calama (GDP US$21.8 billion)

3. 5th Region, Valparaiso, includes the Viña del Mar metropolitan area (GDP US$16.7 billion)

4. 8th Region, Biobío, includes the Concepcion metropolitan area (GDP US$16.5 billion)

5. 6th Region, Libertador General Bernardo O’Higgins (GDP US$9.4 billion)

6. 7th Region, Maule, includes Talca (GDP US$7.7 billion)

7. 4th Region, Coquimbo includes the La Serena metropolitan area  (GDP US$6.6 billion)

8. 3rd Region, Atacama including Copiapó and Salvador, mining (GDP US$5.7 billion)

9. 10th Region, Los Lagos, including Puerto Montt, Castro and Osorno (GDP US$5.14 billion)

10. 1st Region, Tarapacá, inlcuding Iquique (GDP US$5.12 billion)

11. 9th Region, La Araucanía, including Temuco (GDP US$4.7 billion)

12. 14th Region, Los Ríos, including Valdivia (GDP US$2.5 billion)

13. 12th Region, Magallanes and Chilean Antarctic, includes Punta Arenas (GDP US$1.8 billion)

14. 15th Region, Arica and Parinacota (GDP US$1.3 billion)

15. 11th Region Aysén of General Carlos Ibáñez, including Coyhaique (GDP US$0,99 billion)

It is pretty clear that Santiago dominates the country economically. Antofagasta and Calama are high on the list on account of mining earnings which does not translate into a generally high quality of life in my opinion. Next up are the Viña del Mar and Concepcion metropolitan areas, for good reason, since they are the main centers for industrial production and tourism outside of the capital city. They are followed by farming regions and some more significant mining in the 3rd, 4th and 6th regions. Lumber, dairy and fisheries are on the low end of overall economic production in the southern regions. Living where there is a lot of economic activity generally translates into a higher quality of life. That fact should provide a good starting point for newcomers making choices about where to live.

Another good indicator to consider is the median household income statistic for 2009, by comuna. The data are a little bit old and in a dynamic country like Chile, things like this statistic change a lot in a few years. But at least it will provide a good idea. The data were obtained from the webite of the Library of the National Chilean Congress.

Remember that only Vitacura is nearly completely free of a significant poorer section. Lo Barnechea and Las Condes both have them, and Providencia’s has been growing. However, Viña de Mar, Concón, much of Concepción and Las Serena have very large poor neighborhoods, dragging down considerably the community average. Considering Viña del Mar in particular, it is likely that the coastal section, especially Reñaca, has a median household income similar to south Concon, which is certainly much higher than the Concon statistic in the following list (which includes poorer sections in north Concon). Indeed, if Reñaca and south Concón were to become a separate comuna, as some Chileans have been pushing for, then it would probably be 6th in ensuing list.

Comuna (selected) Median Houshold Income (pesos)
2009
Lo Barnechea (La Dehesa) $ 3.256.310
Las Condes $ 3.246.457
Vitacura $ 3.066.970
La Reina $ 2.281.099
Providencia $ 2.271.430
Ñuñoa $ 1.255.232
Santiago (centro) $ 1.230.676
Concon $ 1.076.438
Antofagasta $ 862.784
Rancagua $ 865.167
San Pedro de la Paz $ 853.545
Punta Arenas $ 773.823
Huechuraba $ 763.445
CHILE $ 754.795
Iquique $ 752.842
Valparaíso $ 720.623
Temuco $ 705.271
Concepcion $ 702.613
Alhue $ 699.130
Colina (Chicureo) $ 695.812
Puerto Varas $ 681.652
Osorno $ 654.351
Viña del Mar $ 642.786
Chiguayante $ 624.401
Quilpue $ 620.451
La Serena $ 585.880
Talca $ 584.756
Valdivia $ 567.329
Zapallar $ 555.243
Olmue $ 549.263
Puerto Octay $ 546.021
Rengo $ 520.720
Castro $ 484.848
Pucón $ 461.966
Coronel $ 454.950
Alto de Carmen $ 432.987
Puqueldon $ 409.010
Vichuquen $ 399.796
Camiña $ 345.269
AVERAGE $ 952.667

Hopefully this information will help the prospective newcomer have a better idea of where he chooses to live in Chile.

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country.

Dr. Cobin’s book, Life in Chile: A Former American’s Guide for Newcomers, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $49.

Dr. Cobin’s sequel book, Expatriates to Chile: Topics for Living, adds even further depth on important topics to expatriates who either live in Chile already or who have Chile on the short list of countries where they hope to immigrate. The book deals with crucial issues pertaining to urban and rural real estate transactions, natural disasters, issues pertaining to emigration and its urgency, money and the quality of life, medical care and insurance, business opportunities, social manifestations (including welfare state and divorce policy concerns), Chile in the freedom indices, social maladies (lying, cheating, stealing and murder), as well as discussion of a few places worth visiting and some further comments about Santiago.

Dr. Cobin’s next sequel, Living in Chile: Key Details of History, Culture, Politics and Places for the Serious Immigrant, goes into detail that mainly those people living in Chile already or serious immigrants will be interested in. It is also of special importance to libertarians that want to know something about the political and ideological undercurrents, past highlights (like having a free port much like Hong Kong or free banking), and people that want practical information and where they can retire on their budget. The travel section compliments the other books in the series so that those that read all three books can be sure to have covered the key places of the country from top to bottom.

This book is chock full of savory details that only a true immigrant and former American with many years of experience would know. Some things are only learned over long periods of time and observation. Take advantage of tapping into Dr. Cobin’s deep knowledge of the country and insights of importance to serious immigrants.

For a brief introduction consider Dr. Cobin’s abridged book (56 pages): Chile: A Primer for Expats ($19), offering highlights found in the two larger books.

Buy Dr. Cobin’s Public Policy books at Amazon.com:

Christian Theology of Public Policy: Highlighting the American Experience (2006)

Bible and Government: Public Policy from a Christian Perspective (2003)

A Primer on Modern Themes in Free Market Economics and Policy (2009)

Bring with You to Chile These Little Things

Over the last 20 years that I have been associated with Chile and bringing things down here from the United States and Europe, several “little” items pop up as necessities that simply are not available in the country. Therefore, I suggest that whether you are bringing a container, pallet or many suitcases that you slips some or all of these things in.

1. Wax paper

2. Casters for rolling high-back leather or other desk chairs

3. Three hole punch and corresponding file folders

4. Manila file folders

5. Pie pans, disposable and otherwise

6. Blue cheese dressing (sometimes can be found here but it is not very good)

7. BBQ sauce

8. Power strips and extension cords with 110V plugs (USA)

9. Parallel and standard leather-covered Spanish Bibles.

10. Vaseline

11. Murphy bed kits, if you are in to space-saving

12. Bedding for USA size beds you bring, if applicable

13. Spanish grammar books and dictionaries, as many as you can find!

14. High quality paint, which is very expensive in Chile with poor selection (Behr is here)

15. Interesting kitchen cabinet insert racks

16. Door knockers and handles, available here but with limited selection

17. 9V extension cord adapters/power strip for car cigarette lighter plug

18. Toner for your laser printer, depending on your chip might not be available here

19. Cordless landline phones, available here but expensive and in more limited supply

20. Most electronic devices that can be plugged into 9V or 200V, except alarm clocks: GPS, radar detector, windows-based notebook PCs, tablets, etc. since they are more expensive here.

21. Plastic bed peg/wheel risers and plastic storage boxes to slide under the bed

22. Car parts, in case you happen to know what kind of car you will have here

23. Red and black licorice ropes

24. Skiing, camping, kayaking and fishing equipment

25. Used, good condition furniture: lazy-boy chairs are a great idea, hardwood coffee table, couches,  

maybe a dining room set, and also chairs and coffee tables. Quality used furniture can be sold at a profit.

26. Replacement electric razor heads/foil

27. Big bottles of vitamins

28. 3 x 5 note cards

29. Christmas cards to send out, basically not available here

30. baking powder

31. lamp shades

32. tape measures in inches, better variety up there than here

33. 10,000 pellets in case you expect pests where you will live 

34. Size 13 shoes and other shoes that are quality in general, better variety up there than here

35. Power transformer, 3000 watts, available here but mroe expensive 

36. Shelf liner

37. Spanish version of Kiersey temperament analysis book, Por Favor Compréndeme 

38. Books published in Argentina or Chile on grammar, also dictionaries, lexicons, verb guides, picture books, Spanish-English dictionaries (very valuable!).

39. Books on Chilean historyand geography (in English), especially Out of the Ashes by James Whelan. 

40. Maps of Chile

41. Nice chess sets 

42. Nice hardhats, if you plan to be in work areas

43. Comforters for beds 

44. High thread count sheets

45. Tums

 I might come back and add to this list so be sure to check back!

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country.

Dr. Cobin’s book, Life in Chile: A Former American’s Guide for Newcomers, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service–Chile Consulting–where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they

would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $149.

Dr. Cobin’s sequel book, Expatriates to Chile: Topics for Living, adds even further depth on important topics to expatriates who either live in Chile already or who have Chile on the short list of countries where they hope to immigrate. The book deals with crucial issues pertaining to urban and rural real estate transactions, natural disasters, issues pertaining to emigration and its urgency, money and the quality of life, medical care and insurance, business opportunities, social manifestations (including welfare state and divorce policy concerns), Chile in the freedom indices, social maladies (lying, cheating, stealing and murder), as well as discussion of a few places worth visiting and some further comments about Santiago.

Dr. Cobin’s next sequel, Living in Chile: Key Details of History, Culture, Politics and Places for the Serious Immigrant, goes into detail that mainly those people living in Chile already or serious immigrants will be interested in. It is also of special importance to libertarians that want to know something about the political and ideological undercurrents, past highlights (like having a free port much like Hong Kong or free banking), and people that want practical information and where they can retire on their budget. The travel section compliments the other books in the series so that those that read all three books can be sure to have covered the key places of the country from top to bottom.

This book is chock full of savory details that only a true immigrant and former American with many years of experience would know. Some things are only learned over long periods of time and observation. Take advantage of tapping into Dr. Cobin’s deep knowledge of the country and insights of importance to serious immigrants.

For a brief introduction consider Dr. Cobin’s abridged book (56 pages): Chile: A Primer for Expats ($19), offering highlights found in the two larger books.

Buy Dr. Cobin’s Public Policy books at Amazon.com:

Increased Real Estate Taxes in Chile

One of the worst outcomes of the landslide election in favor of the Chilean Left in 2014 was the reality of paying higher taxes. Now it is coming to fruition in some areas, although for most people coming in from abroad the effect will be minimal. Unfortunately, those few newcomers that will be engaged in the building or real estate development and trading businesses in Chile will be impacted more.

The best feature of the current regime is its fall into the abyss in terms of popularity (with socialist President Bachelet’s approval rating recently declining to just 26% from around 70%), is that the policies are affecting and hurting so many people from the middle class that it is now unlikely that the Left will return to power for at least a decade.

Until the present administration, Chile has had no capital gains taxes for individuals (except companies, which treat capital gains like any other gain) so long as their real property was held for longer than one year. Such individuals were not considered “habitual” buyers and sellers of real property and thus not in the real estate business.

Now there will be capital gains taxes, starting on January 1, 2017, for everyone. However, there is an exclusion of 8,000 UF, which is just under 200 million pesos or about US$317,000, considering together the total gains from the sale of post-2004 purchased properties sold in any given year.

Upper middle class apartments in northeastern Santiago currently sell for 7,000 UF to 9,000 UF, and in Viña del Mar/Concón about 30% to 40% less, meaning that one’s property value will have to double or more to surpass the exclusion. Thus, in practice, most people are not going to be affected by this tax. And if they are prudent tax planners, they will sell (and perhaps immediately repurchase) property when their capital gain is closing in on 8,000 UF.

Moreover, those who inherit appreciated real property will receive a credit for the inheritance tax against the capital gains tax, so as to avoid double taxation. Nowhere is a rate for the capital gains tax given, so I must assume that it will be the same as one’s marginal income tax rate, which will certainly be much higher once a sizable capital gain is added to his income in any given year. The top marginal personal income tax rate in Chile under the tax reform will be 35% (for incomes over 1,440 UF annually or about US$56,000). For many people, the capital gains tax will be well-worth avoiding. There are several articles detailing the new tax, including the Chilean Library of Congress site. Look it over (warning:  it’s in Spanish!).

What is more onerous is the implementation of the 19% value added tax (IVA) on the sale of properties (excluding land value), effective January 1, 2016. This new tax will likely raise the price consumers pay for newly built homes by 8% to 12%, according to an article in La Nación, with higher rates in the range being applied to middle class purchasers of homes (without considering land value) between 2,000 UF and 3,000 UF (currently US$80,000 to US$120,000). The reason that the consumer will not simply pay an additional 19% is not due to a strict inelasticity of demand, which might well be the case in the marketplace, but rather because the contractor or building firm receives a credit toward the IVA it pays during construction. That credit has been limited, and will decline over the next few years, under the 2014 leftist tax reform. Still, the IVA credit does lower the overall price impact to consumers to no more than a 12% increase. See the chart in this article for details on the calculation.

Buyers and sellers of raw land or unimproved building lots will not have to pay IVA. Only buildings and things that add value to the land are taxed. What is unclear from my reading is whether sellers of used homes will also have to charge IVA to buyers. Apparently not! If not, great, but that tax differential will cause a significant distortion in the housing market, making a wider disparity between used and new home prices. From what I can tell from

From what I can tell from the Chilean Library of Congress article mentioned above, at first the only people affected by the IVA tax are “habitual” sellers of real estate: contractors and builders that build-to-sell, rather than individuals. However, the law is somewhat ambiguous, and it could be interpreted to include real property traders, and maybe real estate firms and brokers (although my wife assures me that such is not the case since they are not the owners of the property).

As always, new taxes and tax increases distort market conditions and induce inefficiencies. One thing that is clear is that anyone that buys a property, or signs a promise to buy it or a rent-to-own contract by December 31, 2015 will not have to pay the value added tax. Thus, my best advice is to conclude your real property transactions by year end, unless you hold to a contrarian position that the tax distortion (quite possibly) will cause a major decline in demand for real property, and thus reduce prices. The problem with the contrarian position is that it assumes that demand from foreign buyers coming to Chile will also fall. This possibility is undermined by the fact that Chilean property already looks like a bargain to serfs from Northern Hemisphere countries, and still would appear cheap even if the price were 12% higher. Hence, I remain unconvinced that overall demand will fall enough to reduce prices, but it could happen.

My interpretation is that foreign buyers will be unfazed by the tax hike. There will be a flurry of local people buying property before year end, especially in new developments and apartment buildings. After that, I see a significant distortion in moderately prices (2,000 UF to 3,000 UF) homes since middle income earners will find it harder to qualify when the property they want costs 12% more. Contractors in this market will likely have to sell for less and have lower profits, and thus will not continue to expand to build in middle class areas. That’s too bad since much urban blight has been removed in places like Viña del Mar, Valparaíso, Temuco, Puerto Montt, Concepción and central and western Santiago by putting up new apartments and tract homes in previously run-down areas. Now, under the tax reform, much more of Chile will remain blighted. It is also too bad for people employed in the construction sector since many of them will lose their jobs.

Moreover, the new tax law doubles the onerous tax paid to take out a mortgage, making loan acquisition more expensive for the middle class (since upper class and poorer people generally do not or cannot take out mortgages). The resulting higher unemployment and harm inflicted on the middle class does have a silver lining in that the current regime’s coalition is sure not to remain in power in either Congress or the Presidency. The tax reform policy will end up being a vote-losing action.

For most people, and especially newcomers to Chile, the effect of the new taxes can be avoided with careful planning and by not becoming a “habitual” trader of real estate. While this new limitation is bad, the truth of the matter is that few people coming to Chile will be affected unless they buy a new home starting next year. They will simply have to pay more, certainly if they buy from a firm selling units or homes, but perhaps also if they buy through a real estate agent (using a loose interpretation of the new law). Thus, it might behoove them to buy and remodel a used home offered “by owner” instead and make certain that they will avoid the value added tax. After they own a property, they should make sure to sell it prior to exceeding the 8,000 UF exclusion on the capital gains tax.

As a side note, the corporate tax rate is also be scaled up from 21% currently, increasing by 1.5% annual increments, to its final resting level of 27% in 2019. Another stupid blunder of the leftist President and Congress! This tax might have a more dramatic effect on newcomers than the real estate tax hikes.

Finally, something to bear in mind about any new tax that is easily avoided at first is that it will likely become more onerous in the future. Once the camel’s nose is in the tent, it does not take long before the whole camel is inside as well. Let’s hope that by ousting the Left next election, Chileans will also sweep away the new taxes and reforms with it!

 

Be sure to become a member of Escape America Now and gain access to the monthly webinar. Details at www.esccapeamerianow.info. Visit AllAboutChile.com for discussion and forums about the country.

Dr. Cobin’s book, Life in Chile: A Former American’s Guide for Newcomers, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service – Chile Consulting – where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $49.

Dr. Cobin’s sequel book, Expatriates to Chile: Topics for Living, adds even further depth on important topics to expatriates who either live in Chile already or who have Chile on the short list of countries where they hope to immigrate. The book deals with crucial issues pertaining to urban and rural real estate transactions, natural disasters, issues pertaining to emigration and its urgency, money and the quality of life, medical care and insurance, business opportunities, social manifestations (including welfare state and divorce policy concerns), Chile in the freedom indices, social maladies (lying, cheating, stealing and murder), as well as discussion of a few places worth visiting and some further comments about Santiago.

Dr. Cobin’s next sequel, Living in Chile: Key Details of History, Culture, Politics and Places for the Serious Immigrant, goes into detail that mainly those people living in Chile already or serious immigrants will be interested in. It is also of special importance to libertarians that want to know something about the political and ideological undercurrents, past highlights (like having a free port much like Hong Kong or free banking), and people that want practical information and where they can retire on their budget. The travel section compliments the other books in the series so that those that read all three books can be sure to have covered the key places of the country from top to bottom.

This book is chock full of savory details that only a true immigrant and former American with many years of experience would know. Some things are only learned over long periods of time and observation. Take advantage of tapping into Dr. Cobin’s deep knowledge of the country and insights of importance to serious immigrants.

For a brief introduction consider Dr. Cobin’s abridged book (56 pages): Chile: A Primer for Expats ($19), offering highlights found in the two larger books.

Buy Dr. Cobin’s Public Policy books at Amazon.com:

Christian Theology of Public Policy: Highlighting the American Experience (2006)

Bible and Government: Public Policy from a Christian Perspective (2003)

A Primer on Modern Themes in Free Market Economics and Policy (2009)

Petroleum Imports into Chile

Some of my clients wonder how wars in the middle east are going to affect Chile’s supply of gasoline and diesel.

The answer is: “not at all.”

Chile is a relatively small country and although expanding and growing at 3% still, its petroleum needs can be fairly easily provided by international markets. Consider this interesting article on where Chile gets its imported oil and petroleum products.

In sum, Chile imports 60% of its oil from Brazil and Ecuador, 32% from Argentina and Columbia and 8% from the UK and Canada. These countries do not charge Chile a duty.

Countries like México refuse to do provide such tax relief and thus the state-run Chilean firm ENAP does not buy any oil from México. ENAP was formed in 1950, currently under the ministry of mining.

By the way, from a libertarian perspective it is ridiculous to have a state-run oil company (monopoly), or any other state-run enterprises. But that subject is for another article.

Chile still has many imperfections and needs to do more privatization. ENAP pays the international price for oil. Retail prices in Chile are affected both by what ENAP pays and the substantial federal gas (especially) and diesel taxes imposed by the government. The state has owned all oil deposits in Chile since 1928, which is clearly another problem.

Here’s another article on the history of oil production in Chile, since the 1890s, from which the image of the derek (1907) in the image below was taken:

I had heard years ago that Chile imports 96% of all its oil, but Wikipedia says that the deep south sites in Tierra del Fuego only produce gas and not petroleum, meaning (if true) that 100% of Chile’s petroleum products are now imported.

Chile does its own refining. Refineries opened in Concón and Quintero in 1954, with capacity in Concón doubled in 1959. A gasoline plant in Cullén (east southeast of Cerro Sombrero in Tierra del Fuego) opened in 1962, Concepción refinery started up in 1966, and the Cabo Negro (northeast of Punta Arenas) gas processing plant opened in 1971, which has also produced methanol since the mid 1990s.

Chile refines 97% of the country’s gasoline need, 83% of its diesel used and 70% of the kerosene consumed nationally. The rest is imported, although it is so far no clear to me from where, and wherever it comes from (Brazil?), the amount is not very significant.

Some have no doubt questioned why a refinery (eyesore) was placed near the sprawling upper class community of Concón. However, one must remember that in the 1960s Concón was a dumpy little town at the end of the Anconcagua River and the international highway (with easiest access to Santiago before the major toll highway was built) and near ocean ports in Quintero and Valparaíso.

No one could probably have imagined that a backwards, Third World and increasingly communist country like Chile in the 1960s would ever have a a sprawling section of Viña del Mar morphing into Concón and transforming much of it into modern elegance. So there is nothing surprising about the location.

The same can be said of refineries in Southern California that were once in the “boonies” but now are located on increasingly valuable property. The bottom line is that when it comes to gasoline and diesel, one need not worry that Chile is dependent on the Middle East. It is simply not the case. The more important focus should be on eliminating federal fuel taxes and privatizing ENAP.
 

Chile has a new sustainable community starting called Freedom Orchard. Check it out. Invest in it, and diversify out of the decaying assets in “First World” nations.
Also, be sure to tune in to Dr. Cobin’s radio program: “Red Hot Chile” at noon (ET) on Fridays on the Overseas Radio Network (ORN). You can also join the thousands of other people who download the shows each month via the archive link on our Red Hot Chile page (recorded show updated every Monday morning).
Be sure, too, to visit AllAboutChile.com for discussion and forums about the country and what’s going on with Freedom Orchard.
Dr. Cobin’s book, Life in Chile: A Former American’s Guide for Newcomers, is the most comprehensive treatise on Chilean life ever written, designed to help newcomers get settled in Chile. He covers almost every topic imaginable for immigrants. This knowledge is applied in his valet consulting service – Chile Consulting – where he guides expatriates through the process of finding a place to live and settle in Chile, helping them glide over the speed bumps that they would otherwise face in getting their visas, setting up businesses, buying real estate, investing in Chilean stocks or gold coins, etc. The cost is $49.
Dr. Cobin’s sequel book, Expatriates to Chile: Topics for Living, adds even further depth on important topics to expatriates who either live in Chile already or who have Chile on the short list of countries where they hope to immigrate. The book deals with crucial issues pertaining to urban and rural real estate transactions, natural disasters, issues pertaining to emigration and its urgency, money and the quality of life, medical care and insurance, business opportunities, social manifestations (including welfare state and divorce policy concerns), Chile in the freedom indices, social maladies (lying, cheating, stealing and murder), as well as discussion of a few places worth visiting and some further comments about Santiago.
For a brief introduction consider Dr. Cobin’s abridged book (56 pages): Chile: A Primer for Expats ($19), offering highlights found in the two larger books.
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