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San Diegans Arthur Lipper and Richard Russell on the current gloom

The Chicago/Austrian School of Economics, the so-called Chicago Boys, got their chance for 16 years in Chile, under near-laboratory conditions. Between 1973 and 1989, a government team of economists trained at the University of Chicago dismantled or decentralized the Chilean state as far as was humanly possible. Their program included privatizing welfare and social programs, deregulating the market, liberalizing trade, rolling back trade unions, and rewriting its constitution and laws. And what were the results? Despite some short-term 'successes', Chile's economy became more unstable than any other in Latin America, alternately experiencing deep plunges and soaring growth. Once all this erratic behavior was averaged out, however, Chile's growth during this 16-year period was one of the slowest of any Latin American country. Worse, income inequality grew severe. The majority of workers actually earned less in 1989 than in 1973 (after adjusting for inflation), while the incomes of the rich skyrocketed. In the absence of market regulations, Chile also became one of the most polluted countries in Latin America. And Chile's lack of democracy was only possible by suppressing political opposition and labor unions under a reign of terror and widespread human rights abuses. Of course, Conservatives have developed an apologist literature defending Chile as a huge success story. In 1982, Milton Friedman enthusiastically praised General Pinochet (the Chilean dictator) as a hero because he "has supported a fully free-market economy as a matter of principle. Chile is an economic miracle." However, the statistics show this to be untrue. Chile is a tragic failure of right-wing economics, and its people are still paying the price for it today So much for the Milton Friedman/Von Hayek/Von Mises school of economics. -Jim Fawcett
— June 18, 2008 2:06 p.m.

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