By Thom Hartmann
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.