Chile story

and now we will tell you about one of the

greatest success stories in neo liberal development.

Chile is one of the greatest success stories in all

of Latin America.

It was also the least likely testing ground for neoliberalism

following the free market oriented concepts of Milton Friedman Chile

transition from a centrally planned import substitute to industrialization model

to a free market under a free market all under

a military dictatorship, Chile started off as an import substitute.

Industrialization UH, country.

It began in the 19.

It's a modern story begins in the 19 thirties Or,

like many third World casualties of the Great Depression, they

followed a central planning economy markets.

The import substitution industrialization model is a policy that advocates

replacing foreign imports of domestic production as a.

It favors nationalization of vital industries, overvalued currency, high tax

rates and price controls, as well as a protective barriers

to trade.

As last week's presentations demonstrated, the OSI model is a

type of state led development model that typically fails, and

Chile was no exception.

All of this was before the final straw in the

socialistic, when the Socialist government of Salvador Allende was elected

to power in 1970.

So but yeah, Salvador a land said the following in

the top left, we start from different ideological positions.

For you to be communist or a socialist is to

be totalitarian for me.

No, On the contrary, I think.

Socialism Freeze man Salvador Hollandaise Economic policy was modeled after

the Soviet satellites in Eastern Europe, albeit retaining democratic institutions

in short, Democratic socialism.

Ellen is a democratic socialism followed a program of nationalisation,

price controls, wage increases and printing unsupported Chilean pesos.

This lead to inflation and other symptoms of economic chaos.

Production and exports stagnated.

Financial reserves were depleted.

The currency, uh inflation had spiraled out of control.

Their strikes were widespread and there were food shortages.

In September 1973 the elected government was ousted after three

years in power by a military coup led by General

Augusto Pinochet, who established a military dictatorship.

The peanut quote in the bottom is, uh, attributed to

Pinochet. Sometimes democracy must be bathed in blood.

Mhm. Augusto Pinochet certainly bathed chile and blood.

Thousands of dissidents, socialist Communist students, journalists, any political rivals.

They were executed, tortured, imprisoned or forced into exile.

He was a product of the old right, similar to

Spain's Francisco Franco, still right wing authoritarian and had a

strong role for the state.

He also didn't know what to do about the country's

economy. He successfully torn down hollandaise, Democratic socialism, but he

didn't know what to put in its place.

In the end, he was saved by a brick.

Now the brick was an economic manuscript, part of a

defeated candidates platform.

It was a free market neo liberal playbook.

It would ultimately be pulled off, its shelf, dusted off

and utilized by the Chicago boys.

The Chicago boys were a group of chilling economists who

were trained by Milton Friedman at the University of Chicago.

They had come to the university, has exchange students, and

they had Freeman as a professor.

Milton Friedman is now known as one of the most

prominent economists, favoring the her the free market.

He's, uh, key successor to the original Adam Smith, and

he advocated minimizing the government and maximizing individual agency and

the role of the market when they returned to Chile.

Chicago boys, as they were known, were among the few

intellectuals who are not targeted by the Pinochet regime, and

eventually they were able to build a bridge with them

and convince him to allow them to build a playbook

that would transform the country's economy.

They would follow neoliberalism.

They would use the power of the Pinochet regime to

almost forcefully deregulate the economy, liberalized trade and privatize 90%

of state owned firms.

Pinochet, the authoritarian he was, see the quote above, went

through this kicking and screaming, but he had no choice.

The economy something had to be done about it.

The economy is substantially improved by 1980.

It does not mean there wasn't a great cost to

this. To the left is a quote attributed to Milton

Friedman. Inflation is taxation without legislation.

That is when, UH, currency is inflated.

It loses its value, and that means it loses its

purchasing power.

And that means it's worth less, and you can use

a less with it.

Therefore, it's forcibly.

Uh, it's a monetary policy that takes money out of

your pocket except doesn't pay for any services.

That's what he meant by it.

And, of course, inflation was one of the first targets

of the Chicago boys for Chile.

Now remember, it had gone out of control under the

LNG regime, and when they decided to tighten the money

supply to combat inflation.

The result was a very painful recession.

By 1982 corruption debt and a pegged currency for the

Chilean peso actually had still been kept under state control,

almost derailed the entire project.

There is always a short term, painful effect of neoliberal

shock therapy, where the money supply is tightened and when

protected industries are subjected to are suddenly exposed to the

international market.

Remember, Chile had once been a protectionist economy.

Now they were exposed to neo liberalism.

Shock therapy.

Of course, there was going to be a lot of

consequences with that said, though.

By the end of 1985 when a new generation of

neoliberal economists returned, the Chilean economy had greatly recovered.

Following the case for free market inflation was kept under

control, the economic growth returned and the markets began to

diversify and the economy because, uh, the country began to,

uh, make a serious exports for the first time.

And it's a recent history.

For example, if you go to the l C B

o, you'll notice a selection of Chilean wines.

It all began during this period when the market was

allowed to breathe.

The uh the quote above is attributed to Friedman, where

he says the real mark miracle of Chile is not

how it has done economically.

The real miracle of Chile is that a military gente

was willing to go its principles and support a free

market regime designed by principal believers in a free market.

And in the end, this free market cost Pinochet his

power. He lost a referendum to stay in office in

1988 and he stepped down in 1990 uh, free and

fair elections were held and all of the candidates continue

the path of free market economy economics and they still

do. To this day, Chile's economy continues to grow and

democratic elections have been held ever since.

First they freed the market, then they freed the country

politically. What?

How is chilly doing today?

Now? Chile today has a human development index of 0.85

which is over the world average of 0.73 The human

development index measures the average achievement of a country in

terms of three factors educational achievement, life expectancy and GDP

per capita the image above is a diagram explaining the

H. D.

I. And Chile is also one of the freest countries

in Latin America, is the freest country in Latin America

and one of the freest countries in the world.

It has an economic freedom score of 7.96 and was

ranked the 14th freest by the Fraser Institute.

This is measured in terms of government size, regulation, rule

of law and freedom to trade.

We're going to click this link if you when you

click the This link will be made available in the

chat and you'll see how Chile's economic freedom compares to

that of the rest of Latin America, none of which

had really followed the neo liberal path.

Now Chili, in the end, was one of the most

unlikely success stories.

But there was a long term cost to this.

Although Chile had been able to free its market, neoliberalism

has forever since been associated with Augusto Pinochet's brutal dictatorship.

Therefore, neoliberalism is associated with the Uh huh.

Not only that, but Pinochet's dictatorship had been supported by

the United States and the CIA during this time As

part of their Cold War.

They had been helping right wing dictators get rid of

left wing dictators.

This is part of their chest with the Soviet Union.

And this right wing dictator had followed the neoliberal model.

And therefore, uh, Chili's Neil liberalism, even though it had

been created by Chilean economist, was now known as quote

the Washington Consensus.

This was not a good time of relations between the

United States and South America.

And for this reason, the rest of the continent stayed

far away from Chile style liberalism.

For that reason, they aren't as free as Chile.

Thank you.

Chile story

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