Dec 29, 2011

CHILE'S FLAWED MODEL: Glaeser ignores brutality of Pinochet | By Jerry Meldon | published in the Boston Globe Dec 29 2011

EDWARD L. GLAESER suggests that Deval Patrick has a lot to learn from economists and from the recent history of Chile, which the governor visited last month ("In economists' paradise, lessons for US," Op-ed, Dec. 19). Unfortunately, Glaeser begins by distorting Chilean history, and thus misses the lessons that should have been drawn from it.

"After Pinochet took power in 1973", Glaeser writes, "he eventually turned to a cadre of free-market economists, the `Chicago Boys,' " who, like Glaeser, received their PhDs at the University of Chicago. "Chile's subsequent rapid growth allowed economists to retain some influence."

Pinochet didn't just take over. He violently overthrew Salvador Allende, a socialist who had nationalized Chilean corporations. Pinochet then implemented the Chicago Boys' privatization and deregulation plan. Rapid growth followed. But that was a bubble, and in 1982 the economy tanked and unemployment reached 30 percent - ten times what it had been under Allende.