Despite years of policy debacle and dictatorship, writes Ryan McMaken, Chile has taken a turn toward liberalism that has gone largely unnoticed. Unlike many Latin American countries, Chile is not notable for its strongman politics (like Venezuela) or its ongoing guerilla wars (like Colombia), but is rather a place where people prefer to get on with the business of doing business. What that equates to for Chileans is a large measure of peace and freedom. [Full Article]
Source link: http://archive.mises.org/2960/chile-socialism-dictatorship-and-liberalism/
Chile: Socialism, Dictatorship, and Liberalism
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Of course government spending on “social programs” keeps going up in Chile. But it is hard to think of any nation where that is not the case.
The shopkeepers still have a lot to learn though. Incredibly inefficient when it comes to service, not to mention rude. In most department stores and other stores like stationery shops, etc. at the counter one person will ring up the price, the next will take the money and the other will then give you the goods. Just one example of room for improvement.
Jacob Hornberger offers A more detailed piece on the Pinochet regime in light of libertarian concerns. He compares the “war on terror” mindset with Pinochet’s war on all political dissidents.
A very good article. In a grad class I took about Latin America, the main point made again and again about Chile was that economic inequality in their society is huge. Chile was used as an example of how free markets have been tried in Latin America, and the experiments with them were basically a failure. Failure, in this context, was defined as the persistence of an income gap between rich and poor. Wish I had this article when I was in that class. There is no doubt that the Pinochet government was a brutal dictatorship, but I would have liked the class to hear a point of view other than that Allende would have made Chile some kind of paradise of social justice if only he had stayed in power.
As a Canadian, I envy Chile for their recent success.
Canada resembles more and more the “bad” kind of Latin American economy, characterized as the article says, by “state-controlled economies and oligarchic rule”. Many right-leaning people within the reigning Liberal Party heralded the prime ministership of Paul Martin because they expected that he would cut government spending, taxes and regulation. But they were fooled, because he is after all just another oligarch, whose success in business probably owed more to political and family connections than to any particular skill or intelligence. But whatever the verdict is on the character of Paul Martin, I think his record speaks for itself – no tax cuts, no deregulation, no government corporations sold off, and no cuts to welfare of any kind.
Describing Chile as “well on the way to becoming one of the richest countries in the world” is a bit optimistic. According to < http://www.geographyiq.com/ranking/ranking_GDP_per_capita_purchasing_power_parity_dall.htm > it is in 62 position just behind Argentina – not bad but hardly world class.
The way the western governments & media cheered Pinochet’s coup was an important event for me proving that their commitment to democracy was only skin deep. Granted Pinochet’s 3,500 killings pale before the 80,000 in El Salvador & that I now accept the superiority of the free market. Nonetheless we cannot know what a democratic socialist woould have developed into – Lee Kwan Yew started as a socialist too. Pinochet’s other fault was that he was clearly acting as a CIA patsy. If we believe that companies should be allowed to fail or succeed without interference it must be even more important that nations have the same choice.
I think Jacob Hornberger gave a too positive picture of Salvador Allende.
First of all, to say that he was “democratically elected” is about as misleading as saying Adolf Hitler was democratically elected.
Like Hitler, Allende never received a majority in any election (He only received 36%) and was only instituted after the Chilean Christian Democrats agreed to choose him in a congressional vote over the other leading candidate. Later, after the Christian Democrats realized what a great mistake they made, both the Chilean Congress and Supreme Court declared that Allende had violated his authorities and called for his removal.
So it was the right thing to do to remove him-although Pinochet commited unnecessary atrocities to do so. And he clearly should not have used this opportunity to seize power for himself.
And to compare Allende’s economic agenda to that of FDR and LBJ is also misleading. Firstly because Chilean welfare state went far beyond what America has ever had, at more than 50% of GDP. But Allende did far more than merely institute Scandinavian-style Social Democratic welfare statist policies. They also instituted widespread nationalisations (socialisations) of private companies, that is outright communist policies.
I am certainly not trying to defend the inexcusable atrocities comitted by Pinochet here-but we should not buy into the leftist myth of Salvador Allende as some kind of a heroic martyr.
If it’s possible Neil Craig is right, and Karlsson complaining about his country, compared to Chile, is better for him to emigrate there. CHL make a point about a shopping not taking into account that usually people is stolen goods due to the misery there. Chile is right now a “colony” of US corporations and some spanish too. Here seens to be in a class room where the young are washbrained about the “the great success of liberalism”: a myth, young boy, that lead you to see nothing about reality. One powerful US don’t support a dictator for political caprice, but in the interest of corporates to grab resource to another country like Chile, and many other specially in Latin America. This rancid stuff that liberalism bring the best in town for ALL with propaganda imagery is enough. Walk down in central Santiago after sunset for 500 meters and you have a knife on your troat for your money. Think two times before enthusiasm you about the legally exploitation you experiment in your own life, not to say Chile, Salvador, Guatemala, Honduras. Costa Rica, Mexico where US liberalism has acted exactly like the yound chilean boys dowtown Santiago: knife to throat. Peace for all young boys!
I’ve always had a hard time pinning down my opinion of 1970′s Chile.
All points here appear valid, including how Pinochet was a Kissinger/CIA asset and how Allende was not exactly the people’s fave. Who was it again who got blown up in Washington?
Could the (trite) lesson in all this be that misery always follows attempts–from left or right–to “choose” how an economy should operate?
I will also plug a film called “Machuca,” set at the time of Pinochet’s coup over Allende, which explores characters & motivations from both sides of the issue (and revolves around a boy caught in the middle).
As expected, the email comes rolling in from folks telling me “Pinochet great, Allende horrible” or vice versa.
One reader claimed that Allende was pretty much your run-of-the-mill Social Democrat along the lines of say, Tony Blair or Lyndon Johnson. This is quite wrong. There was never hyperinflation under Lyndon Johnson. Johnson never came anywhere near expropriating the amount of private property that Allende stole. Johnson didn’t force the American economy to the brink of economic collapse. Need we be reminded that under hyperinflation and mass “nationalization” of industry it is virtually impossible to make a living, and that complete economic ruin is sure to follow quickly? Was it right for Chilean society to be completely destroyed and reduced to Cuba-like poverty just because Allende managed to get 36% of the vote. I think not.
Does this justify torture and murder. No, but it hardly makes the Allende government the picture of legitimacy or as the steward of a “mildly unpleasant” economy as some would have us believe.
I have walked 500 meters from downtown central Santiago, and have never had a knife to my throat. In fact, in six months working in some of the worst slums in that country (a young American woman often walking alone after dark) I never encountered any violence. There were some miserable teenagers who tried to pickpocket me a few times, but hey, where doesn’t that go on?
A beautiful thing about Chile’s free market economy–even in the slums people has cell phones, even beggers had cell phones. It cost me about 10 cents a minute to call the U.S. from the Southern Hemisphere. Chile has one of the most de-regulated telecommunications industries in the world. Compare that to Mexico, where telecommunications are run by a government backed monopoly and it costs $1 a minute to call Texas from Mexico City.
On another note, I worked with a left-wing anti-torture activist organization, and one of their greatest concerns was (aside from finding Pinochet’s desaparacidos) was to explode the myth that the military dictatorship was the only government in Chilean history to engage in these practices. Apparently Allende’s boys also ran detention centers and killed and tortured people. I, however, don’t have the documentation in front of me.
“Chile is right now a “colony” of US corporations and some spanish too.”
Edoardo, you have read way too many leftist pamphlets. I work for a Mexican cement company that purchased and is operating several cement factories in the US. Is the US now a “colony” of this Mexican corporation? We also purchased several cement factories in Spain. Is Spain now a colony of that Mexican company? (BTW, the company’s name is CEMEX, if you care to google to find it.)
We are able to provide a cheaper product than our competition, which helps bring down one of the costs involved in house and building construction. This also helps many poor people afford a new house. If this is a result of what you call “colonialism”, then I welcome it.
“Walk down in central Santiago after sunset for 500 meters and you have a knife on your troat for your money.”
This is a non sequitur. A person could put a knife in your throat in Stockholm, if that person so wishes it. It has nothing to do with markets, but your comment says a lot about your own biases and hang-ups.
In response to Lisa Casanova’s comment about her grad class focusing on the “failure” of free markets in Latin America: to define failure of economic policy as one that does not lessen the gap between the have’s and have-not’s is… I’m having trouble finding the word… crap?
By that definition, even if all the lowest income people finally got to the point where they have all the amenities of a first world country, the economic policy could _still_ be considered a failure because the richer part of society gained proportionally more. That’s analogous to a child griping about Christmas being bad because their sibling got more stuff.
These people (egalatarians) are not concerned with the _fact_ that the free market raises the living standard for everyone. They are upset because some people have more stuff than others do. They don’t care about how much work someone puts in, or how much they help others to gain their wealth. They see that some people are not willing or not capable to make as much as others, and their sole quest is to equalize. It’s an ideology completely ignorant of the basic realities of life.
I would just like to see a realistic definition of success/failure for economic policy. To complain that some people benefit more from freedom in no way negates the fact that everyone is relatively better off as a result. If the “poor” go from $10,000/year income to $20,000/year (in real terms), who cares that some people also went from $100,000 to $300,000? Aren’t we ALL still doing better than before? Isn’t that what really matters?
In response to Lisa Casanova’s comment about her grad class focusing on the “failure” of free markets in Latin America: to define failure of economic policy as one that does not lessen the gap between the have’s and have-not’s is… I’m having trouble finding the word… crap?
I know that Lisa is not espousing this concept; just want to clarify that the following is a general rant about socialism and not directed at Lisa.
By that definition, even if all the lowest income people finally got to the point where they have all the amenities of a first world country, the economic policy could still be considered a failure because the richer part of society gained proportionally more. That’s analogous to a child griping about Christmas being bad because their sibling got more stuff.
These people (egalatarians) are not concerned with the fact that the free market raises the living standard for everyone. They are upset because some people have more stuff than others do. They don’t care about how much work someone puts in, or how much they help others to gain their wealth. They see that some people are not willing or not capable to make as much as others, and their sole quest is to equalize. It’s an ideology completely ignorant of the basic realities of life.
I would just like to see a realistic definition of success/failure for economic policy. To complain that some people benefit more from freedom in no way negates the fact that everyone is relatively better off as a result. If the “poor” go from $10,000/year income to $20,000/year (in real terms), who cares that some people also went from $100,000 to $300,000? Aren’t we ALL still doing better than before? Isn’t that what really matters?
Sorry about the double post. I cancelled it the first time because it was taking forever. It didn’t show that the comment had posted.
General Pinochet had to act as Chile was teeming with KGB, Stazi, China’s Communists, Cuban commuinists etc. International Communism was crushed mightly in Chile and for that I cheer brave patriots in chilean military.
Yeah, C, better to have western spooks murdering people instead…
‘The shopkeepers still have a lot to learn though. Incredibly inefficient when it comes to service, not to mention rude. In most department stores and other stores like stationery shops, etc. at the counter one person will ring up the price, the next will take the money and the other will then give you the goods. Just one example of room for improvement.’
1) If shopkeepers were rude in a way that customers did not like, then other shops would open up. So it seems that either the people were not being rude (you misunderstood their behaviour) or there is some reason why other people cannot set up shop.
2) Similar points can be made on your opinions on efficiency. If it were actually possible to run a shop efficiently with fewer employees then why do you suppose nobody has done so? It is useful in this regard to remember Rothbard pointing out to interventionists that if they thought some employees got less than their marginal product they were free to become entrepeneurs and prove the market wrong. Well so are you CHL. Moreover, to talk about ‘improvements’ rather than to make them yourself sounds dangerously like interventionist talk.
b) ‘These people (egalatarians) are not concerned with the fact that the free market raises the living standard for everyone.’
3) The free market promotes trade and production and hence tends to make people better off. But Robert Murphy has shown, if there was ever any doubt, that trade can make some people worse off (see mises.org daily articles). Of course, trade will never make everyone worse off. But the reason people should favour the free market is that it is in accordance with natural rights. If we start to make stupid, unrealistic statements about the market making everyone richer or better off, we give statists good reason for trying to improve on the market when they find out that such stupid pronouncements have been empirically falsified.
Please read Rothbard and Hoppe and von Kuehnelt-Leddihn, and then you will see that a proper defence of free markets requires that we make no claims about the standard of living etc.
I have no idea whether or not this post will work, but I felt obliged to attempt a reply because I am at one time impressed with your extensive knowledge of at least one branch of Austro-libertarian literature, and yet a bit concerned that you might have neglected to recall some of the essential lessons laid down by the great Mises in his magnum opus, Human Action. I finished the book recently, so it is relatively fresh in my memory. Before I proceed further, I am compelled to admit that I have not finished in entirety Rothbard’s celebrated Man, Economy, and State; the leftists running my university’s econ department leave me little time to learn about real economics between all the b.s. American Institutionalist readings I have to pay lip service too.
But now that I have finished my caveat, I will try to touch on Mises’s theory (much less eloquently than he explains his views, of course).
First off, it is important that we remember that it is only with respect to the “harmony of the ‘rightly understood’ interests” that we can make the blanket statement that the free market indeed benefits anybody and everybody. You seem to implicitly acknowledge this when you say that
“The free market promotes trade and production and hence tends to make people better off”.
However, this is the essential point. It is obvious to any free-market economist worth their salt that the short-run interests of competing producers are opposed to one another within the bounds of the industry in which they compete, and with respect to their capacity as producers. That much is clear. However, in their capacity as consumers, even the less-efficient producers benefit from the increase in the quantity of consumers’ goods available, and thus the drop in price, of the goods concerned. It should be noted that they may also benefit if the good produced is not a final-consumption good, but rather a producers’ good or factor of production. The drop in price will yield cheaper production of any number of goods the production of which can be attained through the use of that factor, which is now cheaper. Thus, the “rightly-understood” interests are always harmonious. (I guess one might also call these interests the “long-run” interests). If I remember correctly from Power and Market by Rothbard, it is impossible to claim that there is any arrangement of trade more beneficial than completely unrestricted laissez-faire, (for at least the basic reason that every trade conducted is mutually-agreeable to both parties involved). Thus, I do not completely understand your quick dismissal of the utilitarian justification for laissez-faire.
I simply cannot imagine who becomes worse-off as a result of free trade. In the short-run, of course, producers competing for people’s dollars (not necessarily in the same industry even) lose revenue when they cannot measure up to the better performance of competitors. But this does not mean that, considering their “rightly-understood” interests, anybody suffers. After all, if short-run considerations were paramount, then we’d all be Keynesians wouldn’t we? It’s that sort of short-sightedness that justifies protectionism and inflationary credit expansion, as opposed to sound economic policy and free markets.
Actually, now I can see that you might be quite in opposition to much of what a Misesian believes, as opposed to say, Rothbard. I tend to agree with both; Mises was correct in putting forth the utilitarian defense of free markets, and Rothbard also has a very cogent argument in terms of human nature and it’s intricate connections with the psychology of private property–how people naturally conceive of private property without any instruction and how it’s necessary for commerce, society, and even simple dialogue. I tend to agree with you that property is inalienable and inviolable except by granted consent, (in order to pool funds, for example, through a voluntary tax system or “insurance” if you insist). But it is simply impossible to convince anybody who’s not really friendly to the liberal (libertarian) mindset that the inviolability of property rights is self-evident. Most people have become accustomed to, and cannot even conceive of a society completely devoid of state-run coercion of some degree. It seems more “natural” than natural rights theory does to most people in this age of statolatry.
best wishes, keep up the good fight
The chilean poors are nearly 3 millions (CASEN 2003) see also “Fundation por la Superation Pobreza”, the note about huge dangerous Santiago walk refer to the previous remarks, dear Francisco, king of banality, I know you may have a knife even at North pole.About liberalism or neoliberalism what you want, spreaded THIS WAY, I means this recent years, left of right, is a failure, even for their propagandists (Academia,gurus,strange guy pretending to export democracy, what democracy?, financial pundits, fanatic for the murderers etc). All hail to the great communist Gordon Brown, long life to him. Peace young boys.
Good point, Micky. “The best way to lose an argument is to overstate it.” I don’t know who said that, but in my experience it is very true.
Also though, as with intervention having its unforseen negative influences, with trade, while there may be direct negative influences, it is similarly difficult to estimate the unseen benefits that it provides even to those who are directly harmed by one or some instances of trade.
“If the “poor” go from $10,000/year income to $20,000/year (in real terms), who cares that some people also went from $100,000 to $300,000?”In Chile, the poorest 20% receive 17 times less than the richest 20% income; for the USA this relation is 8.9, South Korea 5.7, Peru 10.5 (PNUD 1995) http://www.dii.uchile.cl/~revista/revista/vol2/n2/07.pdf
So? The poorest in Chile live with a standard of living comparable to Peruvian middle-class. And the poorest in USA live with a standard of living comparable to Swedish high life.
Markets always win.
Can anyone respond to this article below? I am studyiing Auatrian economics and am currently analysing socialism, which i am against obviously. This article makes Venezuela look better than it is. Thanks.
VENEZUELA: ACHIEVEMENTS OF 10 YEARS OF REVOLUTION
Submitted by admin on Mon, 02/23/2009 – 00:12 During 10 years of revolution, the Bolivarian Government has been breaking free from paradigms, beating obstacles, exceeding all expectations, facing empires, revolutionizing consciousness, beating foreign and internal propaganda, and even more, defending, as the engine and fuel of the revolutionary project, the deep conviction that the human being is the center and principle of the society.
The most representative achievements can be evaluated quantitatively through the Missions, infrastructure works and technological advancements, among others, but the qualitative analysis leads us to three big conclusions: with the arrival of the Bolivarian Revolution, the quality of life has been boosted for most Venezuelans, social inequalities have been reduced significantly and Venezuela has made important steps in the struggle to reach the real conditions of a developed country.
ACHIEVEMENTS
1. REDUCTION OF POVERTY
During the administration of the Bolivarian Government led by President Hugo Chávez, the extreme poverty rate significantly fell from 42% in 1998 to 9.5%. This result allowed Venezuela to achieve in advance this UN Millennium Goal. General poverty was also significantly reduced, from 50.5% in 1998 to 33.4% in 2008.
Venezuela’s Human Development Index also increased from a 0.69 (medium development) in 1998 to 0.84 (high development) in 2008. Currently, Venezuela ranks 67 out of 179 countries according to the 2008 UNDP report.
Venezuela’s Gini coefficient fell to 0.4099, the lowest in the country’s history and in Latin America. In 1998 it was 0.4865.
2. ACCESS TO EDUCATION
In 2005, Venezuela achieved the goal set by UNESCO to declare a country an illiteracy-free territory; 96% of adults and elders know how to read and write. But we are still working and 99.6% of the population over the age of 15 is now literate.
Currently, the Venezuelan state spends 7% of the GDP on education, compared to 3.9% of Venezuela’s GDP in 1998. Without including the socialist missions (social programs), school enrolment was 6.2 million students in 1998; now it is 7.5 million students both in public and private schools.
The socialist missions, created as an initiative of President Chávez to look after the population excluded from the formal educative system, show the following statistics:
a. Mission Robinson II: 437,171 students, including 81,000 indigenous students, have graduated.
b. Mission Ribas: 510,585 students have graduated.
c. Mission Sucre: 571,917 Venezuelans are in the higher education system in 24 programs (career), in 334 different municipalities. 30,000 students have graduated from seven programs: education, environmental management, social management of local development, journalism, management, computer science, and agro-food production.
3. ACCESS TO HEALTH
Venezuela invests 4.2% of its GDP in health and it continues deepening strategies to guarantee Venezuelans free access to health with the creation of the social programs Barrio Adentro I-II-III and IV. Up to 2009, Barrio Adentro has made the following achievements:
a. 24,884,567 Venezuelans, that is to say 88.9% of the population, benefit from this mission.
b. 630,491 Venezuelan lives have been saved thanks to this mission.
c. Barrio Adentro has inaugurated: 6,531 popular health centers, 479 Integral Diagnosis Centers, 543 Integral Rehabilitation Centers, 26 High Technology Centers, 13 popular clinics, 459 popular opticians and 3019 locations offering medical and dental care.
The public health policies developed by the Bolivarian Government have managed to reduce the children mortality rate (children under 5 years) to 13.7%. In 1990 this figure was 25.8%.
4. SOCIAL SECURITY
Unemployment has been reduced by 50% during President Chávez’s administration, falling from 12% to 6.1% by early 2009.
In May 2007, the Venezuelan minimum wage became the highest in Latin America (US$372). In addition, workers receive a monthly bonus for food amounting to over US$139. Also, pensions have been increased to the minimum wage.
5. ECONOMIC DEVELOPMENT
The Venezuelan economy has experienced 20 consecutive quarters of growth. The year 2004 stands out with an historical growth of 18.3%. The 2008 rate of growth was 4.9%. Our economy has grown by 526.98% compared to the Venezuelan economy in 1998.
Venezuela has the fourth largest economy in Latin America after Brazil, Mexico and Argentina.
6. FOOD SOVEREIGNTY
In order to guarantee the country’s food security and sovereignty, the Bolivarian Government created Mission Food, whose aim is to offer basic foodstuffs to the Venezuelan population at low prices and without intermediaries. This initiative materialized with the creation of a network of storing centers and stores (Mercal, PDVAL, ASA, FUNDAPROAL, and silos, among others).
In 1998, Venezuela produced 16,272,000 tons of vegetables. By 2008, Venezuela managed to produce 20,174,000 tons of food. This represents a 24% increase.
7. PUBLIC DEBT
The public debt dropped from 73.5% of the GDP in 1998 to 14.4% in 2008, placing the national deficit as one of the lowest in the World.
In 1998, a debt of $3 billion was paid off to the International Monetary Fund (IMF) and to the World Bank (WB).
8. INTERNATIONAL RESERVES
By early 1999, the International Reserves amounted to US$14.3 billion. In January 2009, they amount to US$41.9 billion.
9. TECHNOLOGY SOVEREIGNTY
Before the Bolivarian government, there was practically no investment in science and technology. Today, 2.69% of Venezuela’s GDP is aimed at science and technology.
With the creation of the Infocentros (centres of information) and the National Technological Literacy Plan, the access of the population to information and communication technologies was boosted.
On October 29, 2008, Venezuela launched the Simón Bolívar Satellite from the Sichuan’s Satellite Center in the People’s Republic of China. It is operative and the Venezuelan state has taken control. Satellite services will be offered to thousands of communities all around Venezuela, and beyond our borders in other Latin American and Caribbean countries, with tele-education and telemedicine programs.
The consolidation of Venezuela’s technological sovereignty also includes the nationalization of the main, strategic, telephone company, Venezuela’s National Company of Telephones (CANTV, Spanish acronym).
10. ELIMINATION OF GENDER INEQUALITY
Gender equality adds to the achievements of the Venezuelan society. Women’s participation in Communal Centers is 60%; 4 out of the 5 Public Powers are headed by women. The women’s presence in the National Assembly (Venezuelan parliament) increased from 10% to 16.5%.
[Ministry of People's Power for Communication and Information. January 30, 2009.]
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