Saturday, March 06, 2010

The Guardian begs to differ

The Wall Street Journal had a piece titled How Milton Friedman Saved Chile. Naomi Klein at the Guardian has a response, Milton Friedman did not save Chile.

Klein writes:

According to Stephens, the radical free-market policies prescribed to Chilean dictator Augusto Pinochet by Milton Friedman and his infamous "Chicago Boys" are the reason Chile is a prosperous nation with "some of the world's strictest building codes."

There is one rather large problem with this theory: Chile's modern seismic building code, drafted to resist earthquakes, was adopted in 1972. That year is enormously significant because it was one year before Pinochet seized power in a bloody US-backed coup. That means that if one person deserves credit for the law, it is not Friedman, or Pinochet, but Salvador Allende, Chile's democratically elected socialist president. (In truth many Chileans deserve credit, since the laws were a response to a history of quakes, and the first law was adopted in the 1930s).

It's a pity she didn't read a bit further:

Chile also has some of the world's strictest building codes. That makes sense for a country that straddles two massive tectonic plates. But having codes is one thing, enforcing them is another. The quality and consistency of enforcement is typically correlated to the wealth of nations. The poorer the country, the likelier people are to scrimp on rebar, or use poor quality concrete, or lie about compliance. In the Sichuan earthquake of 2008, thousands of children were buried under schools also built according to code.

If you can't afford to adhere to the codes, and you need a place to live, you will live in a place that doesn't adhere to the codes. Chile's economy had turned around, and the country became prosperous enough to implement its codes.

As for the damage Friedman's followers allegedly did to Chile, she fails to mention the 1000% inflation rate before they started meddling, and how the economy turned around afterward. I'm sure she has a response. Why not put it in the article?

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