Home > Economics > You Cannot Compare Chile to Haiti

You Cannot Compare Chile to Haiti

I just wanted to repost this one from T3Live and get the ideas back out there. I anticipate talking more about history and emerging market growth (or lack thereof) and its implications on policy moving forward and I think some of themes discussed below are particularly important:

Yesterday, a Wall Street Journal editorial written by Brett Stephens, entitled “How Milton Friedman Saved Chile” touched a personal nerve. Andrew Leonard over at Salon.com did an excellent job of breaking down the relationship between the Pinochet government and the actual execution of thousands of innocent Chilean civilians and pointing out the dishonesty in arguing that the very same regime which slaughtered civilians saved lives. This editorial is so out of touch with reality that it demonstrates a lack of journalistic ethical standards, and is more analogous to partisan hackery than merely offering news and editorials. I am all for people having opinions, and supporting them; however, disingenuous manipulation of facts and history crosses lines, especially when the argument is attempting to capitalize on a disaster. The following analysis is not written to debate the merits of Stephens argument, but rather to clear up the facts and history in order for legitimate debate to ensue.

Stephens says the following:

“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.”

Reality says:
Yes this statement is completely correct; however the reasoning is off. That is because Chile started as a revolution of white Spanish colonials with a growing middle class, a developed civic society and a decent amount of wealth rejecting rule by the Spanish Crown. Haiti, on the other hand, started out as a slave revolt whose citizens have been the victims of institutionalized slavery, racism and even genocide at different points in its history. That’s not to mention the fact that the country has suffered through foreign occupations and U.S. backed dictators who bankrupted the country to pad their own wallets.

Stephens says:

“In 1973, the year the proto-Chavista government of Salvador Allende was overthrown by Gen. Augusto Pinochet, Chile was an [sic] economic shambles. Inflation topped out at an annual rate of 1000%, foreign currency reserves were totally depleted and per capital GDP was roughly that of Peru and well below Argentina’s.”

Reality says:
Anyone can isolate one moment in history in order to establish a point; however, Stephens takes advantage of his audience and forum and rather than simply isolating a moment in history, he reshapes it to fit his conclusion. In 1973, Chile was in the depths of a depression that began in 1967, and in many respects, arose out of the class warfare that plagued much of the Western world at the turn of the 20th century. An oligarchy dominated most of the nation’s wealth and political processes and the country’s citizens were not happy. Chile alternated between far right and lefty politics, with both sides sharing parts of the blame for the country’s economic plight. Additionally, the depression actually climaxed in 1970, the year in which Allende first took power and foreign capital flight was happening at its fastest rate.

It’s not “just” the ignorance and brushing off of Pinochet’s massacres that irritates me with respect to this editorial. It is the blatant disregard for providing an accurate historical context to the divergent state of infrastructure between Chile and Haiti. If you want to argue the merits of free market reform in Chile, by all means do so, but, establish a true chronology of events with respect to the country’s history and highlight the direct relationship between Pinochet’s reforms and the present prosperity of Chile. Additionally, if you want to take it one step farther and argue that Pinochet saved lives, then do a cost-benefit analysis of the lives that Pinochet abruptly ended and the future lives that he may have saved. I always thought an important premise in free-market economics asserting its supremacy over totalitarian communism was the notion that the killing of innocent lives is NEVER worth the cause of the greater good. Disaster profiteering takes many forms, and all of it is equally disgusting. Unfortunately, this article is just one such example.

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