Neoliberalism: lunatics take over the asylum

- Episode 06-

‘Dark make-believe’

Dark make-believe
11 December 2024
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NEW SERIES Lunatics take over the asylum: Neoliberalism uncut
'Dark make-believe' - historian Anita von Schnitzler
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



 
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.



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. 


 
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



 

Student uprising in Soweto 1976 when 500 young people and children were killed by the state

Neoliberals and Soweto

Thatcher’s other favourite among repressive regimes was apartheid South Africa, where her own family had business connections. Here too there was a tradition of neoliberalism going back into the 1950s, and here too we find Milton Friedman turning up in person.
 
In March 1976 Friedman informed a university audience at Cape Town that apartheid would eventually come to an end, not through voting, which was not, in his view advisable because it extended the vote beyond the wealthy few, but through the forces of free market capitalism.
 
Friedman’s visit came just in time for South Africa’s forces of conservatism. Three months later, 500 students were killed in rioting at Soweto.

The government’s response was gruesomely military. But also – extraordinarily – it borrowed heavily from Friedman’s neoliberalism. Instead of attending to the grinding injustice and poverty that was straining apartheid – and people’s lives - to breaking point, the government cut spending in Soweto.

There was an end to aid programmes and housing subsidies. The government had decided that the solution to Soweto’s deprivation was to be free enterprise.
 
What that meant in reality was transferring the economic problems of the black townships away from white government and onto the backs of private black businesses.

The townships would now, for example, get electricity. But only by private enterprise, funded by a levy on their poor inhabitants.

In reality, the white minority would now be able to hold on to power for many decades. Another triumph for neoliberal economics and Milton Friedman's version of freedom.

Fire engineer Dr Barbara Lane, appointed by the inquiry, found non-compliant and faulty aspects of fire and smoke-extract systems at Grenfell Tower

‘A bonfire of regulations’
 
One of our listeners has asked us whether we mention the catastrophic 2017 Grenfell Tower fire in our series. Unfortunately we do not. But it does indeed serve as a terrifying example of what happens when we have no government or the government we have refuses to regulate business.
 
We quote George Monbiot on Grenfell:
‘For years successive governments have built what they call a bonfire of regulations. They have argued that “red tape” impedes our freedom and damages productivity. Britain, they have assured us, would be a better place with fewer forms to fill in, fewer inspections and less enforcement.'
 
'Deregulation of this kind is a central theme of the neoliberal ideology to which both the Conservatives and Labour under Tony Blair succumbed.'



'In 2014, the then housing minister Brandon Lewis, rejected calls to force construction companies to fit sprinklers in the homes they built on the following grounds: Conservative MPs see Brexit as an excellent opportunity to strip back regulations. In our commitment to be the first Government to reduce regulation, we have introduced the one in, two out rule for regulation … Under that rule, when the Government introduce a regulation, we will identify two existing ones to be removed.’
 
That's neoliberal dark make-believe!! You couldn't make it up...
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