Glandien milton friedman did not expect that his six-day trip to Chile in March 1975 would cause so much controversy. A group of Chilean economists invited him to San Diego. This group of economists studied at the University of Chicago in the past few decades and participated in a project of Friedman's colleague Arnold Harberg. Two years after Allende's government was overthrown, the dictatorship was unable to control inflation, and "chicago boys" began to exert real influence in Pinochet's military government. They suggested adopting what Friedman called "shock therapy" or "shock plan", that is, immediately stopping printing money to solve the budget deficit, cutting government expenditure by 20 to 25 percentage points, firing tens of thousands of government workers, stopping wage and price control, privatizing state-owned industries and deregulating the capital market. Friedman also advocated "complete free trade".

Friedman and Harberg went to Chile to help chicago boys sell their plans to the Chilean military government. The dictator who slaughtered and tortured thousands of Chilean people seemed to be "attracted by the idea of shock therapy".

Protests broke out.

After Friedman returned to China, protests broke out, which were further intensified by the constant disclosure of his celebrity status as a columnist of Newsweek and the participation of Washington and American companies in overthrowing Allende. Not only Nixon, CIA, AT&T and other companies conspired to subvert Allende's "road to democratic socialism", but now even a famous economist at the University of Chicago has made suggestions for this dictator who overthrew the regime and completed counter-revolution at the expense of the rapidly rising unemployment rate of the poor in Chile. The Economist's publicity about the miracle of the free market has been strongly sponsored by large companies such as Berkeley, Pepsi, Getty, Pfizer, General Motors, Grace and Firestone. The New York Times thinks Friedman is "the vane of this military group's economic policy"; Columnist Anthony Lewis questioned: If "pure Chicago economic theory can only be implemented in Chile at the expense of repression, should the initiator of this theory bear some responsibility?" At the University of Chicago, the Spartacus Youth League vowed to "expel Friedman from the campus through protest and exposure"; The student self-government organization followed the example of the church Committee hearing that was investigating the crimes committed by the United States in Chile at that time and convened a "Friedman and Harburg Investigation Committee". Every time Friedman's name appears in the media, it will be accompanied by adjectives of "cruel" and "shocking", and small-scale but persistent protests will also bother him when he appears in public.

In his letters to various editors and denunciators, Friedman played down his participation in Chile and pointed out that Haberger was more directly involved in guiding Chilean economists. At the Nobel Prize ceremony, a man shouted "Down with capitalism and freedom in Chile" and was dragged out. When describing this plot, Friedman happily pointed out that the protest had the opposite effect, which made him win "applause twice as long" as other winners.

Friedman defended his relationship with Pinochet, claiming that if Allende was allowed to remain in power, Chileans would suffer "thousands of people being wiped out, mass starvation, torture and illegal imprisonment". However, during the reign of his disciple Pinochet, thousands of people were killed, starved on a large scale, tortured and illegally imprisoned. Allende collapsed because he refused to deviate from Chile's long democratic tradition and adopt martial law, but Friedman still insisted that the military government that came to power later provided "more space for personal initiative and private life", thus providing "more opportunities to return to a democratic society".

A critical voice

Critics of Friedman and Pinochet regard Chile as positive evidence that free market absolutism advocated by Chicago School can only be implemented by coercive means. Contrary to the belief that political freedom prevailed after World War II depends on moderate social equality, Friedman emphasized that "economic freedom is an indispensable means to realize political freedom." The equality between capitalism and freedom is his greatest contribution to the revival of conservatism in the 1970s. Before Roosevelt's New Deal, conservatives devoted themselves to defending social class, privilege and order, while after World War II, conservatives praised the free market as a place of creation and freedom. Today, this clear statement points out the nature of the conservative movement and is generally accepted by major politicians and decision makers as a kind of * * * knowledge. Bush's national security strategy also regards it as sacred. In this strategy, "economic freedom" appears more than twice as frequently as "political freedom".

In a speech entitled "Vulnerability of Freedom" published in Chile, Friedman described "the role of the emergence of welfare state in destroying free society". He believes that Chile's current difficulties are almost entirely due to the trend of collectivism, socialism and welfare state in the past 40 years. This is a process that leads to political coercion rather than freedom. "He believes that Pinochet's regime is a turning point in this long struggle, that is, tearing open the false shell of democracy and pointing to the core of true freedom. Friedman later wrote in a letter to Pinochet: "The problem did not originate in the near future, but originated from the trend towards socialism that appeared 40 years ago. He praised General Pinochet for "taking many measures to reverse this trend" and putting Chile back on the "right track".

Chile reaction

A month after Friedman's visit, Chile's military government announced that it would stop inflation "at all costs". The regime cut government spending by 27% and burned a lot of pesos. The state withdrew from the banking system, relaxed financial controls, including interest rates, greatly reduced tariffs, liberalized the prices of more than 2,000 products, and lifted restrictions on foreign investment. Pinochet pulled Chile out of the alliance with neighboring countries to promote regional industrialization and turned Chile into a gateway for cheap goods to enter Latin America. When the government auctioned state-owned enterprises, thousands of state-owned employees lost their jobs. This auction is actually a huge transfer of industrial wealth from more than 400 countries to the private sector. Chile not only allows multinational companies to bring all their profits back to China, but also provides exchange rate protection to help them do so. In order to build the trust of investors, the peso is pegged to the US dollar. Within four years, not only during Allende's administration, but also during the land reform before the Progressive Alliance, nearly 30% of all confiscated property was returned to the original owner. The new law treats the labor force like any other "free" goods, sweeps away the progressive labor legislation in the past 40 years, and privatizes medical care like a public pension fund. Gross national product plummeted 13 percentage points, industrial output value dropped by 28%, purchasing power dropped to 40% of 1970 level, one national enterprise after another went bankrupt, and unemployment rate rose sharply. It was not until 1978 that the economy rebounded. From 1978 to 198 1 year, the economy increased by 32%. Although wages are still nearly 20% lower than before 10, per capita income has started to increase again. A possibly better indicator of progress is the gradual reduction of torture and illegal executions. However, although Chicago economists have won the honor of three years of economic growth, they have put Chile on the road of near disintegration, which can now be clearly seen through reflection. The economic rebound is the result of the financial system and a large amount of foreign capital. The results show that foreign capital leads to the revelry of speculators, the monopoly of the banking system and the heavy foreign debt. The influx of foreign capital did maintain the fixed exchange rate in a short time, but the personal debt increased sharply from $2 billion in 1978 to more than $40 billion in 1982, which brought unbearable pressure on the Chilean currency. Because the actual existence of the peso is fixed with the appreciation of the US dollar exchange rate, it artificially increases the value of the peso and leads to the influx of cheap imported goods. When consumers use liberalized loans to buy televisions, cars and other high-priced goods, savings decrease, debts increase, exports decrease, and the trade deficit widens.

1982, everything fell apart. The sharp drop in copper prices aggravated Chile's trade deficit. GDP dropped 15%, industrial output shrank rapidly, bankrupt enterprises tripled, and the unemployment rate reached 30%. Although Pinochet promised to keep the currency stable, he devalued the peso, which ruined the poor Chilean people who borrowed dollars or saved in pesos. Central bank reserves have decreased by 45%, and the private banking system has collapsed. The crisis forced the country to re-adopt laws that were not implemented during Allende's administration, took over nearly 70% of the banking system, and regained control of finance, industry, prices and wages. Pinochet sought help from the International Monetary Fund to get out of trouble, and publicly promised to repay the debts of foreign creditors and banks.

Just as the international leftists flocked to Chile during Allende's reign, in the golden age of Pinochet's rule 1978 to 198 1, Chile became a yearning place for the rightists who believed in free markets. Economists, political scientists and journalists have come to witness this "miracle" and regard Chile as an example that can be implemented all over the world.

protect

Besides businessmen, right-wing activists also came to Chile to show their solidarity with Pinochet's regime. William Raschel, publisher of National Review, and other elites who finally came together in the Reagan 1976 and 1980 elections and the presidential nomination of the party organized the US-Chile Committee to deal with the critical reports on Pinochet in the United States. "I can't find anyone who" opposes the Chilean regime "to believe that the Chilean government is practicing torture," Raschel wrote after 1978' s visit to Chile. As for "the inconvenience caused by radical free market policy", Raschel believes that "it is unbearable and incomprehensible to suffer certain losses today for a healthier society tomorrow."

Friedman defended Pinochet with the superiority of economic freedom over political freedom, and Chicago Group institutionalized this relationship in Chilean Constitution 1980 named after Hayek 1960' s monograph Principles of Free Order. The new constitution regards economic freedom and political authority as complementary qualities. They defended powerful rulers, such as Pinochet, saying that such people were needed not only because of the emergence of far-reaching social changes, but also because they had to maintain such changes until Chile's "people's minds changed." The governor of the central bank said: Chileans have long been "educated in weakness" and need a strong person to cultivate their own strength, and the market itself will provide guidance. When asked about the social consequences of the high bankruptcy rate caused by shock therapy, Admiral toribio merino replied: "This is a jungle of economic animals. The jungle is the jungle. This is the reality. "

But in such a paradise of pure competitive beasts, there may be dangers, and dictatorship is needed to force the Chilean people to accept consumerism, individualistic values and passive rather than participatory democracy. "Democracy is not an end in itself", but a way to a real "free society" and protect absolute economic freedom, as Pinochet said in a speech drafted by two followers of Friedman in 1979. Friedman avoided talking about the relationship between capitalism and dictatorship, but his former students were consistent. "A person's actual freedom can only be guaranteed by an authoritarian regime," said Finance Minister Castro, who admitted: "Public opinion is strongly against us, so we need a strong figure to maintain this policy."

In Chile, the new right redefined democracy with economic freedom and authority for the first time. According to Christian Laro Houlette, an outstanding graduate of the University of Chicago, under Pinochet's strict control, Chile became "the pioneer of the world trend of establishing a government form on the basis of a free social order". For example, the privatized pension system in Chile is now a model of social security reform. 1997, Bush accepted the advice of Jose Piniella, a Chilean economist and a graduate of the University of Chicago.