Home | Community | Message Board


Kraken Kratom
Please support our sponsors.

General Interest >> Political Discussion

Welcome to the Shroomery Message Board! You are experiencing a small sample of what the site has to offer. Please login or register to post messages and view our exclusive members-only content. You'll gain access to additional forums, file attachments, board customizations, encrypted private messages, and much more!

Amazon Shop for: Scales

Jump to first unread post. Pages: 1
InvisibleXlea321
Stranger
Registered: 02/26/01
Posts: 9,134
Milton's NOT so good ideas...
    #3503253 - 12/15/04 01:35 PM (12 years, 1 month ago)

Tinker Bell Pinochet and the Fairy Tale Miracle of Chile
The London Observer

SAO PAULO - Cinderella's Fairy Godmother, Tinker Bell and Senator Augusto Pinochet have much in common.

All three performed magical good deeds. In the case of Pinochet, he is universally credited with the Miracle of Chile, the wildly successful experiment in free markets, privatisation, de-regulation and union-free economic expansion whose laissez-faire seeds have spread from Santiago to Surrey, from Valparaiso to Virginia.

But Cinderella's pumpkin did not really turn into a coach. The Miracle of Chile, too, is just another fairy tale. The claim that General Pinochet begot an economic powerhouse is one of those utterances, like "Labour's ethical foreign policy," whose truth rests entirely on its repetition.

Chile can claim some economic success. But that is the work of Salvador Allende - who saved his nation, miraculously, a decade after his death.

In 1973, the year the General seized the government, Chile's unemployment rate was 4.3%. In 1983, after ten years of free-market modernisation, unemployment reached 22%. Real wages declined by 40% under military rule.

In 1970, 20% of Chile's population lived in poverty. By 1990, the year "President" Pinochet left office, the number of destitute had doubled to 40%. Quite a miracle.

Pinochet did not destroy Chile's economy all alone. It took nine years of hard work by the most brilliant minds in world academia, a gaggle of Milton Friedman's trainees, the Chicago Boys. Under the spell of their theories, the General abolished the minimum wage, outlawed trade union bargaining rights, privatised the pension system, abolished all taxes on wealth and on business profits, slashed public employment, privatised 212 state industries and 66 banks and ran a fiscal surplus.

Freed of the dead hand of bureaucracy, taxes and union rules, the country took a giant leap forward ... into bankruptcy and depression. After nine years of economics Chicago style, Chile's industry keeled over and died. In 1982 and 1983, GDP dropped 19%. The free-market experiment was kaput, the test tubes shattered. Blood and glass littered the laboratory floor. Yet, with remarkable chutzpa, the mad scientists of Chicago declared success. In the US, President Ronald Reagan's State Department issued a report concluding, "Chile is a casebook study in sound economic management." Milton Friedman himself coined the phrase, "The Miracle of Chile." Friedman's sidekick, economist Art Laffer, preened that Pinochet's Chile was, "a showcase of what supply-side economics can do."

It certainly was. More exactly, Chile was a showcase of de-regulation gone berserk.

The Chicago Boys persuaded the junta that removing restrictions on the nation's banks would free them to attract foreign capital to fund industrial expansion.

Pinochet sold off the state banks - at a 40% discount from book value - and they quickly fell into the hands of two conglomerate empires controlled by speculators Javier Vial and Manuel Cruzat. From their captive banks, Vial and Cruzat siphoned cash to buy up manufacturers - then leveraged these assets with loans from foreign investors panting to get their piece of the state giveaways.

The bank's reserves filled with hollow securities from connected enterprises. Pinochet let the good times roll for the speculators. He was persuaded, as Tony Blair said this month in another context, "Governments should not hinder the logic of the market."

By 1982, the pyramid finance game was up. The Vial and Cruzat "Grupos" defaulted. Industry shut down, private pensions were worthless, the currency swooned. Riots and strikes by a population too hungry and desperate to fear bullets forced Pinochet to reverse course. He booted his beloved Chicago experimentalists. Reluctantly, the General restored the minimum wage and unions' collective bargaining rights. Pinochet, who had previously decimated government ranks, authorized a program to create 500,000 jobs. The equivalent in Britain would be a government program for 4 million workers.

In other words, Chile was pulled from depression by dull old Keynesian remedies, all Franklin Roosevelt, zero Margaret Thatcher. (The junta even instituted what remains today as South America's only law restricting the flow of foreigncapital.)

New Deal tactics rescued Chile from the Panic of 1983, but the nation's long-term recovery and growth since then is the result of - cover the
children's ears - a large dose of socialism.

To save the nation's pension system, Pinochet nationalized banks and industry on a scale unimagined by Communist Allende. The General expropriated at will, offering little or no compensation. While most of these businesses were eventually re-privatised, the state retained ownership of one industry: copper.

For nearly a century, copper has meant Chile and Chile copper. University of Montana metals expert Dr. Janet Finn notes, "Its absurd to describe a nation as a miracle of free enterprise when the engine of the economy remains in government hands." (And not just any government hands. A Pinochet law, still in force, gives the military 10% of state copper revenues.)

Copper has provided 30% to 70% of the nation's export earnings. This is the hard currency which has built today's Chile, the proceeds from the mines seized from Anaconda and Kennecott in 1973 - Allende's posthumous gift to his nation.

Agribusiness is the second locomotive of Chile's economic growth. This also is a legacy of the Allende years. According to Professor Arturo Vasquez of Georgetown University, Washington DC, Allende's land reform, the break-up of feudal estates (which Pinochet could not fully reverse), created a new class of productive tiller-owners, along with corporate and cooperative operators, who now bring in a stream of export earnings to rival copper. "In order to have an economic miracle," says Dr. Vasquez, "maybe you need a socialist government first to commit agrarian reform."

So there we have it. Keynes and Marx, not Friedman, saved Chile.

But the myth of the free-market Miracle persists because it serves a quasi-religious function. Within the faith of the Reaganauts and Thatcherites, Chile provides the necessary genesis fable, the ersatz Eden from which laissez-faire dogma sprang successful and shining.

Half a globe away from Chile, an alternative economic experiment was succeeding quietly and bloodlessly. The southern Indian state of Kerala is the laboratory for the humane development theories of Amartya Sen, this year's winner of the Nobel Prize in Economics. Committed to income re-distribution and universal social services, Kerala built an economy on intensive public education. As the world's most literate state, it earns its hard currency from the export of technical assistance to Gulf nations. If you've heard little or nothing of Sen and Kerala, maybe it is because they pose an annoying challenge to the neoliberal consensus.

This week, the international finance Gang of Four - the World Bank, the IMF, the Inter-American Development Bank and the International Bank for Settlements - offered a $41.5 billion line of credit to Brazil. But before the agencies hand the drowning nation a life preserver, they demand Brazil commit to swallow the economic medicine that nearly killed Chile. You know the list: fire-sale privatisations, flexible labor markets (i.e. union demolition) and deficit reduction through savage cuts in government services and social security.

Here in Sao Paulo, the public is assured these cruel measures will ultimately benefit the average Brazilian. What looks like financial colonialism is sold as the cure-all tested in Chile with miraculous results.

But that miracle was in fact a hoax, a fraud, a fairy tale in which everyone did not live happily ever after.

http://www.gregpalast.com/detail.cfm?artid=16&row=2


--------------------
Don't worry, B. Caapi


Post Extras: Print Post  Remind Me! Notify Moderator
Anonymous

Re: Milton's NOT so good ideas... [Re: Xlea321]
    #3509785 - 12/16/04 06:40 PM (12 years, 1 month ago)

chirp... chirp... chrip...

i'm a little disappointed that no one has addressed this. i'm not entirely familiar with the history of chile. friedman supporters: is this article accurate in its depictions of what happened to the chilean economy when free-market principles were applied? if so, what went wrong?


Post Extras: Print Post  Remind Me! Notify Moderator
InvisibleKrishna
कृष्ण,LOL
 User Gallery

Registered: 05/08/03
Posts: 23,284
Loc: oakland
Re: Milton's NOT so good ideas... [Re: ]
    #3509989 - 12/16/04 07:19 PM (12 years, 1 month ago)

:smile: I'm no Friedman supporter, but the historical facts cited in this article all seem to match my knowledge of Chile's economic history. Of course, one might argue that the economy was uber-screwed right before Pinochet seized power - that Allende's policies (mainly of nationalisation and socialisation of most Chilean industry) resulted in complete disaster regarding the value of the currency, and thus the availability of imports. However, a counter-argument to that point is that the West (mainly the US) took enormous action to basically boy-cott Chile and spent lots of money (read the de-classified CIA documents for more covert involvement, or read economic journals for more out-right involvement) making sure that Allende would be a failure.

But as to Pinochet being a big economic failure in Chile, I think the case is fairly well stated above. There was an emergence of a "middle-class" of Chileans that had not existed before during Pinochet's dictatorship - but I'd have to do more research into this issue to resolve this with the article posted above...


--------------------




Post Extras: Print Post  Remind Me! Notify Moderator
InvisibleXlea321
Stranger
Registered: 02/26/01
Posts: 9,134
Re: Milton's NOT so good ideas... [Re: ]
    #3511859 - 12/17/04 02:02 AM (12 years, 1 month ago)

It wasn't just the economy of Chile that he helped fuck up..

He may have just hit 90, but Milton Friedman should not be allowed to rest on his far from Nobel laurels

His 90th birthday celebrations began a few weeks ago, but I wonder if any painful self-honesty has been allowed to invade the usually rosy world of Milton Friedman's recollections.

He can pat himself on the back for being the most influential post-war economist in the world. His analyses of economics (he invented 'monetarism'), have been adopted by many governments around the world and for the past 30 years or more John Maynard Keynes' previously dominant liberal theories have been widely derided because of Friedman.

But what did Friedman ever really achieve, apart from international fame and a large following? With his huge reputation and limitless confidence, this little walnut of a chap looks hard to crack - until you press the weak spot, and then he splits wide open.

First of all, he is hailed as a Nobel Laureate in Economics - an aggrandising misnomer which he confirms in his International Who's Who entry. In fact, he was never awarded the Nobel Prize. That great award is specifically given for contributions to physics, chemistry, medicine, literature or peace. Alfred B Nobel did not intend anyone to get one of his prizes for glorified bean-counting.

Friedman is actually the holder of the Bank of Sweden Prize in Economics in Memory of Alfred Nobel, a different award entirely. A central bank's prize for economics is a big thing, of course, and Friedman deserves respect for winning it - even if most recipients have been monetarists.

Anyway,the mark of a good economist, surely, is whether or not the theories work. Friedman's influence has spread so far and so wide that it would be impossible to assess the full effects of his preachings. But there are three truly glaring examples where his theories have played a pivotal part in the government of countries.

His first great coup was Chile. In 1972, a year before Pinochet's military overthrew the elected Allende government, military leaders started working on an economic programme with the help of a group of monetarist economists led by Friedman.

The initial effect, two years after the coup, was a savage depression that cut national output by 15 per cent and wages to below pre-1970 levels. Over the next seven years, per capita GDP grew at 8 per cent in Chile, 40 per cent in the rest of Latin America.

Then came another economic crisis, which cut wages to 14 per cent less than they had been before the coup 10 years earlier. Bankruptcies and foreign debt soared. Unemployment rose to more than 30 per cent. By 1986, per capita consumption was 11 per cent lower than in 1970. Health spending was halved and typhoid, diabetes and hepatitis exploded. Free of health and safety regulations, Santiago became one of the most polluted cities in the world. Chile managed to reduce inflation, from 500 per cent to an average of 25 per cent, but at what cost?

The next two examples are Britain and the US, the two most powerful countries ever to adopt monetarism, which they did simultaneously in 1979. In Britain, the economy instantly sank into a deep recession. Inflation came down but unemployment more than doubled to 12 per cent, while manufacturing output fell 10 per cent and manufacturing investment dropped 30 per cent. In1986, the Bank of England abandoned monetarism.

In America, events mirrored those in Britain until 1982, when the Federal Reserve abruptly abandoned monetarism and reverted to a Keynesian increase in the money supply. Friedman was reportedly furious, but a few months later the American economy was under full steam in a recovery that lasted seven years.

Friedman has been accused by many distinguished economists of tampering with statistics and cutting corners to prove his points. For example, he claims that the Fed exacerbated the Great Depression by causing the money supply to fall. In fact, the money supply fell because bank runs caused 10,000 bank failures, leaving depositors with worthless bank notes no longer backed by gold reserves.

So Friedman actually argues that the Fed should have stepped in and injected enough money into the economy to maintain the money supply. I'm no economist but, er, that would have been interventionist, wouldn't it?

I think, in fairness to an old man, that we should probably gloss over other errors, such as his claim, in 1993, that the US economy would make no progress under Clinton, or his assertion that the euro would never come into being. Let's forgive him, and forget him.

http://observer.guardian.co.uk/business/story/0,6903,796373,00.html


--------------------
Don't worry, B. Caapi


Post Extras: Print Post  Remind Me! Notify Moderator
OfflineTao
Village Genius

Registered: 09/19/03
Posts: 7,935
Loc: San Diego
Last seen: 1 year, 7 months
Re: Milton's NOT so good ideas... [Re: ]
    #3512349 - 12/17/04 06:30 AM (12 years, 1 month ago)

with the exception of possibly hong kong, open markets have not been a successful way of industrializing. East asian countries, including japan post-1945 and others have been more successful following the guidance of policies similar to that of Friedrich List, where states protect certain key industries (not too many as to be an overbearing command economy, but not too few as to be ineffective) that are vital for industrialization while they are in their infant stages so that they are not blown out of the water by TNCs who would easily outcompete them if the country was open to them. this is the policy at least until they are in a more advanced stage of industrialization.


--------------------
Magash's Grain Tek  + Tub-in-Tub Incubator + Magash's PMP + SBP Tek + Dunking = Practically all a newbie grower needs :thumbup:


Post Extras: Print Post  Remind Me! Notify Moderator
OfflineGazzBut
Refraction

Registered: 10/15/02
Posts: 4,770
Loc: London UK
Last seen: 12 days, 17 hours
Re: Milton's NOT so good ideas... [Re: Xlea321]
    #3516524 - 12/18/04 09:30 AM (12 years, 1 month ago)

Surely somebody has something to say about this????


--------------------
Always Smi2le


Post Extras: Print Post  Remind Me! Notify Moderator
OfflineGazzBut
Refraction

Registered: 10/15/02
Posts: 4,770
Loc: London UK
Last seen: 12 days, 17 hours
Re: Milton's NOT so good ideas... [Re: GazzBut]
    #3519643 - 12/19/04 07:50 AM (12 years, 1 month ago)

Oh come on, please explain why this arguement against open markets and Friedmans ideas is flawed!!! Pinky, Mush, SS7?? any ideas??


--------------------
Always Smi2le


Post Extras: Print Post  Remind Me! Notify Moderator
Jump to top. Pages: 1

Amazon Shop for: Scales

General Interest >> Political Discussion

Similar ThreadsPosterViewsRepliesLast post
* Milton's NOT So good ideas... GazzBut 621 13 06/07/05 07:43 AM
by GazzBut
* Milton Friedman's "Free To Choose"
( 1 2 3 all )
trendalM 2,177 45 01/02/06 03:00 AM
by MisterMyco
* Allende and Pinochet Great_Satan 787 15 11/29/04 01:03 PM
by Vvellum
* Milton Friedman on the Drug War
( 1 2 all )
JesusChrist 1,903 32 12/15/04 09:48 PM
by EonTan
* Chilean judge charges Pinochet Krishna 595 9 12/15/04 05:01 PM
by zappaisgod
* Milton Friedman: Legalize It! JesusChrist 540 5 06/06/05 08:02 AM
by GazzBut
* Castro, Chavez and Operation Miracle
( 1 2 3 all )
Alex213 2,355 58 12/24/05 09:30 AM
by kotik
* HOw can anyone exercise controll over a miracle? ZippoZM 404 7 07/06/03 11:33 PM
by mntlfngrs

Extra information
You cannot start new topics / You cannot reply to topics
HTML is disabled / BBCode is enabled
Moderator: Prisoner#1, Enlil
552 topic views. 0 members, 0 guests and 3 web crawlers are browsing this forum.
[ Toggle Favorite | Print Topic | Stats ]
Search this thread:
Marijuana Demystified
Please support our sponsors.

Copyright 1997-2017 Mind Media. Some rights reserved.

Generated in 0.092 seconds spending 0.004 seconds on 14 queries.