The Economic Transformation of Chile
Paperback, 242 Pages
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The Economic Transformation of Chile: A Personal Account
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Jul 6, 2011Chile's economic revolution came just before the big, better-known free market economic reforms associated with Ronald Reagan and Margaret Thatcher. Thus, it is not that well known, except in a broad, general sense. An educated person might know that a group of mostly University of Chicago-educated economists influenced by the thinking of Milton Friedman were behind it, and that they achieved pension reform and trade liberalization (remember when Chilean wine and blueberries first came into US supermarkets in the 1980s?), but there's little sense of the persistence it took, the sense of mission, the incredible obstacles, and the creativity of working together, were able to achieve. Hernan Buchi, who served as President Pinochet's finance minister from 1985-1989 has an interesting story to tell, because he outlines in a very organized way the huge task of how the society was reformed on free market lines out of a socialist rubble, a debt crisis, and flagging confidence. Contrary to... More > what one might imagine, the Marxist left was not the main obstacle to the project - a 50-year history of soft almost Roosevelt-style paternal democratic socialism that had run out of money was. Unions, banks, the international community, and even the generals all served in one way or another as obstacles toward achieving this desperately needed reform because they had as special interest groups benefited from it - at the expense of the economy as a whole. Buchi's role is interesting because unlike most of the Chicago Boys, who served the military government for just a year or two, Buchi was present in the government, and in many agencies, for 15 years. Learning how various agencies operated - from health care to privatizing industry, to taxes, to labor issues, he probably has the widest appreciation of the Chilean economy as it changed. At the end of his time in government, he played a virtuoso pivotal role in saving the project when many had lost faith after a 1982 debt crisis - with stunning success. Working with a gentle pragmatism that nevertheless didn't betray any of his hard-wired principles - he literally saved the economy and helped preserve public faith in free market principles that subsequent governments, even socialist ones, have not dared to change. In retrospect, had there been no Hernan Buchi, Chile may have gone the way of Argentina - a nation that for all its potential, lacks faith in free markets and elects hostile-to-markets leaders. Buchi is not falsely modest about his achievement, but he tends to be self-effacing in this historic account, writing intensely from his interior thinking, but not doing much personal storytelling, which would have enhanced the book. In fact, he barely making himself present in the account, despite his importance. He describes Chile's transition to democracy, for instance, and the election of a new president after Pinochet, but doesn't mention that he ran against the man as his opponent - a necessary piece of information. He casually mentions that during frustrating debt rengotiations around 1982 that he up and went to Antarctica to 'cool off,' an aside that begs for a bit more detail. He mentions that someone tried to kill him at a university - another jarring detail that needs more explanation, and that he walked through a riot-ravaged area - not really saying what he saw. In a few passages, such as his description of how energy and electricity were reformed, he is a little vague. But the account is absolutely invaluable in conveying the big picture of how a society gets reformed, how the parts fit together, how disturbing carve-outs and special-interest clientelism can leave a society a shell of itself even without a totalitarian takeover, and how working as a group makes a difference. He's also very good at pointing out the role of history and the uniqueness of nations as factors in how a reform takes place. And he's very very respectful of the interests of working people - describing a tiny bit about his own experience of being a poor student - but also of showing how well-intentioned policies virtually alway hurt the poor the most. In all, it's an utterly fascinating account that ought to be better known as Europe and North America prepare to free themselves of an overbearing state in coming years. It's a must-read.< Less
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- Hispanic American Center for Economic Research (Standard Copyright License)
- June 14, 2010
- Perfect-bound Paperback
- Interior Ink
- Black & white
- 0.93 lbs.
- Dimensions (inches)
- 6 wide x 9 tall
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