Chile's rising economic tide leaves many stuck on the bottom. Critics say official free-market policies widen gap between wealthy and poor

When Carmen Luz received her nursing certificate nine years ago, it was the proudest day of her life. But remembering that day now produces a bittersweet memory. With the military regime's cutback in public health spending, Ms. Luz has never been able to find a nursing job. To put food on the table, she cleans houses, sells goods at open-air markets, and collects newsprint that she peddles to recyclers.

These odd jobs don't put much on her table: Like most of the other residents in Lo Hermida, a shantytown in southeastern Santiago, she eats only one solid meal per day, at lunch. Breakfast and dinner consist of tea and bread. ``The only time I see meat is in photographs,'' she says with a rueful laugh.

With Chile's economy projected to grow by 5.7 percent for the second year, businessmen and government officials boast Chile's free-market economic model is lifting it out of underdevelopment. Industrial companies' profits are up, agricultural exports are booming, and inflation is down to about 20 percent.

But diplomats and opponents of the military regime say the rising tide is leaving many boats stuck on the bottom. They say that while expensive restaurants are crowded and Mercedes fill Santiago's wealthy suburban streets, the gap between the rich and the poor is widening.

``What we're increasingly seeing, thanks to the government's free-market policies, is a Chile being divided into two, one rich and the other poor,'' says Ricardo Ffrench-Davis, an economist at Cieplan, an economic think-tank affiliated with the opposition Christian Democratic Party. The country's once-large middle class is sinking under the government's policies.

How the poor are faring in Chile has important implications beyond this country's borders.

The Reagan administration has strongly supported President Augusto Pinochet Ugarte's economic program, which it says provides a development model for other Latin American debtors. Chile's military government has eliminated price controls, fired thousands of government employees, and privatized hundreds of state companies.

But if General Pinochet's polices are benefiting the wealthy at the expense of the poor, other Latin debtors might be well advised to look for other solutions to their economic problems, economic analysts say.

How the poor are faring is also an important question in Chile, where their vote could prove decisive in a national plebiscite Pinochet is expected to hold a year from now. If the 71-year-old general wins the single-candidate election, under the 1980 Constitution he can continue as President until 1997.

Cieplan economists say per capita income is 10 percent lower today than in 1970, when Salvador Allende Gossens, a Marxist, was elected President. They add that per capita consumption of beef, wheat, and dairy products has declined in the 14 years since the military overthrew Allende in a bloody coup.

Economists say minimum-wage earners are earning 40 percent less than what they received in the 1978-81 period. Purchasing power, too, has shrunk 15 percent on average compared with the 1970 figure.

Officials dispute these findings, arguing that the poor are better off today than during Allende's three-year term. They say illiteracy is down, as is malnutrition and unemployment. They add that infant mortality has fallen to one of the lowest rates in the hemisphere. In 1965, the infant mortality rate was 95 for every 1,000 births; in 1970, 79; today, it is 19.

``We've proved with statistics that the poor are better off today than in the 1960s and '70s,'' says Jorge Asecio, a top official in the ministry of economics.

Life in the shantytowns ringing Santiago suggest government statistics don't tell the entire story. Following a 1983 flood, which killed 16 people and washed away dozens of homes in Lo Hermida, the government built three-room brick houses, installing electricity and running water. But many residents have had their electricity cut off because they can't afford the bills. Only 40 percent of the residents have steady employment. The rest get by doing odd jobs.

Teen-age Maria Sandoval takes care of the 10 children living with her and her mother in their two-bedroom home. The 12 people share three single-person beds, sleeping head-to-toe to fit. Maria's mother feeds everybody with the 12,000 pesos ($52) she earns each month cleaning houses. This is just enough to give the children one full meal a day - but not enough to warm the house during winter nights nor buy materials to keep the tin roof from collapsing during heavy rains.

Lo Hermida residents say, in sharp contrast to the Allende period, medical care is expensive and not easily accessible.

``I've never seen things as bad as they are today,'' says a nun in Lo Hermida, echoing comments by priests and nuns living in other shantytowns. ``People often come to my door saying they haven't eaten anything solid in three days. Drug abuse has become a plague in the past three years. There are no work prospects for the youth. So many people these days seem demoralized and without hope.''

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