Tag Archives: Chicago Boys

Life on Hannan World (Part 9)

The occasion of Milton Friedman’s 101st birthday…no, he’s still dead, I just checked… has moved the Lyin’ King to pen this gushing tribute to the man whose economic theories have quite literally turned the world into a toilet. Dan opines:

Today would have been Milton Friedman’s hundred-and-first birthday. The Chicago economist, who died in 2006, is already acquiring that almost Homeric status that normally comes only decades after a man’s life.  Perhaps social media have speeded up the process, or perhaps it’s the fact that Friedman’s strongest enthusiasts are often students with no direct memory of their hero.

Friedman, darling of neoliberals everywhere and supporter of Pinochet’s Chile, where his theories were rammed down people’s throats, is given the airbrush treatment… well, that’s not quite true. Friedman’s supporters refuse to see any flaws in the man. In their eyes, he was the very model of economic perfection. So no need for the airbrush.

Yet for someone who talked so movingly about ‘freedom’, Friedman was capable of turning a blind eye to political repression. For him, all that mattered was the functioning of the free market with its insistence that social relations be reduced to financial transactions between actors. Friedman was also fervently against any form of regulation, so in a pure Friedmanite dystopia, surgeons can practice without proper qualifications and driving licenses would be banned. Can you see the dangers? Yes? Well, Dan can’t.

Here, Hannan tells us:

Friedman did not limit himself to academic theories; he had a keen sense of how to translate ideas into action. He understood politics very well, and used to say that his aim was not to get the right people elected, but to create a climate where even the wrong people would do the right thing. Every year I spend in politics I find that insight more brilliant.

Yes, Friedman understood politics so well that in his perfect world, certain kinds of political activity would have been outlawed because they didn’t fit into his perfect model of a rampant capitalist society.

Here we get to the core of the blog:

What mattered to him most of all? Oddly enough, it was nothing to do with monetary policy, or indeed with economics at all. He believed that the single measure that would do most to ameliorate society was school vouchers.

School vouchers, loved by Pinochet’s Chicago Boys and loathed by those who have had to put up with a substandard education, have become a sort of gold standard in the eyes of the Right.  Higher education, too, has moved backwards. For the last few years, students have been protesting over the inequalities of the education system. Dan simply ignores this.

He had first suggested the idea as early as 1955 – in an intellectual climate so unfriendly that he might as well have been proposing that children be cooked and eaten.

You can see where this is heading and predictably enough, Dan tells us:

But the climate shifted, not least through Friedman’s own interventions and, by the end of his life, a few places were prepared to give his idea a go. Chile had led the way in the 1980s, followed by Sweden in the early 1990s. Milwaukee became the first city in the US to adopt vouchers 23 years ago, and around a quarter of a million American pupils are now benefiting.

“Chile had led the way in the 1980s” he says. No mention of the oppressive weight of the Chilean ‘small state’ crushing those below. No mention of the thousands rounded up, tortured and executed. No mention of the oligarchical free-for-all ushered in by Pinochet’s ‘hands off’ approach to the economy and its disastrous consequences for ordinary Chileans. He continues:

Though Britain has stopped short of full-blown vouchers, Michael Gove has plainly embraced the idea that governments can fund schools without running them, and the free schools programme is one of the greatest of the Coalition’s achievements.

The truth of the matter is that the Tories have been historically opposed to the state school system and have spent the better part of 60 years talking it down when they’re out of power and running it into the ground when they’re in government.  The unspoken dictum here is “some state schools are bad, therefore the state education system is bad”.

The Cat believes that the Tories would prefer it if everyone paid for their schooling and if you can’t find the money, that’s tough. You will die illiterate and ignorant. Why? Because it’s God’s will. That’s why.

Finally Dan tells us:

With his wife, he established the Milton Friedman Foundation for Educational Choice, which has helped thousands of students, especially poor students, to get a decent education.

“Choice” has been used as a battering ram since the 1980s. But choice is neither here nor there. You can only have what is available. The Tories believe that if you don’t live in the catchment area of a school that you’ve fetishised, then you should be able to bypass the rules and send your kid there anyway. Better still, set up your own free school where you can be free to inculcate children in any superstitious tosh that occupies your thoughts.

While 75% of free schools were found to be “good” or “outstanding” by OFSTED inspectors, 25% were not. This article from The Guardian says:

One of the first free schools to open has been placed on special measures and given an inadequate rating by Ofsted inspectors, in an untimely blow to the government’s flagship education policy.

Adding:

Inspectors were severe on the primary school’s leadership, saying its governors failed to grasp the school’s “serious shortcomings”, while school leaders “believe the school is far better than it is”.

The inspection team gave the school the lowest grade, of “inadequate”, in three of four categories, for pupil achievement, quality of teaching, leadership and management. “Too many pupils are in danger of leaving the school without being able to read and write properly,” inspectors concluded. “Unless this is put right quickly, pupils are unlikely to flourish in their secondary schools and future lives.”

To borrow from the Tories’ lexicon of smears, I could say that “some free schools are poor, therefore all free schools are poor”. But unlike Dan,  I’m not that petty.

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The ugly truth behind the Chilean Miner’s TV extravaganza

Piñera unmasked

Socialist Unity has  produced this interesting article,

Deeply moved, nearly a billion of us looked on. A whole nation—managers and workers, rich and poor—united in a common effort to save 33 Chilean miners, with their President leading from the front. Emotion, suspense, ratings, huge advertising revenues. But what did this TV extravaganza conceal ?

That the “saviours” were in fact the culprits. Three hours before the landslide, the San José miners had requested permission to leave after hearing suspect noises. Their bosses’ refusal imprisoned them under several tons of earth. Is this surprising ? No. On the 30th July, a Ministry of Labour report had already flagged up important safety problems at the San José mine, but no action was taken, and the Ministry kept silent.

Of course everyone was overjoyed at the happy ending. But the rescue show masked the extent of the problem : four hundred Chilean miners have died in the last decade. And more importantly, it masked the causes. “Poor investment and safety standards” said Marco-Enriquez-Ominami, Sebastián Piñera’s opponent in the last presidential elections. In fact, in 2009 alone, 191,000 work accidents were recorded in Chile, in which 443 workers died. And the Chilean government is directly responsible, as, it has refused for the last twelve years to ratify the International Labour Organisation Convention C176 on health and safety in mines. Business enjoys unrestricted freedom, while the workers have no rights.

You can read more of the article here. Read my blog on the return of the Chicago Boys here.

The media spectacle may have died down but one of the former trapped miners, the Elvis impersonator, Edison Peña appeared on the Late Show. A new Chilean television personality in the making? Maybe the president can use his influence to make that happen. Yes?

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Fairness? I don’t see that in the Spending Review

I remember reading something on a pro-free market website a few years ago where a neoliberal apologist  claimed that “capitalism is a moral system” and that it was “the greatest system ever invented”. I am not quite sure what he meant by the word “moral” nor am I certain if capitalism is the “greatest system ever invented”. In terms of its apparent ‘morals’, this is something of a chimera: morality is subjective: the legendary libertinous activities of the Marquis de Sade, for example, would be described as immoral, possibly amoral by many. That would be a majoritarian position. Others would describe de Sade as an extreme libertarian; a libertine in every sense of the word. They may argue that de Sade had his own morality but it was not a morality that any of us would understand but it was a morality nonetheless.

Today the Hon Gid announced the long-awaited Comprehensive Spending Review. There were no surprises: we knew that the Tory-led coalition was going to punish the poor. We also knew that they had laid, at least partial blame for the recession (and by extension the banking crisis that led to the recession), at the door of those on benefits, who have all been tacitly accused of ‘dragging the country down’. The Guardian said this,

To gasps from the Labour benches, the chancellor announced “tough but fair” reforms that will lead to extra changes for housing benefit and on the rules for the mobility and care arrangements for disability living allowance.

There’s that word “fair” again; this time tied to the word “tough”. Changes to Housing Benefit will result in more homelessness. Many families will not be able to afford to live in places like London and will be forced to leave their communities behind.  Yesterday the the media announced that the government was going to end “council house tenancies for life”. What I’ve read so far doesn’t suggest that this is going to happen…yet…they’re just going to make more difficult to afford. However, because of the 60% cut in the social housing budget,

…new tenants will be offered intermediate rents at around 80% of the market rent. The age at which people are allowed to claim housing benefit for a flat, rather than only a room in a shared house, will rise from 25 to 35, “so that housing benefit rules reflect the housing expectations of people of a similar age not on benefits”, said Osborne

So that’s more people out on the street then? Who is going to be able to afford 80% of a market rent in a place like the Tories’ model Borough of Hammersmith & Fulham? This article from Inside Housing tells us that social landlords will be able to increase their rents in line with local market rents,

The CSR document is less explicit, stating: ‘Social landlords will be able to offer a growing proportion of new social tenants new intermediate rental contracts that are more flexible, at rent levels between current market and social rents.’

It adds: ‘The government wants to make social housing more responsive, flexible and fair so that more people can access social housing in ways that better reflect their needs.’

This means that a social landlord like Peabody (they dropped the word “Trust” from their name some time ago to reflect their new neoliberal direction) will now be able to force out tenants in the more well-heeled boroughs -like Hammersmith & Fulham –  by increasing their rents. This is ironic given that the Peabody Trust was originally created to house London’s poor.

Also announced was the predicted loss of 500,000 public sector jobs. Hon Gid and the Hole-in-the Wall Gang tell us that jobs will be created in the private sector but where will these jobs actually come from?

The Marquis de Sade lent his name to the practice of sadism and is with a sadistic pleasure that this government has announced these swingeing cuts. We have been told on an almost daily basis that ‘”we are all in this together” but it is clear from what has been announced that rich are not standing shoulder to shoulder in a Spirit-of-the-Blitz fashion. The neoliberalism that began in Pinochet’s Chile was imported to Britain in the 1980’s by Margaret Thatcher. Privatizations, cuts and a reduction in the size of the state (its repressive apparatuses were left intact, of course) were all part of the drive for ‘greater efficiency’. Under this new regime, working class Chileans suffered terribly and the anti-working class policies of the Pinochet regime continue to this day. The Latin American Herald Tribune says that today, 80,000 public sector employees went on a one day strike,

President Sebastian Piñera’s right-wing government has dismissed more than 2,500 public sector workers since taking office in March, Raul de la Puente said.

The ANEF protest enjoys support from Chile’s biggest labor organization, the CUT, as well as from teachers and associations representing high school and college students.

Contrary to what the government says, the layoffs have affected not just positions traditionally filled by political appointees, but people at all levels, including “clerks, messengers, drivers, technicians and professionals,” De la Puente said.

Sebastian Piñera visited Britain this week to take tea with Lord Snooty. He brought with him a few lumps of rock from the San Jose mine as gifts. He was also here to give a speech to the London School of Economics on “The Chilean Way of Development”.

There is no question that this government is using the budget deficit as an excuse to further socially engineer Britain. The sadism of its anti-working class policies are designed to destroy communities and associations under the guise of fiscal prudence.

UPDATE:

I remember who said “capitalism is a moral system”. It was Ayn Rand. In fact, she said it was “the only moral system”.  She also took a lot of amphetamines.

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Chile: neo-liberalism, weak unions and populism

In the aftermath of the rescue of the 33 trapped miners in Copiapo, I listened with incredulity as Sebastian Piñera said “when people hear the word Chile they will not remember the coup d’etat or the dictatorship, they will remember what we’ve done; all the Chileans together”.  Unfortunately the ghosts of the dictatorship won’t disappear as  quickly as he would like them to. As  I reported in this blog, the Chilean President has given 3 Chicago Boys jobs in his cabinet. Commentfactory tells us that his brother, Jose Piñera,

is today revered in many economic circles for his application of Chicago School-inspired principles, yet whose connections to Pinochet run even deeper. Jose Piñera was a minister in the Pinochet cabinet from 1978 to 1981, first as the Secretary of Labour and Social Security and then as Secretary of Mining (much of Chile’s economy is dependent on the vast copper and nitrate mines in the north of the country). During his period in office, Jose Piñera introduced legislation that saw large-scale privatisation of the pensions system and healthcare, and the repeal of laws introduced after the coup that had effectively banned trade unions, following the threat of a boycott of Chile from North American trade unions, something that would have had severe implications for the Chilean economy.

Piñera also said that the mine would close…that was until they allegedly discovered deposits of precious metals nearby. The Herald Scotland said,

Frankly, given Chile’s modern history, it did seem strange to have a right-wing government present itself as a guardian of the people. Where I found myself drawing the line with Pinera’s otherwise admirable handling of the rescue though, was his observation that in future when people think of Chile they will remember the rescue of the miners, not the 1973 coup that brought the infamous General Pinochet to power in a military dictatorship that lasted until 1990 and was marked by severe human rights violations.

If this mine collapse had happened during the dictatorship, I doubt the General would have been present to witness the rescue. Though he would have milked any successful rescue effort for all it was worth – just like Piñera has done. Away from the festive scenes and the ballyhoo, the Chile that Pinochet and his Chicago Boys created still exists: trade unions are effectively outlawed (there are two rather weak unions). This Guardian blog says,

While labour standards and workers’ rights are often sidelined by the aggressive “pro-growth” talk of development economists, they are fundamental components of social or human development.

The freedom of association and the right to join a trade union is a human right. Yet such rights are often forbidden because they form an obstruction on the road to economic growth – or so the pro-business economists tell us. The mines of Chile have been allowed to continue in business without any regard for safety. The Chilean government has consistently failed to ratify the International Labor Organization’s (ILO) conventions on health and safety in mines

The International Federation of Chemical, Energy, Mine & General Workers’ Unions (ICEM) yesterday called on the Government of Chile to radically change the procedural methodology it uses on mine safety once the imminent rescue of 33 miners at the San José mine near Copiapó in northern Chile is complete.

In a letter to Minister of Mining Laurence Golborne Riveros, the 20-million-member global union federation called on the government to streamline workplace safety and health enforcement, now contained in several different ministries, into a single, autonomous agency “that has full powers and full technical capabilities to inspect and correct workplace deficiencies before accidents happen.”

The San Jose mine has witnessed dozens of deaths in the last few years. However Piñera has promised a mine safety review while the mining minster, Laurence Golborne said,

Avoiding such incidents, he suggested, was not just a matter for legislation: “The real origin to avoid this in the future lies in the consciousness of people: of workers, entrepreneurs… all society to face situations of safety at work.”

The neo-liberal personal responsibility mantra is invoked here which suggests that any legislation is likely to be piecemeal.

Because of his hands on approach to the rescue, Piñera’s popularity has risen which ensures his victory in the next presidential election in 4 years. Of course if it all goes badly for the president, Golborne could always put himself forward as a candidate in the hope that people will find his good looks more appealing than his politics.

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The ghost of Pinochet rears its ugly head

The Chilean presidential election which took place in January received superficial attention in the British media. But those of us who have been watching Chile know that the new President, Sebastian Piñera is a billionaire. What many people don’t know is that his elder brother, Jose, was in Pinochet’s cabinet as the Secretary for Labor and Social Security and Secretary of Mining (he oversaw the privatization of Chile’s mines which were nationalized under Salvador Allende). Sebastian Piñera on the other hand amassed a fortune during the Pinochet years. This fortune mainly came from the introduction of credit cards to Chile in the late 1970’s. Like his brother he is also connected to the infamous Chicago Boys. He was Professor of Economics at the University of Chile from 1977 to 1990. Presumably he was moonlighting for Pinochet while inculcating his students in the benefits of an unfettered market economy. Both Sebastian and Jose’s father (also called Jose) was once a CIA operative.

As I reported in yesterday’s blog, the Chicago Boys have returned to power; Piñera has rewarded three of them with cabinet portfolios – one of which is the Economy portfolio. In fact, Piñera’s election depended  largely on support from Pinochet supporters. This blogger reports that a blog called Cuestionatelo Todo had this to say on Piñera’s victory,

His (Pinera’s) triumph represents a resurrection of “pinochetismo,” […] Pinochet never really died, and Piñera’s victory is only the natural consequence of a transition that never happened and the simple continuation of the same thing with faces that appear friendlier. The triumph of Piñera’s party is a step backward for Chilean democracy.

Quite, it is almost as if The Caudillo were controlling events in Chile from beyond the grave. There’s more from the Comment Factory

Piñera himself has ties to the Pinochet-era, something which he has been keen to downplay. While he was among those who in 1988 voted to end the dictatorship and restore democracy to Chile, in 1989 he also managed the unsuccessful election campaign of Hernàn Buchi who was a minister in the Pinochet regime for ten years, including the position of Minister of Finance from 1985-1989. Buchi has never been implicated in any of the abuse or corruption allegations that stain the regime, yet his participation in so oppressive a system makes him a figure of animosity to a large section of Chilean society, something that is true of all Pinochistas.

Last year US Expat Living in Chile said,

So, Sebastian Pinera, perennial candidate, is running again. I saw a poll showing he and Frei (concertacion candidate) were within a few points but another independent and former socialist party candidate has entered the race. He is somewhat left of Frei and appears to be taking votes-Pinera is now far ahead with the other two splitting the rest of the vote. Pinera has carefully distanced himself from the Pinochet legacy.

He may have tried to distance himself from Pinochet but he is tainted by both association and the fact that he amassed millions under the dictator. Piñera has also claimed that he voted “No” in the 1989 plebsicite to retain Pinochet (who expected the vote to go his way). This is from US Expat who found this interesting nugget,

The first document is a compilation of data and analysis on Miguel Juan Sebastián Piñera Echenique, ordered by the Department of Communications at the U.S. Embassy in Santiago, which increased the number WSA/Was/3215B, the input register 1975, 1984 and 1990, and is related to money laundering, setting up shell companies, bribery and conspiracy, all acts relating to the intervention and liquidation of the Banco de Talca, 1982.

Veteran Chile-watchers may recall that Pinochet was also accused of money laundering as well as drug-trafficking. Piñera also owned one of the biggest television channels in Chile, which he was reported to have sold to Time-Warner. Nikolas Kozloff’s blog on Buzzflash says,

Piñera, a kind of Chilean Berlusconi who owns a television channel amongst other business holdings, and who piloted his private helicopter around the country to make campaign stops in isolated regions, is one of the world’s 700 richest people. The politician opposes human rights prosecutions for military and police officers implicated in abuses during the Pinochet military dictatorship, and as such represents a political step backwards for Chile.

Kozloff also reminds us,

Unlike Venezuela for example, Chile has no television station that espouses the views of the left. There are two left-wing bi-monthlies, El Siglo of the Communist Party and Punto Final. Both have notoriously low circulation. The Communist Party owns a radio station, and there are a few other progressive leaning stations. On the Internet, there is more political diversity than in TV and print, but digital media is still incipient in Chile where most people lack Internet access.

I think we know where this is going: a media that is controlled by the right did the ‘right thing’ by Piñera and convinced the electorate to hand him their votes. According to Huffington Post, Piñera also owns a controlling interest in LAN, the Chilean flag-carrier and the country’s most popular football team.

Piñera has pledged to continue former President Michelle Bachelet’s policies. However,

Other promises include privatizing 20 percent of state-owned Codelco, the world’s biggest copper producer, and hiring 10,000 new police officers and pushing for renewable energy and improvements in public education.

Socially, he said he would expand legal rights for gay and lesbian couples, but draw the line against same-sex marriage or adoption. He’s also against euthanasia and abortion, which remains illegal in all cases in Chile.

While trade unions are not illegal in Chile, intimidation and union-bashing are near routine; a legacy of the Pinochet years. Interstingly enough, one company that has been identified for violating trade union rights is LAN,

Union bashing at LAN Airlines: In July, LAN Airlines Chile dismissed three union representatives, Juan Martínez, Carlos Sarmiento and Mario Ricci. This anti-union measure was one of a series of practices violating organising rights, aimed at weakening the union’s power to act. In addition, the company, which has branches in other countries, is developing a policy of precarious employment, making increased use of subcontracting and outsourcing arrangements.

Enough of Piñera, what about those Chicago Boys? I reported yesterday that Juan Andrés Fontaine had been given the Economy portfolio (which includes development and tourism). One interesting appointment has been in Education with Joaqín Lavín taking that portfolio. Lavín is a member of Opus Dei who wrote a book praising Pinochet’s economic policies . He is also a former presidential candidate having lost to Ricardo Largos in 1999. The last Chicago Boy to be included in the cabinet is Cristián Larroulet, who has the intriguing title of Minister Secretary General of the Presidency of the Government (or Segpres). It’s a pretty fair bet that he is extremely close to the president.

What do the next 4 years hold in store for ordinary Chileans? Given the inclusion of 3 Chicago Boys in the cabinet, it is clear that the Piñera presidency will continue with its Friedmanite economic practices. Bachelet’s presidency changed precious little in that regard. The rescue of the trapped miners at Copiapo reminds what happens when a nation’s economy is left to the free market: safety goes begging and trade union rights are violated. When the Thatcher government took on the miners, it did so for ideological reasons. The coalition government is pledged to ‘reform’ public services; the reason for this, too, is ideological: the public sector is heavily unionized, whereas few companies in the private sector are unionized. This is sold as a form of ‘freedom’. Pinochet promised the same thing but this  freedom was only accessible through him. It was the same during the Thatcher years and this idea has been resurrected and re-articulated by the present government.

Finally Piñera is set to meet our esteemed PM, Lord Snooty for a cup of tea next week.  I wonder what they will talk about?

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The Chicago Boys are back in town

The Chilean Miners’ plight has been the biggest news story of the year – next to that of the hapless Raul Moat of course. But what is really going in post-Pinochet Chile aside from the massive world media event that surrounds every move of the rescue efforts at Copiapo? I don’t want to denigrate the plight of the miners; they’ve suffered and will probably continue to suffer for some time to come. What I cannot fathom is the way in which the company that owns the mine has behaved towards the 33 trapped miners and the workers on the surface. Last week, the Buenos Aires Herald reported that,

Employees from the San Esteban Company, owner of the mine where 33 miners have been trapped since August 5, held a demonstration in Copiapó, northern Chile, in order to protest unpaid salaries.

Some 300 persons, amongst them miners and their families, protested peacefully against the company, owner of the San José mine, claiming that the salaries corresponding to the month of September have not been paid.

There was a brief mention of this on BBC News but the focus was inevitably drawn towards the ‘human interest’ story of the trapped miners – who have also not been paid.

Union leaders have called on the government to pay compensation to the men, together with roughly 270 other employees of San Esteban who are now out of work. They blame the accident on poor regulation, pointing out that the mine was allowed to remain open despite repeated safety violations which led to the death of a miner in 2007.

But this is Chile. Remember? This is the Friedmanite Paradise designed by Pinochet’s Chicago Boys.  Here the market operates without any interference, what began under Pinochet continues to this day in spite of the stagnation of Chile’s economy,

While both the Concertación economists and those of the far right sought to blame Chile’s woes on outside factors—the Asian crisis of 1997, the Argentine implosion of 2000, the U.S. slump of 2001, and so on—a few dissident economists had predicted all along that the boom would inevitably reach an impasse. One, economist Graciela Moguillansky of the U.N. Economic Commission for Latin America and the Caribbean, argued that the large Chilean finance/resource-processing conglomerates which dominate the economy had exhausted the easy resource-processing opportunities handed to them by the government through programs created decades ago. The “Chilean miracle” had reached its own self-imposed limits.

Nothing can grow indefinitely, not even economies but try telling that to some Austrian School zealot.

While the Chicago School is known for its devotion to free-market policies and its hostility to government regulation, the chief target of the Chicago Boys (and other right-wing economists), along with the military dictatorship and the business class, was not state intervention in economic life, but rather the organized power of the Chilean working class.

Does any of this sound familiar? It should.  The soi-disant libertarians of the British right often try to couch their anti-union rhetoric in terms of freedom. Last week Emperor Boris called for a change in strike laws.

The UNHCR has documented cases of serious violations of trade union rights in Chile.

So while the world waits for the latest chapter in the latest media drama to unfold, spare a thought for Chile’s workers who now have to struggle to survive under Chile’s first right wing government since Pinochet. 3 of the original Chicago Boys have been installed in the cabinet as ministers. One of them, Juan Andrés Fontaine, is currently Minister of the Economy.

Fontaine said he was “called to serve with a mandate to increase economic activity in Chile.”

He even has a Facebook page.

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