Chicago Boys

The Chicago Boys are a group of Chilean economists who have mostly studied at the University of Chicago from 1956 to 1970 and were inspired by the ideas of Friedrich August von Hayek and Milton Friedman. They were economic and socio- politically very influential in Chile under the rule of Augusto Pinochet. These economists were convinced of the superiority of free markets, they sought to be realized by privatization and deregulation measures.

Because of the political conditions in the dictatorship they could enforce their far-reaching reform ideas first without essential loss. Many critics as well as proponents see in the reforms, therefore, an important experiment under real conditions, the conclusions about the effects of an economic liberal and monetarist practice allowed. Also in other Latin American countries, economists of the Chicago School were able to gain influence and are also often referred to as the Chicago Boys.

• 3.1 In Chile
• 3.2 Influence in Latin America and worldwide

• 4.1 Economic and social aspects
• 4.2 technocracy and authoritarianism
• 4.3 Opinions of Chicago professors

Training and organization

As the " Chicago Boys, " the group of economists has been known for its links to economic faculty of the University of Chicago, although not all have studied Chicago Boys there. Thus, four of the 26 mentioned in Patricio Silva influential Chicago Boys accounts of other U.S. faculties. However, the group defined over a common project: the predominant in Chile structuralist economic policy to be superseded by the teachings of the Chicago school of economics. The Latin American structuralism was closely associated with the CEPAL ( Comisión Económica para América Latina y el Caribe ), headquartered in Santiago and her longtime director Raúl Prebisch. It is regarded as closely related to - but often more Marxist-oriented - approaches to dependency theory. Unlike the monetarism of the Chicago School, the Latin American structuralists ( structuralist economic policy) walked away from that market liberalization and international division of labor because of an expected deterioration in the terms of trade in the long run be detrimental to the developing countries at the periphery of the world economy and that only one active industrialization policy could reduce the dependence from the center. This strategy is also known as import substitution industrialization.

The group of the Chicago Boys was closely connected with each other through personal relationships and shared experiences. Therefore, they could still occur during the reign of Pinochet in a coherent manner, which is considered as one of the reasons for their success. A group with a common political program have the Chicago Boys, however, formed only after her return to Chile. Among the graduates of the exchange program with Chicago were some, such as Ricardo Ffrench -Davis and Carlos Massad, who had different political views and were therefore not counted later to the Chicago Boys.

Basis of the study visits Chilean economists in Chicago was an exchange program based on contracts between the University of Chicago, the Universidad Católica de Chile and the State Agency for International Development International Cooperation Administration (now USAID) based. The Ford Foundation supported financially later programs. The contracts went back to an initiative of the Development politician Albion Patterson and the Chicago economist Theodore W. Schultz. Schultz was convinced on the basis of its human capital theory assumes that the developing countries of Latin America could only be carried forward through improved education. Patterson and Schultz had first made ​​contact with the Universidad de Chile, but because of their structuralist orientation had reservations about an exclusive partnership with the Chicago faculty that has distinguished itself as an independent economic school since the 1950s. On the other hand wanted the dean of economic and social science faculty of the Universidad Católica de Chile, Julio Chana, modernize its Department of focusing on the economy, so that then arose with this university cooperation.

In the early years 1956-1964 underwent 26 Chileans the training program in Chicago, total over 100 Some of the students of this first generation later became professors at the Universidad Católica, where one of the first exchange students, Sergio de Castro, Dean of the Faculty of Economics had become. Under the guidance of Chicago professors they established the Faculty of fundamentally new. With support from the Rockefeller Foundation Castro and other Chicago Boys also went to Argentina and Colombia to teach there. A central role in the implementation of the program between the Católica and Chicago and for the training of the students played Arnold Harberger, who was a frequent also in Chile from 1955 to visit. Milton Friedman on the other hand did not have such an intense personal contact with the Chicago Boys, even if most of its courses and some also his Money and Banking Workshop visited. Although the faculty in Chicago only regarded as special economic school in the late 1950s, were characteristic to George Stigler monetarism, neoclassical price theory and the critical attitude towards public regulation. George P. Shultz describes the climate of the faculty to be very contentious and characterized by open debates between professors and students.

A first merger of Chicago Boys as a politically relevant group was initially in opposition to student protests at the Universidad Católica mid-1960s. As a result, Chicago Boys made ​​contact with the PDC and the Gremialisten movement Jaime Guzmán. The so-called Gremialistas is a right-wing conservative, Catholic, and initially strong corporatist dominated movement. She had also been established in the 1960s at the Universidad Católica was later closely associated with the Chicago Boys and won how these political in the early years of the Pinochet regime influence. Social support were able to win the Chicago Boys, especially among internationally oriented entrepreneurs. The banker and owner of the conservative newspaper El Mercurio Agustín Edwards Eastman addressed in 1968, Centre for Social and Economic Studies ' ( CESEC ) a, where many Chicago Boys were active. Furthermore, El Mercurio got a business section, for which the Chicago Boys editorials written. In their discussions in the 1960s, the Chicago Boys savings, according to Rolf Lüders from political issues; they were of the opinion that the objectives of a science-based economic policies are not negotiable.

The group was founded in 1970 as a political force of the " new right ", as the Chicago Boys supported the conservative Jorge Alessandri against presidential candidate Salvador Allende. During the presidency of Allende met in a so-called Monday Club weekly opposition press and business representatives in the publishing house of El Mercurio. To prepare for the time after the planned coup this circle initiated the creation of an economic program writing. Ten economists - including eight with a degree in Chicago - working from the font, the El Ladrillo ( the brick ) was later called. In this manifesto the Chicago Boys took later in the implementation of its reforms repeatedly reference.

Economic policy

Starting position

In the 1950s and 1960s Chile was dominated by the structuralist economic policies of the ECLAC. Accordingly, it was necessary to make the Chilean economy through protectionism and industrialization initially out of himself strong for the challenges of the world market.

Salvador Allende had begun after his election in 1970 with the socialist reconstruction of the economy. His measures included nationalization, particularly in banking and in the copper mining industry, a strong increase in government spending and price controls. From the nationalization of many foreign, especially U.S. companies were affected. The U.S. government has been urged by representatives of the industry to economic sanctions, but opted against a formal trade embargo. She tried rather together with U.S. companies Chile largely cut off from the granting of loans and development aid. The ensuing shortages led among other things to a strike by truck drivers. Thus, a chain of events was set in motion that ended with the overthrow of Allende. Nevertheless, remains controversial in the literature as to whether this policy of so-called "invisible blockade " can actually be blamed for the economic failure of the Allende government. Thus, the U.S. political scientist Paul E. Sigmund assumes that the measures taken Nixon's actions in the face of the expropriations were relatively mild. The main cause of the high inflation and social unrest had been lying in the political program of Allende. Critical comments on Sigmund emphasize that while he recognized the details of influence substantially, but ultimately " the forest for the trees " do not see. Even Sigmund admit that without external influence, the strikes would not have escalated so quickly against Allende and would not have lasted so long.

By 1973, in any case, a galloping inflation developed. While economic growth had risen to 7.7 percent in the first year of reign, Chile in 1973 experienced a recession.

After the coup in September 1973, first launched military all important ministries. Without a clear economic policy plan, they failed to get inflation under control: Inflation remained in the triple digits. Although the generals always had as an opponent of the socialist government of Allende a liberal economic policy adjustment, they had to recruit sufficient contacts with the civil society, economic personnel.

First, therefore, the Pinochet regime spoke to former minister of the Christian Democratic government of Eduardo Frei Montalva. However, since these represented political demands and human rights wanted to see met, failed these tests. About Hernán Cubillos, who sat on the board of the El Mercurio, and Roberto Kelly then got in touch with the Chicago Boys. So that the moment for instruments drawn up in El Ladrillo plan had come. Sergio de Castro convinced laboriously General Pinochet from the need of market reforms, and by the end of 1974 occupied the main government departments Pinochet with Chicago Boys.

Radical reforms 1975-1982

In the second half of the 1970s, the regime undertook increased efforts to compensate for the lack of democratic basis by economic success. Chile was considered a test case for testing the liberal economic program of the Chicago School. Arnold Harberger invited Milton Friedman on behalf of Banco Hipotecario de Chile on a visit to Chile in March 1975. On this occasion, told Friedman that the fundamental problems of the country, ie inflation and economic disruption, a "shock treatment " required. A policy of small steps runs the risk that the patient will die before the treatment am working. At the personal request Pinochet's Friedman wrote to him afterwards from Chicago a detailed letter of recommendations. In April 1975, Pinochet handed a team of four " hardliners " among the Chicago Boys, the economic policy command: He appointed Sergio de Castro Minister of Economics, Jorge Cauas of Finance, Pablo Baraona as President of the Central Bank and Roberto Kelly Chief of the Planning Office.

Content

In the same month, the Chicago Boys began to transform the economy of Chile fundamentally with far-reaching deregulation and privatization measures.

Instead of the previously pursued policies of import-substituting industrialization, the Chilean economic policy oriented now on the developmental model of externally oriented trade policy. But the Chicago Boys built sided trade barriers and price controls from deregulated and opened the financial market; towards the end of the 1970s they liberalized capital movements. In order to make the Chilean economy in the sense of the theory of comparative advantage more efficiently, the import duties in excess of 100 were reduced to 10 percent. As a result, the foreign trade of Chile grew rapidly. The free trade policy came in the early 80s in the crisis, as for a number of reasons such as the overvaluation of the Chilean peso declined, exports and there was a substantial trade deficit.

The Chicago Boys downsized the public sector, by they returned expropriated companies to former owners and traditional public enterprises privatized. The public education system was partially privatized. Lowered in 1975 alone, the Chicago Boys under Pinochet to combat inflation, the expenditure of the ministries, government agencies and educational institutions around 15-25 percent. A tax reform reduced the proportion of direct and progressive taxation.

Should also be in the field of labor, agriculture, education, health, social security and justice bring to bear - 1979 launched a program of "seven modernizations" ( Siete Modernizaciones ), the principles of market economy - in addition to the privatization of the public sector. In labor law, including the protection against dismissal in the private sector and the right to strike was abolished.

The Chicago Boy José Piñera, the Chilean pension system against initial resistance of the generals and the opposition completely from a PAYG to a funded system to where he got the idea to privatization when reading Milton Friedman's major work Capitalism and Freedom in 1962. As an alternative to the national health system, the subsidies they drove back strong, the Chicago Boys private health insurance established after the model of the U.S. health care system. In education, a voucher system should be from 1980 facilitate the free choice between public and private schools ..

According to Milton Friedman was the recession of 1975, had led to a contraction of gross domestic product by 13 %, the predictable and inevitable consequence of the monetary shock treatment to lower the monetary growth. In his view, this was but necessary to bring about a healthy economic growth. Inflation went up to the end of the 70 years:

Political implementation

Central to the implementation of the reforms, the National Planning Department, founded in 1967 as the authority was ( ODEPLAN ). The line first took over Roberto Kelly, then Miguel Kast, who could ODEPLAN quickly as the main advisory organization established in addition to the financial and the Ministry of Economy. ODEPLAN organized exchanges with Chicago and prepared legislative projects. In the office, there was a strong interdependence and cooperation between the economic advisers to the Chicago School and the Gremialistas, politicians and lawyers were the majority and had supported the regime from the beginning. Pinochet, gave the Chicago Boys in their reforms, a wide-ranging autonomy.

The drastic measures to reform the Chilean economy were possible after participating economists and Chilean media view only due to the authoritarian nature of the regime. Based on the principles developed by Hayek in The Road to Serfdom principles of the Chicago Boys were able to transfer their liberal economic ideas in the social and political sphere. In their opinion, only " pseudo- democratic " conditions had prevailed in Chile before, where parties and organized interest groups have imposed their ideas to the detriment of the population. Some of the Chicago Boys, as Alvaro Bardon and Sergio de Castro, saw the dictatorship even as an ideal regime to ensure the neutrality of the market. De Castro, who had a leading role among the Chicago Boys, wrote that " the true liberty of a person can be secured only by an authoritarian regime that exercises the violence by the same rules for all interspersed ".

In order to effectively enforce the reforms, intermediary civil society organizations had to be largely eliminated. Thus, the Chicago Boys, contributed by about busting uniform trade union organizations. 1981 operated the Chicago Boys, the disempowerment of professional organizations - to carry out reforms - particularly against the will of the medical profession in health care.

Role of the Chicago School

The Chicago Boys were while working for Pinochet with members of the Chicago School in close contact. Thus, besides Milton Friedman endowed from Friedrich August von Hayek and Arnold Harberger visits that took place in the Chilean press and strong international response. Hayek was honorary president of the Centro de Estudios Públicos and Friedman appeared with a lecture on state-controlled television. 1981 a regional meeting of the Mont Pelerin Society in Viña del Mar took place. Hayek justified on this occasion in an interview with El Mercurio, the establishment of a dictatorship when the imposition of economic freedom was temporarily necessary as the foundation of liberalism. Is justified under certain circumstances, the victim an individual's life in order to secure the survival of the majority. " The only valid moral standards for, calculation of life ' can [ ... ] only be the private property and the contract. "

Although Milton Friedman is often associated with the Chicago Boys, he never had an official advisory role and no direct influence on Pinochet. In his memoirs, Friedman praised the actions of the Chicago Boys, however, explicitly and lifts such measures as the dismantling of the state quota, control, health and pension reform forth. The Chicago Boys attacked in their market- liberal assumptions on Milton Friedman's theory - and in particular to capitalism and freedom - back. Apart from the basic monetarist orientation and privatization strategy more concrete reform projects of the Chicago Boys of Friedman and the Chicago economist James M. Buchanan had been proposed in the years before the coup, Pinochet in scientific publications, such as the introduction of education vouchers and the establishment of an individually funded pension fund. The economic program of the Chicago Boys, however, differed in two ways different from Friedman's recommendations: So they built the import tariffs and does not abruptly only gradually, as recommended by Friedman. In addition, Sergio de Castro took off in the late 1970s for two years against the advice of Friedman's the exchange rate fixed. The Austrian Economic and Social historian Karin Fischer assumes that the Pinochet regime did not implement the pure doctrine of the Chicago School. Rather were also ideas from other theoretical traditions, as has been the Virginia School of Political Economy and the Austrian School, and tailors them to the land.

Recession 1982/83

Around the year 1980, the success of the reforms initially seemed to confirm. The Chilean experiment had become a showpiece for monetarists and market liberals in addition to the reforms of Margaret Thatcher after the positive economic developments of the late 1970s. Friedman coined in his regular column in Newsweek still on January 25, 1982 expressed Miracle of Chile, when he described the Chilean development as " economic miracle" ( "economic miracle" ); an " even more astonishing political miracle " ( "even more amazing political miracle" ) is that the military junta was willing to carry out the interest held by him for the right market-oriented transformation was.

This image tarnished but in 1982 a severe recession, when there was a drastic fall in real income, a sharp rise in unemployment and a collapse of the financial market. Sixteen out of 50 private financial institutions went bankrupt while.

The cause of the collapse of the Chilean economy by 1982/83 a number of external and internal factors is considered. The binding of the peso to the dollar before the crisis led to a strong capital inflows and an overvaluation of the Chilean peso. As a result of overvaluation, exports of Chile fell and the country was flooded with cheaper imported goods. The light-touch regulation of the banking and lending, as well as the abundant money at low interest rates led to a risky business practices of the privatized banking sector. In Chile, many banks were also to be a conglomerate (so-called grupo ). Within the grupo banks were lending at unreasonably favorable terms to other subsidiaries. If these companies anmeldeten a need for further financing, the banks also extended non-performing loans or new loans awarded to avert the threat of insolvencies.

In the years 1981 and 1982 larger amounts of capital from private and public companies incorporated abroad. As a result, reduced the Chilean currency reserves. As a result of the second oil crisis, the price of crude oil, which had to import Chile rose. The enforced in the United States to combat inflation rise in interest rates hit because of the dollar peg of the peso directly by the Chilean banking system and credit-constrained Chilean economy. While the global recession that followed the oil crisis, the price dropped the most important Chilean export goods, copper. The country slid himself into a severe recession, which was further supported parts of the debt-ridden financial system from a meltdown. Many businesses had to close.

Also in other Latin American countries, it came in the early 1980s to a debt crisis. In particular, in 1982 Mexico, Brazil and Argentina were also affected. The Latin American debt crisis of the 1980s provided the structuralist strategy of import-substituting industrialization in question, as it had been, however, no longer persecuted in Chile after 1975. A better starting point than Chile had in the crisis of the early 1980s, the countries that benefited from higher oil prices as oil - exporting countries (eg Venezuela). The specific Chilean combination of internal and external factors led Chile 1982/83 in the sum of influences in a much more severe recession than most other states of Latin America.

" Pragmatic Neoliberalism " 1983-1990

The recession led to social unrest; the so-called " monetarist experiment" was widely regarded as a failure. The Chicago Boys lost as a result of influence on the Chilean economic policy.

The finance minister Sergio de Castro had introduced in 1979 a system of fixed exchange rates. At this he also held fixed yet, as more moderate economic adviser urged a depreciation of the Chilean peso because of the sharp rise in the number of corporate bankruptcies. De Castro responded that only the strongest and most competitive companies should survive the crisis, but could with his mind no longer prevail and had to go in 1982. In its place which also trained in Chicago Rolf Lüders, who advocated government intervention to rescue banks entered. After 1982, the two largest banks had been taken over by the state, in 1983 five more were nationalized and two more came under state supervision. The central bank had to pay for the foreign debts. Critics derided this development as " Chicago way to socialism " because under the aegis of the Chicago Boys and more banks were nationalized as under the socialist Allende government.

1983, other ministers were forced to resign, among others José Piñera as mine minister. Pinochet occupied the ministerial posts by practitioners, initially especially business owners, and later administrative officer. In agricultural policy, the new team was to establish minimum prices and granted subsidies for loans. The import tariffs on agricultural products were increased, while exports were subsidized. This phase, gained great influence in the Hernán Büchi is often referred to as opposed to the more radical in Market principles reforms until 1983 as " pragmatic neo-liberalism ". Büchi in 1983, first minister of public planning ( ODEPLAN ), then head of the bank supervision until Pinochet finally in 1984 appointed him as Minister of Finance. In response to the financial crisis in 1982 he set a bank bill passed the minimum reserves required made ​​and strict banking supervision established. His privatization policies, however, was more in the tradition of the Chicago Boys. There was a further reduction of the national rate, particularly in the area of ​​social spending.

By international organizations such as the IMF and the World Bank had been pushed for a return to strict fiscal policy and to re-privatization of the banks during the 1980s. Towards the end of the Pinochet dictatorship Chicago Boys were again increasingly responsible positions in economic policy.

Democratization

During the Pinochet dictatorship had Chilean economists who were critical of the price of the Chicago Boys, either at international organizations such as ECLAC and the ILO or private research institutes such as the Society for Latin American Studies ( CIEPLAN ) to stay, as heterodox economists from the universities were dismissed and Pinochet critical faculties even had unceremoniously close. After democratization, therefore, many of the economic policy experts and managers were recruited from these organizations. In the economic team of the first democratic government of Patricio Aylwin Christian Democrats of 1990 were studied by 23 members, only three in Chicago, it is only one, Andrés Sanfuentes calculated as president of the Banco del Estado, the Chicago Boys. Another Chicago Graduate Ricardo Ffrench -Davis was, although it was among the first generation of exchange students, as followers of the Christian Democrats under the Chicago Boys alongside Carlos Massad, however, was an exception. The third team member with Chicago 's degree was the later Chilean Central Bank President Roberto payer who had as early as 1982 " the arrogance of science and absolute truths " by the Chicago Boys publicly criticized.

Summary

The radical reforms of the Chicago Boys were in the phase of "pragmatic neo-liberalism " as well as by the democratic governments after 1990 into perspective and partly complemented by the regulation of banks and social policies. However, the market orientation and the free trade policy retained in principle both Büchi and the center-left governments under Ricardo Lagos and Michelle Bachelet. Among the center-left governments, however, been a shift to more pragmatic neostructuralist economic policy.

Other CVs and global influence

While the Chicago Boys were largely dismissed in Chile after 1983 out of the governing and after democratization played virtually no political role more, they kept in the economy and in civil society advisory organizations continue to exert influence.

In Chile

After the banking crisis of 1982/83, the Chicago Boys and Gremialistas founded the pro-regime Unión Demócrata Independiente (UDI ), which had to go to the democratization (1989 ) in the opposition.

Some Chicago Boys returned to their extensive disempowerment early 1980s or after the democratization of the universities. Others started to work for Chilean banks and companies. Many, however, were able to establish itself as an international consultant or found in think tanks. So, for example, advises José Piñera today. Libertarian American for the Cato Institute states in pension reform José Piñera had studied at Harvard along with his brother Sebastián Piñera, was under the Pinochet dictatorship only labor minister and later minister of mining and is considered one of the Chicago Boys.

His brother Sebastian had early on criticizes the economic policies of the Chicago Boys. In the presidential elections in Chile (2005/2006), he first was able to prevail against the Chicago Joaquín Lavín Boy (UDI ), but then lost in the runoff election against the socialist Michelle Bachelet. 2010 Sebastian Pinera won the presidential election, making Joaquín Lavín for the Minister of Education.

Influence in Latin America and worldwide

In the 1980s and 1990s, economists were able to gain influence in several other Latin American countries with authoritarian regimes after the Chilean model with training in Chicago (and increasingly to the so-called Ivy League schools such as Harvard and MIT ). In Mexico, this was a group to which Francisco Gil Díaz and later President Carlos Salinas belonged and the market economy since 1985 reforms continued.

In Argentina, first under the junta in 1976 was the Friedman -student Adolfo César Diz 1981-1986 Governor and went as a consultant to the World Bank later. Under Carlos Menem who also trained in Chicago Roque Fernández was in 1991 Central Bank President and since 1996 Minister of Economic Affairs. More Argentine Chicago Boys were followed from the mid-1990s in important economic posts.

Other Latin American military governments, such as in Brazil and Paraguay, pursued economic policy programs that were barely or not at all influenced by the Chicago School.

Yves and Bryant Garth Dezalay indicate that the transfer between the U.S. and Chile was not one-sided, but that a " remarkable story of export and import " the credibility of the Washington Consensus and supported the ground for the structural adjustments after the election of Ronald Reagan prepared. While the World Bank but still looked in the 1980s the reforms of the Chicago Boys in Chile as a model for economic and political leadership, the policy style changed during the course of the 1990s, and there was more emphasis on human rights, democracy and participation of stakeholders. In 1998, Joseph Stiglitz explained as chief economist of the World Bank, the end of the Washington Consensus. Since then, the principles of good governance are sought as a new model of macroeconomic conditionality in international lending.

Assessment

The reforms of the Chicago Boys were hotly debated in the economic and social science literature regarding the effectiveness of their economic impact and the political legitimacy they are concluded. The members of the Chicago School, which the Chicago Boys have supported in their reforms, negotiated for their commitment public criticism.

Economic and social aspects

When the Chicago Boys to the financial crisis beginning to be made ​​responsible of the 1980s, so they merit but is often conceded to have paved the way for another good economic development. As a permanent success of market orientation thus monetary stability and that since the late 1980s and early 1990s, again increasing growth of the Chilean economy is praised. Nevertheless, this long-term balance of their work is controversial. The influence of the Chicago Boys on economic growth is assessed differently. Proponents of reform cite statistics showing that Chile had, for example, recorded from 1981 to 1990 growth in gross domestic product in the amount of real average of 2.7 percent, and the growth rates of other major Latin American countries such as Brazil, Mexico, Venezuela, Argentina Peru was. Other authors point out that the real economic growth between the early 1970s and the end of the dictatorship in 1990 was relatively low and was below the Latin American average. Various Chilean economists reject it citing negative developments of the investment rate and the per capita gross domestic product during the reign of Pinochet from, to speak of an economic miracle.

It is also questionable to what extent the long-term development is due to the reforms of the Chicago Boys. In the opinion of Ricardo Ffrench - Davis, the former chief economist of the Central Bank of Chile and today advisor to the UN Economic Commission for Latin America (ECLAC ), the radicality of shock therapy has been among the Chicago Boys prevents a higher growth because of phases of high growth followed by severe recessions. It was only at the stage of pragmatic economic policy, the economy had come to a sustainable growth path.

The California economist James M. Cypher emphasizes that the Chicago Boys SOEs awarded during the 1975-1978 privatization on a large scale under the market price, which they have especially favored few large corporations. Thus it has come to a further concentration of the already suffering from large Grupos Chilean economy.

The partial privatization of the health system meant that a growing number of citizens had no access to health insurance coverage more. Since patients sometimes have to pay extremely high co-payments and health insurance protection has significant gaps in coverage, the reformed health care system for patients has developed into a two-class medicine with unpredictable and often existential financial risks.

It was also emphasized that the social differences have a drastic way. So is statistically proven that the economic policies of the Chicago Boys has been done in the first few years, that the monthly consumption expenditure of the poorest 20 percent of the population have fallen sharply. Even with the lower middle class and middle class consumer spending declined. In contrast, the upper middle class had a little more money to spend, and the richest 20 percent of the population were able to expand their consumer spending strong:

Overall, there were during the Pinochet dictatorship from 1973 to 1990 with a moderate increase in unemployment of nearly 5 to more than 7 percent, the after democratization to 2000 still increased. Until the adoption of the policy offices by the Chicago Boys unemployment had risen in a first recession in more than 18 percent in the second recession in 1982, when most of the Chicago Boys were dismissed from their posts, unemployment was over 25 percent.

Even a proponent of reforms such as Gary Becker admits that the market reforms have not solved all the problems of Latin American societies. For example, there is according to a study by the World Bank in this region greater economic inequality than in other parts of the world, in good part because education and other social policy issues for the poor were inadequate.

Technocracy and authoritarianism

Also controversial is the relationship between liberal economic reforms of the economic and technocratic or authoritarian politics. The work of the Chicago Boys, is often described as a kind of technocratic revolution "from above", which was not limited to economic policy issues. The Chicago Boys wanted the neo-liberal market approach (market approach) and thus the belief in individual action rather than state responsibility permeates the whole society. This ideological orientation that was created during the design of the exchange program, perceived critics within the Ford Foundation in retrospect as too one-sided: the interests of developing countries was not served with the enforcement of a single perspective.

The failure of the first radical reform phase is attributed to the fact that textbook knowledge of the Chicago School has been implemented on an overly rigid and ideologically charged nature of technocrats. They were shielded by the authoritarian regime of the expertise of social interest and the interests affected. According to a division of labor between the liberal economic reforms of the Chicago Boys and the political rule of Pinochet is sometimes adopted in which the authoritarian military exercise of power reinforced in order to keep the economic reforms of the person concerned at bay. The now teaches at the Universidad Católica political scientist Carlos Huneeus other hand, draws from a study of the ODEPLAN the conclusion that it ( which he calls " ODEPLAN Boys" calls it) was no division of labor between economists and a more politically aligned group of Gremialisten, but that both with different agents had pursued the same goal, a "protected democracy " (protected democracy ) to build. An important step towards this goal was by Friedrich August inspired by Hayek and designed by Gremialisten leader Jaime Guzman " constitution of liberty " (La Constitución de la Libertad ) of 1980, which granted the economically liberal idea of freedom a high priority, with respect to the democracy, however, served to set these limits and to define them.

The fact that North American economists such as Milton Friedman and Arnold Harberger, who supported Chicago Boys, despite the human rights violations in Chile, them was partly a harsh criticism from colleagues. The disintegration of political and economic freedom in Pinochet's Chile meant that opposition Chilean economists were able to give the term " neoliberalism " has negative connotations, by setting it apart from classical liberalism, in which (as in the theory of Hayek ) to a inseparability both forms of freedom was provided.

In the opinion of Orlando Letelier " repression against the majority and economic freedom for small privileged groups in Chile two sides of the same coin " were. In contrast, insured Sebastian Edwards, a former chief economist of the World Bank for Latin America and the Caribbean, who had been trained to Pinochet times at the Universidad Católica in Chicago: " The Chicago Boys were not part of the Pinochet conspiracy [ ... ] Contrary to the claims of some critics was the policy of the Chicago Boys, not dogmatic, rigid performed and total rejected by the population. Also wrong is the assertion that the Chicago Boys are natural allies of the military government were, in 1973 seized power. "

With regard to the legitimacy of the reforms is also controversial, as strong foreign political actors, particularly the U.S., the reforms have influenced and controlled. Naomi Klein's bestseller The Shock Doctrine asked this question before a wider audience. Klein describes the exchange program with the University of Chicago primarily as a move by the U.S. to gain hegemony over the Latin American economics. In the opinion of Valerie Brender they have neglected the analysis of economic development and the comparison with other development assistance and exchange programs in the USA.

Another criticism of the ratio of the Chicago Boys Chilean dictatorship lies in the restructuring of the Chilean civil society by the economic reforms. On the one hand, the scientific habit of the Chicago Boys served the dictatorship as a legitimation to justify their authoritarian policies, on the other hand led the massive destruction of trade union organization and the monopolization of the media in the hands of the military and oligarchy to a massive displacement of political topics from the public space. Recent statements of prominent Chicago Boys show that they are not ready for a critical distance to the Pinochet dictatorship until today, boasts José Pinera ( brother of the current President and Labour and Mines minister under Pinochet ) to have berfreit the Military Junta of Chile from a communist dictatorship and referred to it as a step that was necessary in order to rid the country of an " illiberal democracy ".

Opinions of the Chicago professors

The Nobel Prize winner and Chicago professor Gary Becker said 1997 on the Chicago Boys:

" In retrospect, was their willingness to work for a cruel dictator and develop a different economic approach, one of the best things that could happen Chile. [ ... ] Chile was a pariah state, which was controlled by a dictator to an economic model for all developing countries. Chile's achievements were even more impressive when the government was transformed into a democracy. [ ... ] Your teachers are proud of their rich deserved honor. "

Milton Friedman said in 1991 about the almost 10 years earlier dominated by it expression "Miracle of Chile ":

" I have nothing good to say about the political regime did Pinochet imposed. It was a terrible political regime. The real miracle of Chile is not how well it has done Economically; the real miracle of Chile is a military junta did what willing to go against its principles and support a free market regime designed by principled believers in a free market. "

"I have to say about the political regime of Pinochet nothing good. It was a terrible regime. The real miracle of Chile is not how well the country has developed economically. The real miracle of Chile is that a military government was willing to act against their principles and to support a regulatory free market economy, which has been designed by people who believe principled in the free market. "

Overview of the Chicago Boys

The following Chilean government members or consultants are counted by Patricio Silva among others, the Chicago Boys:

• Sergio de la Cuadra ( Minister of Finance from 1982 to 1983 )
• Sergio de Castro ( Minister of Economics from 1975 to 1976, Minister of Finance from 1976 to 1982 )
• Martín Costabal (responsible for the 1981-1984 budget, Finance Minister 1989-1990)
• Pablo Baraona ( Minister of Economics from 1976 to 1979 )
• Alvaro Bardon ( State Secretary in the Ministry of Economic Affairs from 1982 to 1983 )
• María Teresa Infante ( Minister of Labour 1988-1990)
• Miguel Kast ( Planning Minister from 1978 to 1980, Minister of Labour from 1980 to 1982, Governor 1982)
• Roberto Kelly ( Minister for Economic Affairs from 1978 to 1980 )
• Felipe Lamarca ( director of the tax authority SII 1978-1984 )
• Joaquín Lavín ( Advisor to the Ministry of Planning, editor of the business section of the El Mercurio )
• Rolf Lüders ( Minister of Economics from 1982 to 1983, Minister of Finance 1982)
• Juan Carlos Méndez (responsible for the 1975-1981 budget; World Bank Economist 1982)
• Andrés Sanfuentes ( advisor to the Central Bank as well as the budgetary authority )
• Jorge Selume (responsible for the budget 1984-1989 )
• Francisco Soza ( CORFO 1975)
• Juan Villarzú (responsible for the 1973-1975 budget, then World Bank economist, Banco Concepción from 1978)

Chicago Boys with financial statements of other American schools:

• Hernán Büchi ( Minister of Finance from 1985 to 1989, MBA Columbia)
• Carlos Caceres ( Central Bank President from 1982 to 1983, Minister of Finance from 1983 to 1984, Minister of the Interior from 1988 to 1990, Cornell MBA )
• Jorge Cauas ( Minister of Finance from 1974 to 1976, MA Columbia)
• José Piñera ( Minister of Labour from 1979 to 1980, Minister of Mines from 1980 to 1981, PhD Harvard )