Tuesday, March 2, 2010

Life Saving Capitalism

One of the left's most notorious villains is former Chilean dictator Augusto Pinochet, the army general who led the country from 1973-1990. Certainly Pinochet's rule was repressive and brutal as political opposition was crushed during his tenure. He ascended to power through a military coup which overthrew the democratically elected socialist Salvador Allende. The CIA assisted coup is cited as a prime example of nefarious American meddling in the affairs of other nations.

Today however, Chile is reaping the benefits of the free market reforms that Pinochet instituted while in power. So effective were these in transforming Chile's moribund economy that they've been maintained by successive leftist governments. In an op-ed in today's Wall Street Journal, Bret Stephens points out that Chile is South America's most prosperous nation. He credits Pinochet's adoption of recommendations offered by Milton Friedman in 1975 for the turnaround.

(Under Allende) Chile was an economic shambles. Inflation topped out at an annual rate of 1000%, foreign-currency reserves were totally depleted, and per capita GDP was roughly that of Peru and well below Argentina's.

(Now)...Chileans have become South America's richest people. They have the continent's lowest level of corruption, the lowest infant-mortality rate, and the lowest number of people living below the poverty line.

Stephens also credits this economic miracle for the relatively small loss of life from Saturday's powerful earthquake.

...Saturday's earthquake in Chile measured 8.8. That's nearly 500 times more powerful than Haiti's, or about one million Hiroshimas. Yet Chile's reported death toll—711 as of this writing—was a tiny fraction of the 230,000 believed to have perished in Haiti.

Chile...has some of the world's strictest building codes. That makes sense for a country that straddles two massive tectonic plates. But having codes is one thing, enforcing them is another. The quality and consistency of enforcement is typically correlated to the wealth of nations. The poorer the country, the likelier people are to scrimp on rebar, or use poor quality concrete, or lie about compliance. In the Sichuan earthquake of 2008, thousands of children were buried under schools also built according to code.

Yet the left derides Friedman and his University of Chicago economics department which had an ongoing exchange program with Chile's Catholic University.

"If the pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?" wrote New York Times columnist Anthony Lewis in October 1975.

In "The Shock Doctrine," Ms. (Naomi) Klein titles one of her sub-chapters "The Myth of the Chilean Miracle." In her reading, the only thing Friedman and the Chicago Boys accomplished was to "hoover wealth up to the top and shock much of the middle class out of existence." Actual Chileans of all classes—living in the aftermath of an actual shock—may take a different view of Friedman, who helped give them the wherewithal first to survive the quake, and now to build their lives anew.


No comments:

Post a Comment