Saturday, December 21, 2013

Can We Follow Chile Out of Plutocracy?

American "exceptionalism" is the get-out-of-consequences-free card the conservatives and corporatists use to pretend that economic and political lessons learned in other countries don't apply to us.

But in one case, the catastrophe that led to recovery was entirely an American operation, following our own path uncomfortably closely. Now that country is showing us the path home.

Chileans have rejected Reaganomics, and it’s time we followed their lead.

Back in the early 1970s, Chile was one of the most progressive countries in South America. Its democratically elected socialist president, Salvador Allende, nationalized big businesses and gave every Chilean access to free healthcare and higher education. GDP went up and income inequality went down, and for the first time ever, working-class Chileans had a chance to live out their version of the American dream.

But not everyone was happy with President Allende’s Chilean New Deal. Behind his back, the United States and the country’s corporate and military elite were conspiring to sabotage his reforms and destroy the economy. Although Allende’s policies were successful, Chile still needed foreign loans to survive, so the Nixon administration got the International Monetary Fund to suspend all aid. This decimated the economy and stunted the progress Allende had made over his first few years in office.

The Chilean elite’s sabotage campaign turned into outright treason on Sept. 11, 1973 when, with the help of the CIA, General Augusto Pinochet overthrew Allende’s government and ushered in 17 years of military rule. Pinochet’s dictatorship was one of the most brutal in Latin American history. Dissidents were jailed, tortured and executed. People were thrown out of helicopters into the ocean. Others were taken to the national soccer stadium in Santiago where they were shot at point blank range by firing squads.

The memories of Pinochet’s brutality are so raw that to this day many Chileans refuse to attend soccer matches at the national stadium, believing that to do so dishonors the dead.

 Pinochet’s cruelty to his opponents was matched only by his equally cruel devotion to austerity-style economics. Soon after he took power, the general invited Milton Friedman’s Chicago Boys to “reform” Chile’s economy. They privatized industries and slashed government spending. Inflation reached as high as 341 percent, GDP decreased by 15 percent and Chile’s trade deficit ballooned to a whopping $280 million. Unemployment jumped to 10 percent, and in some parts of the country climbed as high as 22 percent.

Of course, that didn’t really matter to the Chicago Boys, because as Chilean economist Orlano Letelier noted, “They [had] succeeded… in their broader purpose: to secure the economic and political power of a small dominant class by effecting a massive transfer of wealth from the lower and middle classes to a select group of monopolists and financial speculators.”

Like Reagan in the United States, Pinochet gutted progressive reforms and ushered in a new era of dominance by the super-rich and the corporate elite.

Pinochet’s military government eventually fell in 1990 and democracy was restored, but the legacy of his time in power is still felt today. Inequality is still high and education is too expensive for many Chileans to afford. Not surprisingly, the country’s outgoing right-wing president, Sebastian Pinera, did little to change this. That’s why on Sunday, Chileans elected socialist Michele Bachelet as president. Like Allende before her, Bachelet promises free higher education and wants to raise taxes on the rich.

Coming on the heels of Chile’s first right-wing president since Pinochet, Bachelet’s election is a significant one. Chileans have, once and for all, it appears, said goodbye to the legacy of Pinochet and the policies of the Chicago Boys. To put it bluntly, they’ve rejected Reaganomics.

It’s about time we did the same.

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