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Don’t credit Chile’s economic rise to Pinochet

by Heraldo Munoz

The Washington Post.

Forty years after Chile’s dreadful 9/11, when Gen. Augusto Pinochet overthrew democratically elected President Salvador Allende, Americans still ask me: Wasn’t Pinochet responsible for the economic miracle that made Chile a success story?

After the coup in Egypt in July, a Wall Street Journal editorial argued that “Egyptians would be lucky if their new ruling generals turn out to be in the mold of Chile’s Augusto Pinochet,” who, it said, “hired free-market reformers and midwifed a transition to democracy.” Some years ago, Jonah Goldberg made a similar argument in a Los Angeles Times column headlined “Iraq needs a Pinochet.”

As an established Pinochet opponent, I can affirm that he personified a disturbing contradiction. He won praise for transforming the economy, operated by the “Chicago Boys” (Chilean students of Milton Friedman at the University of Chicago), into the most prosperous in Latin America. He encouraged export growth, removed trade barriers, established an independent central bank able to control interest and exchange rates, and privatized social security and state companies. Chile became the Washington Consensus model for countries seeking to put their house in order.

The main problem for Pinochet’s apologists was his brutality and corruption. This is why, although the U.S. government intervened to destabilize Allende before and after he came to power and initially backed Pinochet, the dictator never found lasting friendship in Washington. If only he had modernized Chile’s economy without assassinating, torturing and exiling tens of thousands of dissidents and getting caught hiding offshore bank accounts. What seems to matter for some Pinochet defenders is that, much like Mussolini, he made the trains run on time.

It should be noted, however, that the groundwork for Pinochet’s economic modernization of Chile was laid by his predecessors under democratic rule. Land reform in the 1960s and early ’70s broke up inefficient semi-feudal estates, allowing the military regime to stimulate an export-oriented economy driven by large-scale agricultural production. Some aspects of Chile’s modernization began around 1920. By the 1973 coup, most Chileans enjoyed a high level of education (the illiteracy rate was less than 10 percent in 1970), and malnutrition and infant mortality had been declining for decades. Chilean universities were among the best in the Americas; the country’s central bank, Internal Revenue Service and General Comptroller’s Office were all solid state institutions.

Could Chile have reached prosperity without Pinochet? My answer is yes. Many Latin American countries that endured economic crises in the 1970s and ’80s, including Brazil and Peru, introduced tough economic reforms — not without vigorous opposition.

A Pinochet-type regime is not a necessary evil. No nation needs a tyrant to modernize and attain well-being. As Nobel laureate Mario Vargas Llosa has written, reforms imposed by dictatorships always result in “atrocities that leave civic and ethical sequels infinitely costlier than the status quo.” In the end, economic liberty seldom thrives in the absence of political freedom.

The return of democracy in 1990 started to remedy the social costs of the Pinochet era. In the next two decades, Chile grew at more than 5 percent per year, almost doubling its growth rates of the three previous decades. Meanwhile, Chile’s poverty rate plummeted from 40.8 percent in 1990 to 9.9 percent in 2011, by some measures; meat consumption increased from about 36 kg per capita in 1990 to about 84 kg; the share of homes with refrigerators jumped from 55 percent to 92 percent; the share of homes with washing machines rocketed from 37 percent to 82 percent. But U.N. Development Program data from 2010 show that Chile is still among the 15 most unequal countries in the world, though subsidies soften the gross gap in income inequality.

Chile’s social miracle is yet to come. To reduce social and economic inequalities, efforts need to be made toward affordable, quality education and tax reform. Recent street demonstrations in Chile and elsewhere in the region are being led by the new middle classes. Highly indebted and frustrated by lingering inequalities, they feel vulnerable and are demanding efficient public services and decent treatment.

Like the various identities Pinochet used in his secret bank accounts, he means different things to different groups. Some will continue to underscore that he championed economic reforms that transformed Chile and influenced other nations.

Ultimately, however, Pinochet should be remembered more as a notorious symbol of repression than an economic reformer. One symbol of a new era came two months ago when the name of Santiago’s September 11 Avenue, designated to celebrate the date of Pinochet’s 1973 coup, was finally changed, thanks to the initiative of a mayor new to politics. Although his long shadow remains, the Pinochet days are over.

Heraldo Munoz is an assistant secretary general of the United Nations and the U.N. Development Program director for Latin America and the Caribbean. He is the author of “The Dictator’s Shadow: Life Under Augusto Pinochet.”

  • http://www.sheldonthinks.com/ andrew Sheldon

    What nonsense. They are sweeping reforms. Why did he ‘suppress dissidents’? Because they were collectivists with no respect for justice? There was perhaps too many of them to rely upon the ‘Western’ justice system, which is only just relatively less oppressive, and very inefficient. Was he supposed to rely upon a corrupt and indolent police force to preserve order. Justice is not ‘sanctioning majorities’, its protecting natural rights. He was effectively protecting life-affirming values, and showed little respect for those with no respect for those with no respect for humanity. Where did they get that message? Collectivists who deride rationality, explicitly or by default, and originally from Catholicism, which taught ‘Original Sin’. This guy makes a bad case for his thesis…in fact he does not even deal with it.

    • Reco2

      You support fascist dictators do you?

      Chile would have been better off without Pinochet.

      • http://www.sheldonthinks.com/ andrew Sheldon

        Actually, I don’t think so. They needed his courage. I don’t expect him to be a military as well as philosophy genius, but he quashed socialists with no respect for justice. Perhaps the minerals boom helped him, but he facilitated it by establishing a regime for business to prove itself. The issue is not that he was aggressive, but whether he initiated it, and to what end. The in was freedom. To that end he killed far fewer socialists than Stalin so I say well done! Meanwhile Putin’s Russia is still a collectivist state.

  • Jayk Quinn

    Chile still leads all latin American countries in economic freedom and wealth. Brazil, Argentina and some of the other supposed emerging economies are now falling back, after their keynsian attempts to pull their economies up, is finally coming back to bite them. I do not condone violence against peaceful dissenters and in that regard pinochet was wrong, but the limited free market ideals he supported and that are still supported by Chile’s current government, is why Chile is fairing better than the rest of Latin America today.

    • http://www.sheldonthinks.com/ andrew Sheldon

      The dissenters were socialists. Conservatives with something to protect valued law and order. One has to appreciate that moral ambivalence, scepticism or collectivist identity is incompatible with objective, ‘natural law’ justice. A brazen pack of socialists therefore is a dangerous threat in a community of anti-intellectual protesters. This is a reason to cut off subsidisation for public education which undermines people’s intellectual development. The representative democratic system is an extortion racket that suits or enables populist socialists.

      • Jayk Quinn

        Cutting off subsidies for public education and the rest of the government socialistic programs is fine, but harming a 3rd for beliefs, destroys the fabric of our representative republic. Granted many of the programs violate our natural rights, but that is for the republic to do in a non-violent fashion against the dissenters, although it seems that we are in the dissent.

      • http://www.sheldonthinks.com/ andrew Sheldon

        Jayk, you are presuming that representative democracy or majoritivism is an ethical foundation for a society – its not. Its an extortion racket that imposes the views of the majority on the minority because its considered ‘convenient’ or ‘efficient’. The reason why countries have ombudsmen, senates, courts is because truth rests on facts and arguments, not perceptions and popularity. So when a socialist (or any type of collectivist) says they are going to redistribute wealth, well, you have the courage to repudiate their argument. When they are so organised and powerful to undermine the credibility of govt by obstructing good government, even when it lacks the intellectual integrity to communicate those ‘life-affirming’ values, then I say give the socialists what they want. They sanction the force of the majority, well, you answer for the minority who respect natural rights. If you think otherwise, then there will be no economic surplus to redistribute. By the way, I’m not a utilitarian… not suggesting that you need to first create wealth to redistribute. I’m saying the discretion to redistribute would lie with the people who possess it; who earned it.

      • http://www.sheldonthinks.com/ andrew Sheldon

        I would add Jayk that lobbying, protest movements are forces of extortion. They are not ‘arguments’, they are displays of brute force to intimidate. That is why they are repudiated with force, i.e. police. Now, the reason why people resort to such measures is either because they are given to process to argument a case on its merits, or because they have no point of merit.

  • Marc Zimmer

    Funny… for all his “free-market reforms” Pinochet never denationalized the mining industry, which was justification for why he threw the coup in the first place. It could be argued that Allende’s resource nationalism was the real reason why Chile has grown so prosperous.