Free markets in Chile

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If you're unaware of the links between free market economists and the Pinichet regime, a good place to start is this article:

The Complicated Legacy of the “Chicago Boys” in Chile, by Daniel Matamala, Pro market, September 12th 2021

A common criticism of neoliberalism is that two of its most famous intellectual spearheads - FA Hayek and Milton Friedman - supported Pinochet's dictatorship in Chile. (In the photo shown, Friedman is on the left and Hayek is on the right.)

Try to put these events in order:

4 points

1973

1975

1977

1990

Hayek visits Chile

Pinochet's dictatorship ends

Pinochet seizes power

Friedman visits Chile

Clear selection

Did Hayek and Friedman meet with Pinochet during their visits to Chile?

2 points

Yes

Clear selection

Friedman claimed that he gave advice on monetary policy to government officials, and broader thoughts about a free society to students and faculty. But that isn't the main influence that people think he had on the regime.

What was the name of the group of Chilean's, trained at Friedman's US university, who played a key role in policy advice to the Pinochet regime?

2 points

The Stanford Crew

The Harvard Men

The Chicago Boys

The Princeton Posse

Clear selection

Hayek had a 20 minute meeting with Pinochet and later sent him a copy of 'A Model Constitution'.

What were the reasons why Hayek spoke positively about Pinochet? (Choose all that apply)

4 points

Hayek had been friends with Pinochet for many years

Hayek had family ties to South America and loved Chilean culture

Hayek thought that liberal dictatorships were better than illiberal democracies

Hayek believed that economic liberalism would lead to political liberalism

A valid criticism of Hayek might be that he failed to speak out against the crimes being committed by the regime. What had happened to personal freedoms under Pinochet?

2 points

Human rights abuses dramatically declined

Significant human rights abuses occurred

Clear selection

Hayek's claim in 'The Road to Serfdom' wasn't a warning that any country that reduces economic freedom will necessarily become totalitarian. He was providing a warning that this can happen.

He played a major role in providing the intellectual basis for those countries that avoided the fate of Venezuela, and liberalised their economies. And notice that the strongest example of how liberating the economy can precede political freedom, is Chile.

Just to see the difference between these two countries, the chart below shows GDP per person from 1950 to 2016. Try to guess which is which:

2 points

Yellow

Red

Chile

Venezuela

Clear selection

One could say that it is wrong to consult illiberal regimes. Perhaps it's important to focus on improving political freedom before economic freedom.

However Chile is the best counterexample to this!

Venezuela is the best example of the dangers of allowing a reduction in economic freedom.

And Chile is the prime example of the success of using economic reforms as a prelude to political freedom.

What do you think?

Finally, can you tell who is who?

2 points

Left

Right

Hayek

Friedman

Clear selection

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