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 fan of the late economist Milton Friedman. So widely discredited is his brand of free-market fundamentalism that his followers 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 U.S-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 nineties, 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 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 eighties, Pinochet's Friedman-prescribed policies had caused rapid de-industrialization, a ten-fold 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 advisors and nationalize 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.
Second, it is a puzzlement to me that people who loudly proclaim the wonders of unregulated free market capitalism are almost always those who were raised in the bosom of socialist programs.
If you really disdain socialism, please never drive on our socialist public highway system, or use our socialist telephone air waves, or utilize our socialist internet, our socialist police, our socialist fire department, our socialist criminal and civil justice system, our socialist waste treatment facilities, etc.
And promise us you will never allow our socialist Medicare or Medicaid systems to treat you or your family.
Sadly, those who are most against socialism are usually those who benefitted least from the socialist educational system they were given (by the way, please pay back the cost of your education). They never learned to use evidence based reasoning.
Are all socialist against making their own decisions? Why would you give up your freedom to someone with no face? I buy the best thing for me and cherish the free market that brings me these choices.
Yes, you need to do away with socialism. I would suggest you move to Waziristan or one of the places left on earth where there is no civilization.
A little less talkofliberty please and a little more education about reality.
Apologists for the Soviets and Chinese Communists were constantly (and in my opinion correctly) vilified for defending the Chinese and Soviet Union's awful human rights abuses by claiming great advances for the society in general. But if you don't accept the trade-off for the left, then you should not accept it here. And it's especially disingenuous to credit Pinochet for a building code that, had he had the time or inclination, would've surely been abandoned to please Chile's 'Chicago Boys'.
Eisenhower also sent secret paramilitary troops under US Colonel Lansburg to disrupt the democratic elections in Vietnam in 1954 that ignited the Vietnam Civil War.
In Ike's autobiography, he admits that he considered doing just that but denied he ever carried out his threat to invade Vietnam.
Ask yourself why it is always the Republican Party that starts coups and preemptive wars after WW II?
"My country right or wrong" is a propaganda ploy to keep people blinded from the truth so the criminal administrators go scot free no matter how much unnecessary death and misery those temporary Administrators cause.
It is time people begin to realize the difference between being a loyal citizen of American and being a loyal citizen to a temporary corrupt political Government.
After WW II, our American Dream has deteriorated into an American Nightmare. Only we citizens who have lived through the Great depression and WW II, know how much our American dreams have deteriorated to a Third Rate Nation economically, politically and socially with a 300 - 1 ratio between CEOs and the working Middle Class.
And Oh Yes! it is the Republican Party that has brought us to ruin these last decades since 1980 when Reagan took office with his Mafioso 'Contract on America'; read our history books.
La Moneda was originally built as a mint. Since it was completed in 1805, I can't say under what building codes applied, but it's fair to say it was under government auspices.
From a little reading on the topic I've done today, it seems that earthquake building codes and enforcement were instituted in Chile in 1930, after 1960, and notably in 1972. Perhaps La Moneda was retrofitted against earthquake damage after these years, and again, I would assume under government direction.
Oddly, Milton Friedman was in fact critical of building codes, see the 1992 interview with David Levy, because they were government mandated and "impose costs that you might not privately want to engage in." But La Moneda seemed to survive destruction largely due to the government.
However, in 1973 La Moneda did sustain damage, but not from any natural causes. In the midst of the General Pinochet led coup of September 11th, the Presidential Palace was bombed by the Chilean air force while the democratically elected President Allende was inside.
Lessons from the photograph of La Moneda--a building survives for years due to government programs, but it was also damaged due to a government program. I doubt Stephens would like to acknowledge either of these realities.
VERY literally a structure made of straw would be extraordinarily resistant compared to one made of brick.
The extremely flimsy structures of the poorest in Haiti fared quite well compared to the seemingly sturdy (but shoddily connected) masonry structures of the well-to-do.
The good quality, firmly connected masonry structures in Chile however managed to resist extreme earth movement. Even many of those that failed did not fail in a catastrophic manner and while likely a complete loss, managed to do their job of greatly protecting the life of the occupants.
There is great corrolary here to my area of the U.S. (the mid-Mississippi valley). While home to the most powerful series of earthquake in north American (1811-12) the cities and towns alike are still filled with unreinforced piles of bricks that will fare no better than those in Haiti. While always vulnerable to fire and tornado, at least the common wood-framed homes will likely not collapse... I just hope that our big one does not happen during high business hours as something tells me that the "big boxes" will be extremely unsafe as well.
I was remarking to an Argentine that praising Friedman in Chile is like saying Mussolini made the trains run on time.
She responded "Yeah, you can make just about anything appear to work with you tell everyone you will cut off their head if it does not."
The other legacy of Chile example that you mentioned is the overthrow of Allende with American CIA support. Again, the issue of American imperialism is more vigorous today than during the overthrow of Allende with American support. America's support for right-wing governments and dictators is stronger than ever. So all in all, sadly to say both Milton Friedman and American imperialism continue to live.
It flew in the face of human nature itself, established the law of the jungle, and a system that was nothing less than degenerate gambling as our economic foundation...and in truth it still exists as you know Naomi and hasn't fully or finally been discredited largely thanks to Obama surrounding himself with those who destroyed America's economy...
The purpose of government is to serve the people...!
Too bad they don't teach this at Columbia or Harvard Law..!
Probably watches the televangelists who said the democratically elected president of Venezuela should be murdered too.
"Patriots" who don't believe in the constitution and "Christians" who don't believe the in the teachings of Christ.