Republicans & Conservatives Archives

I don’t think anyone today thinks there was any particular benefit from Pinochet, except maybe Kissinger, and I certainly hope that isn’t what you are averring.

What you failed to mention was that the “commie” Allende was actually succeeding in turning the economy around…until the CIA, IMF, and World Bank intentionally destroyed Chile’s economy. How dare he tell Anaconda Copper that the Chilean people owned their ore. Or that ITT, Dow and Firestone didn’t run the country. Of course destroying the economy and installing Pinochet, meant that these conglomerates recouped their losses at the expense of Chileans

Of course, that little factoid changes the appearance of the “success” which was delayed because of the cold war. That of course isn’t mentioning the mass killings, much like you smoothed over that little “issue”.

I recently reread Kissinger’s Years of Upheavel and noted his seeming admiration for totalitarianism. Are you in love with it, too?

Gergle

Allende was ruining the economy. We don’t know what might have happened had he survived, but the experience of Cuba and Nicaragua are not encouraging. Nevertheless, we don’t like things like the Pinocet coup.

But after that was done, Chile did some really good reforming that made it much better off than its own past and than its Latin neighbors.

We have had many such takeovers. But in most other cases, be it Cuba, Russia, Iran … well the list is too long, the bad guys bankrupt the country.

This is one of the few cases where (1) the bad guys leave power voluntarily and (2) while they are in power reforms are enacted that help structure future prosperity.

Some times good things can come out of bad things, and the reverse is also true.

Christine+John,

I value political freedom much higher than economic prosperity; thus, I would rather live in a place such as Chavez’s Venezuela than Pinochet’s Chile. A poor freeman is better off than a rich slave any-day.

Of course, I really would not want to live in either.

C&J
Good economic policy is good economic policy. Glossing over Pinocets tortue and murder of thousands and ignoring the US involvement in ousting a democratically government is grotesqe. Is democracy bad for business. Is there any real evidence that Allende, a college professor and no dummy, would not have made similar reforms?Its like saying that Germany’s economic success can be laid at the feet of Hitler. I mean after all,he gassed thousands of Bolshiviks and got the help of the allies in eliminating outdated infrastructure.
Your assertion that the Cuban people are worse off under Castro than that kleptocrat ,Mafia thug, Bautista, is absurd. They would be much better off without that stupid and cruel US economic embargo,little doubt of that. As it is,they have one of the highest literacy rates in the world and according to most objective reports have a good,broad based health care delivery system. If the Bautista regime were still in power their daughters would still be whoring in Mafia casinoes and the compesinos would still be starving.
The Castros should long ago have allowed the transition to democracy,of course. Could this have been done without CIA interference is doubtful,but still. Your general thesis gives just a little peek at the dark truth of the right, dispite the oft repeated platitudes about democratic ideals,at the bottom, rightist do not really believe in it. It complicates business and allows the unwashed masses a say in how they are governed and wealth is distributed. The real monster in the dark,the real enemy of liberty in the US comes from the right.Thank you for letting the secret slip just a little.

Warped & Bills

My point is only that evil dictators are very common. Cuba, Iran, N. Korea and others are certainly as cruel as Pinocet and much longer lasting, but when they go there will be a long time recovering.

There is an interesting thing about Chile. I knew it would be unpopular to point out that from this bad came some good. But when I point out the grudging benefits of Iran or China, I am called a realist. And you feel not only free but compelled to defend Cuba.

So let’s take the general proposition - authoritarian states like Pinocet’s Chile, Cuba, N. Korea, Iran, China and many others have deplorable human rights records and we deplore them. Most also have deplorable development records and do not lay the basis of future prosperity and almost none leave voluntarily. Chile is an exception in both ways. China is an exception in economics.

If I wrote a piece praising China’s economic management would you find it necessary to tell me that we let the secret slip that we like countries to develop and prosper?

Christine,

How exactly was Allende ruining the country?

In the first year of Allende’s term, the short-term economic results of Economics Minister Pedro Vuskovic’s expansive monetary policy were unambiguously favorable: 12% industrial growth and an 8.6% increase in GDP, accompanied by major declines in inflation (down from 34.9% to 22.1%) and unemployment (down to 3.8%). Allende adopted measures including price freezes, wage increases, and tax reforms, which had the effect of increasing consumer spending and redistributing income downward. Joint public-private public works projects helped reduce unemployment. Much of the banking sector was nationalized. Many enterprises within the copper, coal, iron, nitrate, and steel industries were expropriated, nationalized, or subjected to state intervention. Industrial output increased sharply and unemployment fell during the administration’s first year.

The nationalization of U.S. and other foreign-owned companies led to increased tensions with the United States. As a result, the Richard Nixon administration organized and inserted secret operatives in Chile, in order to quickly destabilize Allende’s government. In addition, Nixon gave instructions to make the Chilean economy scream, and international financial pressure restricted economic credit to Chile. Simultaneously, the CIA funded opposition media, politicians, and organizations, helping to accelerate a campaign of domestic destabilization. By 1972, the economic progress of Allende’s first year had been reversed, and the economy was in crisis. Political polarization increased, and large mobilizations of both pro- and anti-government groups became frequent, often leading to clashes.

n its “Agreement”, on August 22, 1973, the Chamber of Deputies of Chile asserted that Chilean democracy had broken down and called for “redirecting government activity”, to restore constitutional rule. Less than a month later, on September 11, 1973, the Chilean military deposed Allende, who apparently shot himself in the head to avoid capture as the Presidential Palace was surrounded and bombed. Subsequently, rather than restore governmental authority to the civilian legislature, Augusto Pinochet exploited his role as Commander of the Army to seize total power and to establish himself at the head of a junta.

Controversy surrounds alleged CIA involvement in the coup. As early as the Church Committee Report (1975), publicly available documents have indicated that the CIA attempted to prevent Allende from taking office after he was elected in 1970; the CIA itself released documents in 2000 acknowledging this and that Pinochet was one of their favored alternatives to take power.

Oh Yeah, he didn’t do things to cater to industrial lobbyists and even resisted military, political and economic interventions by the US in favor of those lobbyists. Horrible!!!

Everyone is entitled to their opinion, just not their own facts.

I guess if you create economic havoc in a country, someone will turn it upside down and note how installing a dictator really turned things around. This graph suggests that the opposite happened. Pinochet, with US help, destroyed Chile’s economy, and only after his removal, did things turn around for Chile. A much delayed course in their generally upward movement over time. Pinochet was a dark period for Chile and a time of shame for the US.

http://en.wikipedia.org/wiki/File:Chile_GDP.jpg

Gergle

Short term results are meaningless. It takes years or decades to build the capacity of an economy. You can increase short term results by dipping into capital or borrowing from the future. If I take your property or repudiate my debts, I will enjoy a short term boom. Pirates can get rich by taking what others have built and saved, but it doesn’t make them or others more productive.

Your chart actually tells the story if you remember the simple fact that causes must precede effects and everything takes a certain amount of time to manifest itself. The economy tanked in the early 1970s. It is hard to get free from the problem of statism. According to your chart, things picked up in 1982 and continued to get better.

The chart also shows the radical break with the past. Chile was growing about the Latin average. The coup caused trouble. No surprise. And as I wrote, Pinochet went in with the idea of restoring the status quo ante, not creating a revolution. The economic revolution began in the middle of the 1970s. You don’t expect immediate benefits, in fact there is significant short-term pain. But once freed from the iron grip of the state, Chile began to take off.

Today Chile is one of the freest economies in the world. I am pretty sure that would not have happened under Allende. His goals were the opposite.

To repeat, we dislike ALL evil dictators, whether it is Castro, Pinochet, Ortega, Kim, Mugabe or any others. But the big difference for Chile was that (1) the dictator left voluntarily and (2) structural changes made during the dark times helped with future prosperity. This is uncommon. When Castro, Kim or Mugabe finally go to hell, it will take years to rebuild their benighted countries. Chile had a running start.

Let me post your chart. The blue line is Chile. The orange line is Latin America. Allende was overthrown in 1973. Pinochet left the presidency on March 11, 1990.

You also are entitled to your own opinion, but when you post a chart you might want to check if it conforms to your facts.

Gergle

I couldn’t get your chart to show in comments, so I put it in the original posting. Thanks for the help.

Christine,

Nice try but again the chart doesn’t lie.
Chile had had economics problems for years prior to Allende’s election. His first year (70-71) responded to his short term fixes, inspite of US efforts to destroy the economy. The US succeeded in killing the economy by 1972, and killing Allende in 1973. The economy responded to the destruction of US terrorism. Yes, some of the problems were Allende’s seizing of businesses, but the long term consequences of the robbing of Chile were at the root of this action.

Try as you might, you cannot separate the fall in Chile’s economy to the US economic and military terrorism. Similarly, You cannot separate the fall of the US economy from actions of the Bush administration. Freidman’s idiocy has now been visited upon the US. Twice. Once was in the eighties, both here and in Chile, known as the Reagan recession and S&L collapse. The difference here was that Volcker managed to save the US economy.

Opposition reestablished democracy in 1988, Pinochet was removed in 1990. Voila. The economy began to recover. Pinochet robbed at least 28 million for himself. The Chicago “miracle” created the mid-peak that was a double dip. It created an massively inequitable economy. The current growth largely benefits the oligarchs.

Maybe if you turn the chart upside down, it will conform to your notions that this worked. The radical “break” you suggest is called economic depression.

Charts don’t lie, but this one doesn’t tell the story of the oppression of the lower classes, either.

“If you’re not careful, the newspapers will have you hating the people who are being oppressed and, loving the people who are oppressing”.- Malcolm X

“Those who make you believe absurdities, can make you commit atrocities”- Voltaire

It seems you and Kissinger share a blindness to totalitarianism. It’s beautiful in it’s ability to be efficient. The trains will run on time, but they may be carrying people to death camps.

Gergle

I posted your chart. People can draw their own conclusions. Those who understand the concept of lag times and those who can see inflection points will draw one sort of conclusion. You are entitled to your own methods. I would suggest that you don’t make any big investments based on it, however.

Christine,

Yes, lag times of six months are reasonable. Beyond that…it’s, well…BS.

Don’t I recall you blaming Obama for Bush’s “lag time?” Johnny Cochran might get away with this kind of subterfuge, In this post, not so much.

Yes, people will draw their own conclusions. I think it’s rather obvious.

Gergle

Actually I did indeed give Obama some lag-time slack. I have said many times that presidents are not as responsible for the economy, good or bad, as liberals think.

It depends on what you are doing. It is often possible to mess things up rapidity. Building is a longer term prospect. In the case of seizing assets or making violent changes, you can often buy short term results at the expense of long term costs. If you just stop maintaining your car, the benefits will be immediate. If you are lucky, the problems will come much later and then you can blame somebody else.

Lag time in an economic restructuring might be a decade or more.

It takes around five years to plan and build a factory. You need about ten years to establish a fruit orchard and it might take a generation to establish a distribution network. Even harder is human capital. It takes ten or fifteen years to train and “build” an engineer and perhaps a quarter century to create a leader. Economic prosperity is not like a light you can switch on and off.

In fact, a short term jump is almost always a bad sign. It means that you are cooking the books, burning up some capital or doing something really risky.