January 15, 2016


The Boys Who Got to Remake an Economy : They embraced free-market economics in America. Then Chile's dictator let them transform an entire society. (Tania Opazo, 1/15, 16, Slate)

The film recounts how in 1956 the University of Chicago and Santiago's Universidad Católica--with the help of Ford Foundation--signed an exchange agreement to send young economics students to the United States to learn more about "monetarism," the theory that governments should refrain from regulating the market, whenever possible, with the exception of managing the money supply. The idea, radical in the United States for years following the New Deal, was developed by Friedman in the 1940s and under his leadership of Chicago's economics department became the intellectual center of free-market economics in America. "This exchange was part of the State Department's investment plan to expand their influence in Latin America, in a moment when they were concerned about the growth of Soviet ideas in the region. It is clear evidence of America's foreign-policy influence in Chile," Fuentes told me.

Around 25 Chilean students came to Chicago between 1956 and 1961. Some of them bought video cameras, an unimaginable purchase in Chile in those years, and recorded their time in Chicago, footage that is used in the film. They filmed their parties, their study sessions, and their walks around the campus. They recorded their everyday lives as normal students, long before they became the economic leaders of Chile's military government.    

Back in Chile, the Chicago Boys hoped to implement some of what they had learned in America. So they started to build an economic program, which they presented to the presidential candidate Jorge Alessandri, who lost to the Socialist Salvador Allende in 1970.

During Allende's rule, the Chicago Boys continued working on their economic project, which was finally named el ladrillo--the brick, because it was so big. Chicago alum Sergio de Castro authored their final recommendation, which they delivered to Navy Admiral José Toribio Merino.

Merino would be part of the junta that overthrew Allende in a CIA-backed coup in 1973, installing Gen. Augusto Pinochet as the new head of state. De Castro became the economic minister and later the treasury minister. The other Chicago Boys also joined the military government, occupying Cabinet positions during the 17 years of dictatorship.

Their program centered on reductions to fiscal spending to solve high inflation and economic difficulties. They opened the economy to foreign imports, privatized dozens of state companies, and removed most government controls on private economic activity. At the same time, as it was opening up the Chilean economy, the regime was clamping down on political opposition. In Pinochet's nearly 20 years in power, thousands of people were killed or "disappeared."

But while it came under heavy human rights criticism, Chile was the first country to apply Friedman's economic principles, and, years later, the famous economist called this process, lead by his disciples, "the Miracle of Chile." Friedman himself visited Chile and met with Pinochet in 1975, where he praised the economic measures taken by the Chicago Boys and Pinochet's government. The connection with the dictator has been one of the most controversial aspects of Friedman's legacy in the United States.

To Carola Fuentes, Chile was the first (and most radical) experiment in what we call now neoliberalism: "We helped to shape the economy of other countries. You can't imagine Margaret Thatcher's reforms, in the United Kingdom, and Ronald Reagan's, in the United States, without Chile."

Because the Anglosphere and Scandinavia are all democracies, we're just getting there slower.

Posted by at January 15, 2016 1:12 PM