View Full Version : What Freidman Actually Did to Chile

Gayle in MD
12-13-2010, 08:40 AM

Milton Friedman did not save Chile
To say the late economist deserves credit for the country's building codes shows a lack of knowledge of pre-coup Chile


Comments (368)

Naomi Klein
guardian.co.uk, Wednesday 3 March 2010 22.15 GMT
Article history
Ever since deregulation caused a worldwide economic meltdown in September '08 and everyone became a Keynesian again, it hasn't been easy to be a fanatical follower of the late economist Milton Friedman. So widely discredited is his brand of free-market fundamentalism that his admirers have become increasingly desperate to claim ideological victories, however far fetched.

A particularly distasteful case in point. Just two days after Chile was struck by a devastating earthquake, Wall Street Journal columnist Bret Stephens informed his readers that Milton Friedman's "spirit was surely hovering protectively over Chile" because, "thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse … It's not by chance that Chileans were living in houses of brick – and Haitians in houses of straw –when the wolf arrived to try to blow them down."

According to Stephens, the radical free-market policies prescribed to Chilean dictator Augusto Pinochet by Milton Friedman and his infamous "Chicago Boys" are the reason Chile is a prosperous nation with "some of the world's strictest building codes."

There is one rather large problem with this theory: Chile's modern seismic building code, drafted to resist earthquakes, was adopted in 1972. That year is enormously significant because it was one year before Pinochet seized power in a bloody US-backed coup. That means that if one person deserves credit for the law, it is not Friedman, or Pinochet, but Salvador Allende, Chile's democratically elected socialist president. (In truth many Chileans deserve credit, since the laws were a response to a history of quakes, and the first law was adopted in the 1930s).

It does seem significant, however, that the law was enacted even in the midst of a crippling economic embargo ("make the economy scream" Richard Nixon famously growled after Allende won the 1970 elections). The code was later updated in the 90s, well after Pinochet and the Chicago Boys were finally out of power and democracy was restored.

Little wonder: as Paul Krugman points out, Friedman was ambivalent about building codes, seeing them as yet another infringement on capitalist freedom.

As for the argument that Friedmanite policies are the reason Chileans live in "houses of brick" instead of "straw", it's clear that Stephens knows nothing of pre-coup Chile. The Chile of the 1960s had the best health and education systems on the continent, as well as a vibrant industrial sector and a rapidly expanding middle class. Chileans believed in their state, which is why they elected Allende to take the project even further.

After the coup and the death of Allende, Pinochet and his Chicago Boys did their best to dismantle Chile's public sphere, auctioning off state enterprises and slashing financial and trade regulations. Enormous wealth was created in this period but at a terrible cost: by the early 80s, Pinochet's Friedman-prescribed policies had caused rapid de-industrialisation, a tenfold increase in unemployment and an explosion of distinctly unstable shantytowns. They also led to a crisis of corruption and debt so severe that, in 1982, Pinochet was forced to fire his key Chicago Boy advisers and nationalise several of the large deregulated financial institutions. (Sound familiar?)

Fortunately, the Chicago Boys did not manage to undo everything Allende accomplished. The national copper company, Codelco, remained in state hands, pumping wealth into public coffers and preventing the Chicago Boys from tanking Chile's economy completely. They also never got around to trashing Allende's tough building code, an ideological oversight for which we should all be grateful.

Thanks to CEPR for tracking down the origins of Chile's building code.

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12-14-2010, 04:19 AM
How oblivious to reality was that?

Under the Allende regime ... virtually nobody had the wherewithal to build anything.

The fact that the left sees Allende as a hero is both unsurprising and disgusting.

The facts are:

1 - He was never "POPULARLY ELECTED", instead in a split race he drew 36% while the law required a majority or else the election would be tossed into the Chilean congress.

2 - Allende was an avowed Marxist and his campaign was a pack of lies sold to a naive electorate, and financed with Soviet money.

3 - Upon taking office Allende began taking over industry and instituting a fascist economy.

4 - The Allende regime also began seizing private land and property.

5 - Two years into the Allende regime the economy was saddled with a 140% inflation rate, the result of Allende paying off all his backers with printed money.

6 - The Allende regime then stated it would renege on it's debts.

7 - Next the economy was smitten with rampant strikes as the people realized they had been had.

8 - Inflation reached 120% per month.

9 - Exports fell 24% and imports rose 26%, with imports of food rising an estimated 149%.

10 - In 1973 the Chilean Supreme Court condemned the Allende regime and accused them of unconstitutional acts by his refusal to recognize constitutional amendments approved by the chamber of deputies that would fight the regime's massive state expansion plan and called upon the military to enforce the law which the regime would not.

11 - Next the Chilean Supreme Court accused Allende of:

*Ruling by decree, thwarting the normal legislative system

*Refusing to enforce judicial decisions against its partisans; not carrying out sentences and judicial resolutions that contravene its objectives

*Ignoring the decrees of the independent General Comptroller's Office

*Sundry media offenses; usurping control of the National Television Network and applying ... economic pressure against those media organizations that are not unconditional supporters of the government...

*Allowing its socialist supporters to assemble armed, preventing the same by its right wing opponents

*Supporting more than 1,500 illegal ‘takings’ of farms...

*Illegal repression of the El Teniente miners’ strike

*Illegally limiting emigration

12 - In 1973 Allende committed suicide rather than face the charges that would have been brought against him as a coup was in the middle of removing him.

<u><span style='font-family: Arial Black'><span style='font-size: 26pt'>THAT</span></span></u> is who the far left holds in such high esteem, an anti liberty and anti rule of law thugocrat.

FACTS! (http://en.wikipedia.org/wiki/Salvador_Allende) They are such stubborn things.