Transcript

PRESIDENT BACHELET: One of the issues when responding to the crisis is the idea of designing and applying stimulus policies, and this is very important, because by definition, a stimulus policy reflects the political decision to act decisively, to use the levers of the state and of public policy to stabilize the economy, a political decision to deploy our best public efforts to reverse a major failure on the private side.

The time has passed for a paradigm that prevailed for too many years, which maintains that the best regulation of the economy is no regulation at all, and this was an almost blind belief that markets, no matter how complex, can solve in a magical way the countless market failures, informational asymmetries and conflicts of interest that arise -- a belief vigorously advocated in this very city not too long ago that the state is part of the problem, not the resolution.

Well, we believe that the state is part of the solution. This approach of no regulation and defining the state is part of the problem is an approach that in Chile we have come to call the Paradigm of Passivity. The crisis has taught us what we should have known all along, that the state is not and cannot be passive when it comes to economic activity or to financial regulation.

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