The Lesson America Chooses Never to Learn
Jon Jeter / Mint Press News
On September 11,1973, General Augusto Pinochet’s troops stormed Chile’s presidential palace. Organized by Henry Kissinger and the CIA, the coup targeted Chile’s popular socialist President Salvador Allende, who the Nixon administration feared was another Fidel Castro in-the-making. As the attack unfolded, workers in the basement of a Santiago publishing house shop were hard at work printing what was to be the military junta’s 500-page economic plan.
CHILE’S FACES OF TORTURE: Over 30,000 people were tortured by the CIA- sponsored Pinochet regime. (Villa Grimaldi Memorial)
Believing himself to be a messianic figure, Pinochet put his faith in a coterie of young Chilean advisers who had trained under Milton Friedman at the University of Chicago’s School of Economics, the academic vanguard of neo-classical economics. With his bloody crackdown on dissidents, artists, college students and union leaders, Pinochet’s repressive regime censored the press, banned labor unions and political opposition parties, murdered an estimated 5,000 leftists, tortured another 30,000 and handed the “Chicago Boys” – as they came to be known – a blank check to remake Allende’s nationalized economy, and return the country at South America’s southwestern edge into the Empire’s orbit.
Nearly 15 years before economists coined the phrase “Washington consensus,” and a decade before Reagan’s trickle-down policies began dismantling the New Deal in the U.S., Chile was the guinea pig for anti-Keynesian macroeconomic policies designed to fatten corporations’ share of global wealth. Pinochet slashed duties on imports, from an average tariff rate of 94 percent in 1973 to 10 percent by 1979. He privatized all but two dozen of Chile’s 300 state-owned banks, as well as utilities and entitlements such as social security. By 1979, he had cut public spending almost in half and public investment by nearly 14 percent. He lowered taxes, restricted union activities and returned more than a third of the land seized under Allende’s land-reform program.
Pinochet’s reforms worked like a fast-acting virus. A recession in 1975 caused Chile’s economy to shrink by 13 percent, its greatest decline since the Great Depression. The recovery that followed was fueled largely by foreign cash, which poured into the country as investors gobbled up utilities and stashed money in Chile’s currency markets. The prices of imports fell sharply; between 1975 and 1982 the number of foreign cars sold in Chile tripled. Domestic manufacturing shriveled by 30 percent. Domestic savings plummeted. Wages fell, and the income gap between rich and poor widened by a factor of 50.Monetary policy was liberalized on two important fronts. First, Pinochet allowed “hot money” — speculation on the currency market — to flow in and out of the country without obstacle. And in 1979 he fixed the exchange rate for Chile’s peso, requiring the central bank to keep $1 in reserve for every 39 pesos printed. This kept the bank from merely printing money to pay bills and curbed an inflation rate that had soared to nearly 400 percent annually under Allende.
By 1982, Chile had accumulated $16 billion in foreign debt — nearly $42 billion in today’s dollars — and foreign investment represented a quarter of the country’s gross domestic product. The money flowing into the country flowed out just as easily, to pay debts and bills for imported goods and through capital flight as investors soured on Chile’s currency market. The economy had overheated and was now in a meltdown.
With a third of the workforce unemployed and unrest growing, by 1984 Pinochet began to “reform the reforms,” the Chilean economist Ricardo Ffrench-Davis said in a 2003 interview.
Pinochet allowed the peso to float and reinstated restrictions on the movement of capital in and out of the country. He introduced banking legislation, and ratcheted up spending on research and development efforts through quasi-governmental institutions and other collaborations between the public and private sectors — creating, as one example, the billion-dollar salmon farming industry out of whole cloth.
Penitenceria prison in Santiago
Still, Chile’s economic woes persisted. By 1989, real wages had declined by 40 percent from 1973, and the percentage of the population living in poverty had doubled to 40 percent. The number of Chileans without adequate housing had also climbed to 40 percent, up 13 percentage points from Allende’s final year in office. The country’s poor consumed 1,629 calories per-day-on average, compared to 2,019 in 1973.
Ill-fed, and ill-housed, Chileans began to refer to the cadre of advisers not as the Chicago Boys but as Si, Cago; Voy — which translates to “Yes, I shit; I go.”
The two 9/11s twenty-eight years apart bracket the United States’ descent into madness. Much like the vintner’s abolition of the dop, the downing of the Twin Towers should’ve triggered some soul-searching in the United States, and an examination of our accumulation of stuff through the dispossession of other human beings. As we mourn the losses on that Indian-summer day in 2001, what we need to contemplate is redemption, not revenge — and how we might begin to rejoin a human community that we’ve wronged, again and again and again.
Families and supporters of victims of the Pinochet regime demonstrate in Santiago in remembrance
God Bless America. . and everyone else too.
NOTE: The introductory paragraphs of this article by Mint Press News writer Jon Jeter were omitted for length, and all photos/caps were added. I wrote the text below. However, ninety-five percent of this post is a simple reblog, reproducing exactly the original text. To see the original post, as well as links to Jon Jeter’s impressive body of work, click on his name at the top of the screen.
VIENTOS DE PUEBLO (WINDS OF THE PEOPLE) Victor Jara
Once more, they want to stain my country with workers’ blood.
I want to live now with my child and my friend, to go together toward the springtime we’re building each day.
You masters of misery can’t scare me with your threats;
The star of hope continues to be ours!
Winds of the people bear me, carry me, blow through
my throat so that I can go on singing even when death takes me,
down the roads of the people.