Sometime ago, I was reading a criticism page on Libertarianism to ensure that my knowledge of events are as impartial as possible. Here was the page:
http://www.zompist.com/libertos.html
Most of it, I was able to refute in my head just as I read it. But I came upon this:
Pinochet's Chile Or consider the darling of many an '80s conservative: Pinochet's Chile, installed by Nixon, praised by Jeanne Kirkpatrick, George Bush, and Paul Johnson. In twenty years, foreign debt quadrupled, natural resources were wasted, universal health care was abandoned (leading to epidemics of typhoid fever and hepatitis), unions were outlawed, military spending rose (for what? who the hell is going to attack Chile?), social security was "privatized" (with predictable results: ever-increasing government bailouts) and the poverty rate doubled, from 20% to 41%. Chile's growth rate from 1974 to 1982 was 1.5%; the Latin American average was 4.3%. Pinochet was a dicator, of course, which makes some libertarians feel that they have nothing to learn here. Somehow Chile's experience (say) privatizing social security can tell us nothing about privatizing social security here, because Pinochet was a dictator. Presumably if you set up a business in Chile, the laws of supply and demand and perhaps those of gravity wouldn't apply, because Pinochet was a dictator. When it's convenient, libertarians even trumpet their association with Chile's "free market" policies; self-gov.org (originators of that cute quiz) includes a page celebrating Milton Friedman, self-proclaimed libertarian, who helped form and advise the group of University of Chicago professors and graduates who implemented Pinochet's policies. The Cato Institute even named a prize for "Advancing Liberty" after this benefactor of the Chilean dictatorship.
Or consider the darling of many an '80s conservative: Pinochet's Chile, installed by Nixon, praised by Jeanne Kirkpatrick, George Bush, and Paul Johnson. In twenty years, foreign debt quadrupled, natural resources were wasted, universal health care was abandoned (leading to epidemics of typhoid fever and hepatitis), unions were outlawed, military spending rose (for what? who the hell is going to attack Chile?), social security was "privatized" (with predictable results: ever-increasing government bailouts) and the poverty rate doubled, from 20% to 41%. Chile's growth rate from 1974 to 1982 was 1.5%; the Latin American average was 4.3%.
Pinochet was a dicator, of course, which makes some libertarians feel that they have nothing to learn here. Somehow Chile's experience (say) privatizing social security can tell us nothing about privatizing social security here, because Pinochet was a dictator. Presumably if you set up a business in Chile, the laws of supply and demand and perhaps those of gravity wouldn't apply, because Pinochet was a dictator.
When it's convenient, libertarians even trumpet their association with Chile's "free market" policies; self-gov.org (originators of that cute quiz) includes a page celebrating Milton Friedman, self-proclaimed libertarian, who helped form and advise the group of University of Chicago professors and graduates who implemented Pinochet's policies. The Cato Institute even named a prize for "Advancing Liberty" after this benefactor of the Chilean dictatorship.
I was curious as to the details regarding Jeffrey Sachs' economic shock therapy of Chile and why the results were the way they were. In my investigation, what I came across was many unsourced claims of government bailouts (which doesn't help because it doesn't explain how they got to the need for a bailout) and an article on the Lew Rockwell website about Milton Friedman:
http://www.lewrockwell.com/rothbard/rothbard43.html
I was wondering if anyone here had more information on the subject as I feel like I'm missing a few key elements of this particular event in history. It seems most contemporary sources cite Pinochet Chile as a failure and I'm curious as to why this was.
Well, whatever the institution measuring poverty chooses it to be. The United Nations' threshold for poverty is less than $1.25 daily wage. The United States' threshold, on the other hand, is less than an annual income of $22,350. Poverty is not something that can be measured like mass or volume; it's purely ones own perspective on what level of material wealth is considered "rich" and what level is considered "poor". It's important to note that because the United States' government periodically raises the poverty threshold, "poverty" will never be eliminated in America.
Well, whatever the institution measuring poverty chooses it to be. The United Nations' threshold for poverty is less than $1.25 daily wage. The United States' threshold, on the other hand, is less than an annual income of $22,350. Poverty is not something that can be measured like mass or volume; it's purely ones own perspective on what level of material wealth is considered "rich" and what level is considered "poor".
It's important to note that because the United States' government periodically raises the poverty threshold, "poverty" will never be eliminated in America.
Aha. But what makes the method that they used inaccurate?
EFW
I came across that, but I didn't see anything about inflation. :x
I agree that economics is the same regardless of the political system. But funny how the left does the exact same thing. Apparently nothing the Soviet Union or North Korea did applies to modern socialism, because that is "democratic".
In any criticism of free market reforms we should keep in mind that these countries are poor in the first place because they attempted socialism. It's kind of hypocritical to blame free markets for not abolishing poverty fast enough when all that socialism does is create poverty. It is also important to note that free market reforms tend to be implemented after the socialist system finally breaks down, which of course doesn't present the best conditions. I mean, if the pension system is bankrupt and finally breaks down while the country goes through free market reforms, it is easy to say "ha! look what free markets did". Also, Chile did become the fastest growing economy in Latin America and free markets did bring about a democratic government. Which you can't claim about socialist countries, they tend to stay poor and oppressive.
I haven't made up my mind about shock therapy yet. I'm definitely for free any market reforms, but some say that shock therapy is trying to plan free markets, which doesn't work and does damage. But I understand that in a lot of the cases where it was applied, e.g. in Latin America and Eastern Europe after the fall of communism, things were falling apart and they needed to do something fast.
I recommend watching The Commanding Heights. It goes through shock therapy and the economic effects in Chile in the second episode parts 5 - 7.
Ripplemagne: Aha. But what makes the method that they used inaccurate?
Their methodology is inaccurate because what is and is not poverty is purely opinion. Is making $23,350 a year "poor"? From the perspective of an upper-middle class American probably yes, from the perspective of an African in the Congo probably no. All attempts to measure poverty will inevitably fail because, much like utility, its very nature defies scientific measurement.
Aha. I knew there were iffy elements to this. Thank you all for your answers. :)
Now to tinker with my WMP to get this Commanding Heights thing to work.
"It's funny that you bring that up. I'm actually in a debate with someone on another forum about that. Haha."
Remember that any ideas that are not logically correct in and of themselves, that is any explanations which are not plausible a priori cannot be proven correct simply because "evidence" proves them to be true. There are always different takes on history and knowledge of historical issues, especially ones as broad as whole economies are to numerous to measure without a priori logic. Thusly those who, in a debate, rely totally upon "real life examples" which would, in the absence of these examples be logically disproven, are committing the post hoc fallacy
Chapter 2 in the World Report has some old stats.