in 1973, democratically-elected president Salvador Allende was nationalizing certain key parts of his country's economy, in accordance with mainstream economic opinon at the time as practiced by most Western European countries. The copper companies, however, were afeared of their interests and implored the Nixon administration to do something about it. Henry Kissinger, who once said that Chile was 'A dagger pointed at the heart of Antarctica' (that is, at nothing), now said that Chile could become 'an example for a successful and democratic socialist country' and therefor had to be stopped. The Nixon Administration responded by spending hundreds of millions of dollars to sabotage the Chilean economy and the installing a military junta.
The junta was led by General Auguste Pinochet, who died this week. During his rule he orchestrated the 'disappearance' of thousands of Chileans and dozens of Americans, Spanish, and other nationals who he deemed inconveient, while torturing thousands more, including the current Chilean president.
After his 'retirement' at the age of 75 (though he remained commander-in-chief for years afterward) Pinochet was arrested and brought to trial by Spanish authorities for having murdered their citizens. His opponents demanded the release of the CIA files about Pinochet. To counter that, a right-wing State Department official demanded that they release ALL the files, including the ones on Allende. What they revealed was a total lack of totalitarian ambition on Allende's part, who apparently viewed advocates of Cuban-style communism at least as big a threat as the right-wing militants who eventually killed him.
Well, anyway, Pinochet is dead. It's a shame he never had to face justice.
14 comments:
While Pinochet's dictatorial regime should be his lasting legacy, it is important to note that his market reforms are what led to Chile's flourishing economy today (at least according to the otherwise critical AP news feature on Pinochet's death). That wouldn't have been achieved with Allende in power.
So, while condemning the brutality
of his regime, I can also appreciate his wise economic policies. I think the goal is to find someone who fulfills those policies without being an awful dictator.
But his economic policies could hardly have failed, considering that there was no longer any deliberate attempts to wreck and destabilize it by the American government.
Ummm...that's a stupid argument.
There was no intervention by the U.S., because it realized that Chile's market reforms would be moving its economy in a positive direction, UNLIKE before.
The point is: Chile's economy was in a position to be strong. It was improving under Allende (before the US asserted its influence) and it improved under Pinochet beause the economic might of the US was now behind it instead of against it.
For example, in the six years before Allende came in the US gave Chile $1 billion in economic aid. During his tenure they gave none. When Pinochet came in the aid came back, as well as military support and international loans.
Even beyond that, there were quite massive direct involvements by the US with the aim of undercutting Allende by ruining the Chilean economy. Don't forget: this was the 1970's, when Keynesian prosperity was still riding high. People in the Nixon administration (including Kissinger) were convinced that Allende's programs were going to have positive economic effects, but would weaken U.S. influence in the region. So, they had to be stopped.
Considering that it was the avowed policy of the U.S. to make sure the Chilean eocnomy sucked so long as Allende was in power, whatever came afterward would have to look good by comparison.
But there is absolutely nothing wrong in the U.S. using its economic influence to maintain its political interests. I think we have the right to decide who our loans go to and when.
I think the problem with our support for Pinochet was that we ended up supporting a dictatorial regime that caused more human damage than Allende's probably would have. That's the only moral question in this matter.
And Keynesian prosperity is a bit of an oxymoron - you can say "stability" or something like that. Allende wasn't just following the way of Keynes, but was adding healthy doses of Marx. That is not a positive economic effect from a broader perspective.
I'm sorry, I didn't add:
With Allende, the economic result without U.S. intervention would have been stable socialism at best, which from an American perspective was not acceptable.
But with Pinochet's market reforms, there was a real economic growth - a flourishing, not just stabilization. That is why the current president, despite her justified hatred of Pinochet, does not want to see a change in the economic structure.
rshams has certainly absorbed the dominant narrative as hoped."Wise economic policies" indeed. In 73 when Pinochet assumes power Chilean unemployment is 4.3%, 20% live in poverty.After ten years of "free market' modernization, unemployment was at 22%,poverty grew to 40%, real wages decline by 40%.Only after Pinochet re-nationalized the copper sector,which was 30 to 70% of export earnings, did the economy rebound. This exact same scenario of economic disaster took place wherever Friedmans Washington Consensus policies were imposed, including America, as we are now experiencing.It is strange how every country which rejected these ruinous policies ended up de-stabilized by the US, while the ones that agreed to this client -state status saw it's minority elite get fabulously rich.
Troutsky has failed to note that the high unemployment was the result of lowering Chilean inflation from its sky-high levels.
In addition, the overall GDP of the country grew tremendously.
From what I've read, the benefits of Pinochet's economic policies were only seen after he left office. It's a little unreasonable to expect immediate results after such groundbreaking reforms.
Of course, the criticism I've just responded to comes from a guy called "troutsky". Taking economic advice from a Marxist is a bit like ordaining David Duke as a rabbi.
Careful, rshams. Even if what some people say about Chile's prosperity is true (and one has to admit, it seems curious that Chile's economy should only begin to improve after more than 17 years of supposedly sound economics, especially as the improvement began just after a move back to more statist economic model), it begs the question: how many stadiums full of corpses are worth a drop in inflation?
Oh loyal, you should look back to comment #1. I was never excusing the brutal nature of Pinochet's dictatorship.
My response to troutsky was in regards to his economic policies ONLY.
Hey, I resemble that remark! Nobody denies that capitalism creates real growth, rshms, but a vast majority of humans and the eco systems pay a terrible price. What Marx showed was that it is not sustainable and I and many respected economists stand by that analysis.Seen any wars lately? Buy any beachfront lately? 36,000 people starved to death today while you were eating Cheetos.
I don't eat Cheetos. I prefer Gouda.
Let them eat Gouda!
Chile was in no position to be economically strong under Allende. In flation at that point was 300%+ and, as anyone who has taken an economics class (or knows about Weimar Germany) knows that inflation at even a tiny fraction of that rate is unsustainable. When you have some inflation (between a very reasonable amount), you necessarily have to have more in order to keep the economy lubricated, all the while making investment more risky and savings less valuable. At some point, it's got to stop; you can't keep printing money at that rate forever.
The transition to a more market oriented economy under Pinochet was certainly a painful one, though I think that there's little doubt that this was a far more sustainable path in the long term.
Regarding the doubling of unemployment in the mid 80's:
"
Marshall particularly fingered Chile’s very un-Friedmanlike insistence on fixing the price of the Chilean peso to U.S. dollars in the early ‘80s, creating an overvaluing of the peso that devastated the Chilean export market. He also noted Chile’s continued system of crony capitalism in which those with access got special government credit, and bailouts when free-market risk hurt them. Those sorts of policies, as well as a worldwide collapse in copper prices, Chile’s prime export, were to blame for Chile’s early ‘80s recession, not a mad rush for too-free markets.
http://www.reason.com/news/show/117278.html
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