None of the indices, however, revealed the distribution of wealth; nothing was known of the poverty and uncertainty in which several million people were living. There was no mention of the soup kitchens in poor neighbourhoods that fed thousands of families – there were more than 500 in Santiago alone – or of the fact that private charities and churches were trying to replace the social services that are the responsibility of the state. There was no open forum for discussing government actions or those of businessmen; public services were handed over to private companies, and foreign corporations acquired natural resources such as forests and oceans, which have been exploited with very little ecological conscience. A callous society was created in which profit is sacred; if you are poor, it’s your own fault, and if you complain, that makes you a Communist. Freedom consists of having many brand names to choose from when you go out to buy on credit.

The head of a Chilean corporation earns the same, or more, than his equivalent in the United States, while a Chilean labourer earns approximately 15 times less than a North American worker. Even today, after more than a decade of democracy, the disparities in wealth are staggering because the economic model hasn’t changed. The three presidents who followed Pinochet have had their hands tied; the right controls the economy, the Congress, and the press. Chile, none the less, has proposed to become a developed country within the span of a decade, which is possible if, in fact, wealth is redistributed in a more equitable fashion.

From here: http://news.independent.co.uk/world/americas/article2067626.ece

long time no talk… i need to chat with you about something, but i lost your email address when my harddrive crashed… please email me when you get a chance…

thx..
alec

Monetarism, which could equally be called Friedmanism, and which was embraced wholeheartedly by the (early) Thatcher government was a policy without any form of compassion. In the quest for the reduction of inflation beyond all other considerations the ravages of unemployment were ignored – destroying people, families and whole communities in its wake. On paper it may have looked reasonable, and I’m sure you could even find statistics to “prove” the “economic success” of monetarism in the UK – but in reality, on the ground, it was a cruel and compassionless form of capitalism, which in the name of progress had no interest in worrying about how many real live people were torn to pieces. (“In fact, the common man was his concern, both as tree and forest.” – I really really find this hard to square with monetarism as it was practiced for example)

OK, you may reasonably point out, but Friedman was an academic and he cannot be held accountable for the actions of government using his theories to make policy. True enough, but Friedman was apparently very vocal in espousing his theories and applauding governments who implemented them.

Which brings us back to Chile. Now we could get into a pissing contest as to whether Ceasescu or Pinochet was worse, but what would be the point? Both were brutal murderous dictators who built their regimes on the back of flawed in practice, logical on paper economic theories. The difference between Marx and Friedman is that Marx never had the opportunity to witness the human cost of adherence to his theories. Friedman did, and despite that continued to enthusiastically promote his ideology.

Perhaps I shouldn’t be so hard on him – he was not Thatcher and he was not Pinochet – he was just a bloke theorizing on economics, which is an academic exercise which I understand relies very much on untestable assumptions, necessarily incomplete data, and the promise of such vague ideas as development and growth and (for the most part) ignores the fact that it is living breathing people who have to live within the actuality of these economic models.

By the way, thanks for posting this and for your comprehensive arguments. I freely admit that my initial reaction to Friedman is greatly coloured by the fact that I came of age politically in 1980s Britain – and thus got to see the ravages of monetarism first hand. Hearing someone whose views I respect championing MF was something of a shock, and I have been forced into some research on the subject. Not that it has changed my views on MF as such, but it has certainly meant that those views are not quite the superficial gut reactions that they once were. (Mind you, economic theories are still somewhat beyond the capacity of my brain – even the wikipedia entries on this stuff serve only to mystify me). I have an acquaintance who is a professor in economics at a university who managed to cut through the jargon for me.

There is a lot more to say, and not least in the area of received wisdom about development and the “third world” – and how heavily MF’s ideas influenced the way that the IMF and World Bank and other powers that be acted towards the developing world and how much of a disaster that has been pretty much from the 1950s onwards, but once again there are many political factors at play too. However, this week looks stacked against me work wise, so if you respond here and don’t hear from me for a while in reply, it’s not because I’m not interested.

I’m not even going to start on flat tax. :-)

Cheers
Andy

Mrs. S – You don’t remember the legend of curly’s gold? HA!

AmFri – “Hark, hark,” harkened he!

Andy – Heh, I’m also rather busy as indicated by my blog-molasses, but… I did read your link. I think it has some excellent point about Pinochet, even if that’s not the focus of the paper. As for the economic overviews, I find them -on the whole- ridiculous! Quite.

Granted, it seems that no plan/policy is pure and clean, or ideal, or utopic. I don’t intend to promote that false hope. I do think the paper you linked to notes interesting details of some erratic fluctuations and the hypocrisy in some public bailouts.

But, real GDP growth in constant dollars? (See the chart at the bottom.)
http://www.sjsu.edu/faculty/watkins/chile.htm

Economic miracle? How about the broad overview presented by a collection of folks who battle over the content in order to find a reasonably balanced, if imperfect as anything else, presentation of the remarkable economic strides?
http://en.wikipedia.org/wiki/Economy_of_Chile

How about some fairly balanced (not in a Faux Newz sense) audio from (an arguably American-leftist) public radio?
http://www.npr.org/templates/story/story.php?storyId=4659772

Synopsis: The socialists currently in power in Chile largely agree with the free-market architecture of the Chicago Boys. In fact, they embrace it strongly and even extend it because they *know* it’s essentially right. Yes, you read that correctly. From what I gather, they appear to be focusing on undoing some damage of Pinochet’s crimes and attempting to dismantle parts of the Pinochet bubba network. I think that’s wonderful.

By the same token, I’d like to see the SRI/PSD bubba networks continue to get dismantled here in Romania. I’d like to see long-term committment to reasonable flat-tax policies. I’d like to see continuing privitization, a lowkey approach to regulation, transition away from public pensions for the great majority, and infrequent intervention in monetary matters.

(And, lordie he’p me, but rhetoric about any right to a job or notions of guaranteed jobs for everyone makes the hair stand on the back of my neck as if the ghost of Nicolae himself were behind me.)

Government has an important role. I’d like to see improvement in how the government handles national public lands and encourages local environmental cleanup, for a chief example. Romania is headed in the right direction and I hope to see that continue with increasing fervor. I wonder if many of Milton’s books have been translated and, if so, are taught in university to students in economics, business, and public policy…

Andy – Thatcherism, if there is such a thing, embodies far more than strictly economic policies and had flaws which were not the fault of Milton. Reaganomics largely achieved the economic goals Reagan had in mind, not all of which were shared by Milton. Suffice to say that people can use Milton, or other intellectuals, to their own ends. I think we see such adoptions, adaptations, distortions, and perversions throughout history.

Milton never had any interest in helping the rich. Milton was straight-up about his distaste for communism, socialism, and economic collectivism in general as he believe it was morally wrong and historically detrimental to the common man. In fact, the common man was his concern, both as tree and forest.

In contemporary context, Milton abhorred the trend in America of a growing government as that runs counter to the historical notions of liberty for individuals. He sought to reverse that trend at home as well as contribute to international understanding of the ethics of personal freedom.

As a strategic analysis, he concluded that no party of any government would be likely reduce its reach into the pocket of the individual because releasing control back to the people would necessarily undermine the authority of those who sought more power.

Thus his tactic would be to advocate tax cuts. He went so far as to borrow phraseology from Malcolm X, who pursued self-determination “by any means necessary.” Hence, Friedman’s mantra with respect to taxes, as an unethically large burden on the individual, would effectively become:

…for a long time now I have been in favor of any tax cut, under any circumstances, in any way, in any form whatsoever… on any pretext.

Thatcher and Reagan both expressed fraternity with some of Milton’s ideas. And I would imagine Milt was elated at the opportunity to try to influence, to whatever degree possible, a reduction in taxes as a necessary measure toward reducing the overall scope of government.

That Maggie would delve into unprecedented regulation of trade unions was not caused by Milton. That the Gipper would seek a significant increase in military spending was not a position advocated by Milton. I’m not sure what other components of ‘Thatcherism’ and ‘Reaganomics’ you may not care for, but I would certainly challenge any spurious derision of Milton Friedman.

It may be a simple case of intellectual disagreement where perhaps you differ from Milton as to where the line should be drawn with respect to the rights of the individual versus the responsibilities of government. That would be a legitimate line of discussion, I think.

Alas, how many have been persecuted for the wrong of having been right?

–Jean-Baptiste Say