Originally posted by FMF
150 or more years of unbridled U.S. style capitalism on the South American continent, and now in 2009 you have the cheek to call "Chile, the first Latin American Tiger in modern history" as being in "capitalism's" corner? This prosperity - which is still shockingly high high income inequality - has basically happened in the last 20 years, since - at long last - ...[text shortened]... torship and since the excesses of toxic Milton Friedmanism has been moderated and diluted.
Why are you even pretending to know anything about Chile's economic growth over the last several decades?
Chile used to intervene in its economy, be closed to trade, and nationalized many industries:
"After six years of government austerity measures, which succeeded in reestablishing Chile's creditworthiness, Chileans elected to office during the 1938-58 period a succession of center and left-of-center governments interested in promoting economic growth by means of government intervention.
Prompted in part by the devastating earthquake of 1939, the Popular Front government of Pedro Aguirre Cerda created the Production Development Corporation (Corporación de Fomento de la Producción, CORFO) to encourage with subsidies and direct investments an ambitious program of import substitution industrialization. Consequently, as in other Latin American countries, protectionism became an entrenched aspect of the Chilean economy."
Chile began the long process of market reforms starting in the 1970's and pushed them further in 1985, with impressive results:
"The adjustment program that started in 1985 also had a structural adjustment component that was aimed at consolidating the market-oriented reforms of the 1970s and early 1980s, including the privatization process, the opening of the economy, and the development of a dynamic capital market. There were several structural goals of the 1985 program: rebuild the financial sector, which had been nearly destroyed during the 1982 crisis; reduce import tariffs below the 35 percent level that they had reached during 1984 to a 15% uniform level; and promote exports through a set of fiscal incentives and a competitive real exchange rate.
Perhaps the most important aspects of these structural reform measures were the privatization and recapitalization of firms and banks that had failed during the 1982-83 crisis. As a first step in this process, the Central Bank bought private banks' nonperforming portfolios. In order to finance this operation, the Central Bank issued domestic credit. The banks, in turn, paid a rate of 5 percent on the nonperforming portfolios and promised to repurchase them out of retained profits. This recapitalization program had as its counterpart a privatization plan that returned the ownership of those banks and firms that had been nationalized in 1983 to the private sector. Economist Rolf J. Lüders estimates that about 550 enterprises under public-sector control, including most of Chile's largest corporations, were privatized between 1974 and 1990. By the end of 1991, fewer that fifty firms remained in the public sector."
Even while talking out of ignorance, you strangely seek to give credit for Chile's performance to "social democracy" and at the same time attack the "shockingly high" income inequality while ignoring the dramatic improvements in Chile's economy due to market reforms.
Thank you, my foolish friends in the West
09 Jul '09 07:13
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