Friday, March 12, 2010
"Milton Friedman has been dead for more than three years. But his spirit was surely hovering protetively over Chile in the early morning hours of Saturday. Thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse. ... By contrast, Saturday's earthquake in Chile measured 8.8. That's nearly 500 times more powerful than Haiti's, or about one million Hiroshima's. ... It's not by chance that Chileans were living in houses of brick--and Haitians in houses of straw--when the wolf arrived to try to blow them down. ... Inflation topped out at an annual rate of 1000%, foreign-currency reserves were totally depleted, and per capita GDP was roughly that of Peru and well below Argentina's. ... Even before the 1973 coup, several of Chile's 'Chicago Boys' had drafted a set of policy proposals which amounted to an off-the-shelf recipe for economic liberalization: sharp reductions to government spending and the money supply; privatization of state-owned companies; the elimination of obstacles to free enterprise and foreign investment and so on. ... In fact, Pinochet had been mostly indiffierent to the Chicago Boys' advice until the continuing economic crisis forced him to look for some policy alternatives. ... Result: Chileans have become South America's richest people. They have the continenet's lowest level of corruption, the lowest infant mortality rate, and the lowest number of people living below the poverty line", Bret Stephens at the WSJ, 2 March 2010, link:
Amazing. Incentives count! I remember when we got calls from the "Chicago Boys" who wanted to confirm their advice to Chile. I was then on Chicago's campus.