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General Agosto Pinochet, brutal dictator
Neoliberals and Pinochet
The key to US policy in Latin America has always been to open it up to American businesses. However, in the 1950s countries like Chile quite reasonably protected their industries by imposing tariffs on imports from the US and elsewhere.
What better, then, than to teach a generation of young Chilean economists the benefits of free markets and free trade? No more tariffs. And where better to send them than the University of Chicago, home of Milton Friedman, and the mecca of free trade capitalist economics?
By paying the fees of the Chilean students the US government was supporting a financially failing university, and keeping the University of Chicago’s eccentric, neoliberal Free Market Project – which its own economics department always kept at arm’s length.
In 1970, with the dollar crisis dragging the world into economic turmoil, the Chileans elected the left-wing Salvador Allende as President. The US government and the CIA were aghast. One CIA director wrote during a meeting at the White House that the objective now in Chile must be to ‘make the economy scream.’ The US ambassador in Santiago cabled Washington that ‘not a nut or bolt will be allowed to reach Chile under Allende.’
By the time General Pinochet seized power in 1973, about a hundred Chileans had been through the course in neoliberal indoctrination at Chicago University.
Actually, being drawn from conventionally Catholic backgrounds, the Chilean students were not wholly unsympathetic to Friedman’s line in far right wing rhetoric. The Chicago Boys knew perfectly well that Pinochet’s right-wing coup was coming. They were ready to play their part.
#106 Dark make-believe - Ep 6 Lunatics take over the asylum: Neoliberalism uncut
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Milton Friedman (centre), General Pinochet (right) in Chile
Best of friends
On 21 March 1975 Milton Friedman met the Chilean dictator, in his Santiago palace, La Moneda (meaning the mint). It was still being rebuilt after the violent coup that had brought Pinochet to power 18 months before. The economist Sebastian Edwards – himself from an influential Chilean family – is clear that it was Friedman’s visit that conclusively swung Pinochet’s regime towards free-market neoliberalism.
Chile became the first, and for a while the most extreme neoliberal economy in the world. In his Newsweek column, Friedman proudly called it an ‘economic miracle’ and Pinochet’s rule as an ‘even more amazing political miracle.’ By the time Pinochet was ousted in 1990, having imprisoned, tortured and killed tens of thousands of people, 28% Chileans were unemployed, real wages were lower than when he started, and 40% of the population was below the poverty line.
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Maggie visits General Augusto Pinochet and his wife Lucia whilst under house arrest in Surrey 1999
Margaret Thatcher was, of course, infamously close to the Chilean dictator and he visited the UK several times. In return, Thatcher’s Chief Economic advisor, Alan Walters, travelled a number of times to Santiago to meet the General and his Chicago-trained economists. Chillingly, Walters called their pitiless regime ‘very exciting… the great experiment in liberal economics.’ Sure thing, Mr Walters.
Thatcher’s government not only lifted a British embargo on the sale of weapons to Chile imposed by the previous Labour government, it also sold arms that could be used for internal repression while training hundreds of Chilean soldiers.
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Milton Friedman advises apartheid South Africa that neoliberal free-market economics can solve the problems of the Soweto riots, in the same way it delivered a ‘miracle’ of liberty under
Pinochet in Chile
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