The Country That's Dismantling Its System of Privilege for the 1% -- Can the U.S. Be Next?

Chileans have rejected Reaganomics, and it’s time we followed their lead. Back in the early 1970s, Chile was one of the most progressive countries in South America.


Its democratically elected socialist president, Salvador Allende, nationalized big businesses and gave every Chilean access to free healthcare and higher education. GDP went up and income inequality went down, and for the first time ever, working-class Chileans had a chance to live out their version of the American dream.

But not everyone was happy with President Allende’s Chilean New Deal. Behind his back, the United States and the country’s corporate and military elite were conspiring to sabotage his reforms and destroy the economy. Although Allende’s policies were successful, Chile still needed foreign loans to survive, so the Nixon administration got the International Monetary Fund to suspend all aid. This decimated the economy and stunted the progress Allende had made over his first few years in office.

The Chilean elite’s sabotage campaign turned into outright treason on Sept. 11, 1973 when, with the help of the CIA, General Augusto Pinochet overthrew Allende’s government and ushered in 17 years of military rule. Pinochet’s dictatorship was one of the most brutal in Latin American history. Dissidents were jailed, tortured and executed. People were thrown out of helicopters into the ocean. Others were taken to the national soccer stadium in Santiago where they were shot at point blank range by firing squads.

The memories of Pinochet’s brutality are so raw that to this day many Chileans refuse to attend soccer matches at the national stadium, believing that to do so dishonors the dead.

Pinochet’s cruelty to his opponents was matched only by his equally cruel devotion to austerity-style economics. Soon after he took power, the general invited Milton Friedman’s Chicago Boys to “reform” Chile’s economy. They privatized industries and slashed government spending. Inflation reached as high as 341 percent, GDP decreased by 15 percent and Chile’s trade deficit ballooned to a whopping $280 million. Unemployment jumped to 10 percent, and in some parts of the country climbed as high as 22 percent.

Of course, that didn’t really matter to the Chicago Boy, because as Chilean economist Orlano Letelier noted, “They [had] succeeded… in their broader purpose: to secure the economic and political power of a small dominant class by effecting a massive transfer of wealth from the lower and middle classes to a select group of monopolists and financial speculators.”

Like Reagan in the United States, Pinochet gutted progressive reforms and ushered in a new era of dominance by the super-rich and the corporate elite.

Pinochet’s military government eventually fell in 1990 and democracy was restored, but the legacy of his time in power is still felt today. Inequality is still high and education is too expensive for many Chileans to afford. Not surprisingly, the country’s outgoing right-wing president, Sebastian Pinera, did little to change this. That’s why on Sunday, Chileans elected socialist Michele Bachelet as president. Like Allende before her, Bachelet promises free higher education and wants to raise taxes on the rich.

Coming on the heels of Chile’s first right-wing president since Pinochet, Bachelet’s election is a significant one. Chileans have, once and for all, it appears, said goodbye to the legacy of Pinochet and the policies of the Chicago Boys. To put it bluntly, they’ve rejected Reaganomics. It’s about time we did the same.

Enjoy this piece?

… then let us make a small request. AlterNet’s journalists work tirelessly to counter the traditional corporate media narrative. We’re here seven days a week, 365 days a year. And we’re proud to say that we’ve been bringing you the real, unfiltered news for 20 years—longer than any other progressive news site on the Internet.

It’s through the generosity of our supporters that we’re able to share with you all the underreported news you need to know. Independent journalism is increasingly imperiled; ads alone can’t pay our bills. AlterNet counts on readers like you to support our coverage. Did you enjoy content from David Cay Johnston, Common Dreams, Raw Story and Robert Reich? Opinion from Salon and Jim Hightower? Analysis by The Conversation? Then join the hundreds of readers who have supported AlterNet this year.

Every reader contribution, whatever the amount, makes a tremendous difference. Help ensure AlterNet remains independent long into the future. Support progressive journalism with a one-time contribution to AlterNet, or click here to become a subscriber. Thank you. Click here to donate by check.

Close
alternet logo

Tough Times

Demand honest news. Help support AlterNet and our mission to keep you informed during this crisis.