Miracle of Chile
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The "Miracle of Chile" is a phrase coined by Milton Friedman in 1982 to describe the liberal, monetarist economic reforms implemented in Chile under the government of President Augusto Pinochet. Friedman did not advise nor personally support Pinochet, though he had given some lectures advocating free market economic policies in the Catholic University of Chile.
At several later occasions, Friedman stated that he had actually intended the miracle to refer to the political developments in Chile, rather than the economic ones. For instance, during an interview held in 1991, he said that the real miracle consisted not in the economic policies adopted by Chile, but in the fact that the Chicago Boys convinced a military junta to adopt them.[1] In 1992 he said that the miracle consisted of the fact that Chile returned to democracy peacefully.[2] However, the phrase "Miracle of Chile" continues to be used to refer to economic aspects.
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[edit] Debate over the "Miracle"
Former President Pinochet, under the advice of a group of Chilean economists who had mostly studied at the University of Chicago Department of Economics (the Chicago Boys), implemented a set of economic reforms during the dictatorial period that included deregulation and privatization. Among others, they privatized the pension system, state industries, and banks, and reduced taxes. Pinochet's aim was to "make Chile not a nation of proletarians, but a nation of entrepreneurs." The main copper company, Codelco, remained in government hands due the nationalization of copper established by Salvador Allende, however, private companies were allowed to explore and develop new mines.
Supporters of Friedman's view argue that subsequent events in Chile have vindicated his free market philosophy: Chile's economy is noticeably stronger and more advanced than those of other Latin American nations. Chile's annual growth in per capita real income from 1985 to 1996 averaged 7%, far above the rest of Latin America. [3].
Chile had a strong economic recession in 1982-1983, and most of the recovery and subsequent growth took place after Pinochet left office. While enacting certain changes, the four successive civilian administrations that followed Pinochet, including that of current Socialist president Michelle Bachelet, have not tried to dismantle the Chicago Boys' policies, but they have been making several efforts to reduce the social inequity present in the country.
Some people have criticized Friedman for assisting the Pinochet dictatorial government with economic reforms, citing the regime's human rights record and authoritarianism (see Chile under Pinochet). Friedman has tried to defend himself against such criticisms, stating that he had given nearly similar speeches and promoted the same policies in China and Yugoslavia, and pointing out that his visit was unrelated to the political side of the regime. [4]
The experience of Chile in the 1970s and 1980s, and more particularly the model of authoritarian political control combined with neoliberal economic policies, has influenced the policies of the Communist Party of China and has been invoked as a model by economic reformers in other countries, such as Boris Yeltsin in Russia and in other Eastern European post-Communist societies.[citation needed] The Chilean social security reform has been followed by 30 countries around the world, including Poland and Sweden, and has been invoked by President George W. Bush and former Fed Chairman Alan Greenspan in the U.S. as an example to follow.
[edit] Additional information
[edit] See also
[edit] External links
- Unemployment Protection in Chile, Wayne Vroman, August 2003
- Jeffery Sachs interviews various economists about the "Miracle of Chile" from PBS.org
- Is Chile a Neoliberal Success? by economist Jim Cypher in Dollars & Sense magazine
- Discurso de Incorporación a la Sociedad Chilena de Historia y Geografía del prof. Luis A. Riveros (Incorporation Discourse to Chilean Society of History by Professor Luis Riveros)made by a Chilean economist and former principal of Universidad de Chile about Chilean economic history
[edit] Articles
- The Millennium Adventure - From Top to Bottom - 6 Oct 2001
- Análisis económico de los gobiernos chilenos 1964-2000 - by a Chilean undergraduate student Daniel Neira - as an introduction to Chilean economy in perspective
[edit] Criticism
- The Chicago boys and the Chilean 'economic miracle' by Steve Kangas; criticism of the Chilean experiment.
- The Road from Serfdom: Milton Friedman and the Economics of Empire
