WHAT PINOCHET HATH WROUGHT

Chile: Ten Steps for Abandoning Aid Dependency for Prosperity (Ana I. Eiras, May 20, 2003, Heritage Foundation)

The annual Heritage Foundation/Wall Street Journal Index of Economic Freedom provides a framework for understanding how open countries are to competition; the degree of state intervention in the economy (whether through taxation, spending, or overregulation); and the strength and independence of a country's judiciary in enforcing rules and protecting private property.

The 10 factors of the Index show the degree of economic freedom in a given country. Some countries may have a substantial degree of freedom in all factors; others may have a degree of freedom in just a few. One of the most important findings of the Index is that, as Hayek foresaw more than 60 years ago, economic freedom is required in all aspects of economic life--that is, in all of the 10 factors--in order for countries to improve their economic efficiency and, consequently, the living standards of their people.

Chile illustrates Hayek's idea. For more than 30 years, the country has persisted in opening its markets, allowing more and more competition, and fostering a strong rule of law, and these efforts have paid off in many ways. Chile today has one of the highest per capita gross domestic products (GDPs) in Latin America, has experienced high levels of economic growth, and conveys an institutional trust that has attracted local and foreign investment. Most important, it has severed itself from reliance on international aid, on which most Latin American countries depend. By following the 10 steps to economic freedom, Chile has become more prosperous. Continuing on this road will transform Chile into a developed economy for future
generations.

Chile has set the example of how a country can escape from the cycle of aid and dependence to the cycle of self-generated growth. Other Latin American countries and the rest of the developing world should be encouraged to follow the Chilean example. Many developing countries have slipped back from reforms into aid and bailout dependency, while others have never exited aid dependence at all.

The United States should do all it can to support the Chilean effort and publicize the great triumph of prosperity through free and open markets. Success breeds imitation. As more and more countries begin to imitate the "Chilean model," the world will experience more growth, development, stability, and peace.

HOW CHILE DID IT: 10 Steps...

An interesting analysis made bizarre by the failure to deal with the fact that all10 steps were possible only in the context of a right-wing government's establishment of order, political stability, and the rule of law. Can even the conservative Heritage Foundation not recognize that the healthy development of democracy and capitalism may require a period of authoritarianism first? Posted by Orrin Judd at May 23, 2003 8:25 AM