Chilean Model Has Little to Emulate

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Mark Weisbrot
Knight-Ridder/Tribune Media Services, October 8, 1998

On Sheridan Circle in Washington, DC there is a small monument jutting out of the sidewalk that I pass by almost every day. Tourists occasionally stumble upon it and are puzzled, since the story behind it is not well known. It marks the spot where two victims of terrorism were murdered, the first time that violence initiated abroad with the backing of the U.S. government actually spread back to our own territory.

On September 21, 1976, the Chilean secret police killed Orlando Letelier and Ronnie Moffitt with a car bomb. The military government that hired the assassins had been installed with massive help from the United States Central Intelligence Agency.

September also marked the 25th anniversary of this intervention, the military coup that overthrew the democratically elected government of President Salvador Allende Gossens of Chile. The Nixon administration did not approve of Allende’s social-democratic economic policies, and so he was replaced by the brutal dictatorship of General Augusto Pinochet, who was more to our government’s liking.

All this might seem like ancient history, except that it is currently being rewritten as an economic success story. Some have even begun to argue that Chileans are actually better off, 25 years later, as a result of the military coup and the "free-market" era that ensued.

This a bit like arguing that Hitler’s rearming of Germany pulled their economy out of the Depression. Except that in the case of Chile, those who would defend the destruction of democracy cannot even point to an economic boom ushered in by fascism. The rate of economic growth in Chile is about the same over the last 25 years, since the coup, as it was over the previous 25 years.

Supporters of Chile’s economic "miracle" like to focus on the last decade or so, and ignore the stagnation of most of the 70s and 80s. This is completely deceptive, since a case for almost any economic theory can be made if the years are selected carefully enough.

But the aggregate statistics tell only half the story. The other half is much more damning: the distribution of income in Chile is one of the most unequal in the world. The richest ten percent of households take 46 percent of the income.

The rate of absolute poverty in Chile is astounding: World Bank statistics show 38.5% of the population living on less than $2 a day. For comparison, consider Jamaica, a poor country with less than one-third of the income per person as Chile. Jamaica has 24.9 percent of its population below the $2-per-day absolute poverty line.

Furthermore, Chile’s recent economic growth is not sustainable, since it is mostly based on the export of natural-resource based commoditites. In fact the economy is currently sliding towards recession because of a 30 percent decline in the price of copper over the last year. Copper makes up 40 percent of the country’s exports. Most of the rest of Chile’s exports are also resource-based commodities, and these have also been hard hit by the economic crisis in Asia, which buys one-third of Chile’s exports, as well as the destruction from El Nino.

Meanwhile, democracy in Chile is still a distant dream. The dictator who presided over the murder, torture, imprisonment and "disappearance" of tens of thousands of Chileans remains in the government as Senator-for-life. The military, granted impunity for its crimes, controls nine of forty-eight seats in the Senate.

And this is supposed to be a model for Latin America?


Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. He is also president of Just Foreign Policy