That’s the title of an interesting piece from Bret Stephens in today’s Wall Street Journal. Stephens argues that the relatively little destruction that occurred in Chile in comparison to Haiti after earthquakes in each country can be attributed to the economic growth that resulted from the implementation of Chicago-style economic reforms. As Matthew Kahn puts it in a recent paper: “Economic development provides implicit insurance against nature’s shocks.” Andrew Carnegie once asserted that capitalism is all about turning luxuries into necessities. The maxim can also be applied to protection against natural disasters.
It’s a shame some still demonize Friedman instead of praising him for his contributions to making a better world.
- Josh McCabe
okay, we’re asked compare two earthquakes, noting major differences in relative levels of devastation, relative body counts, and response capabilities. by all breaking accounts, Chileans are digging out and restoring order, while Haiti remains in chaos.
Brett Stephens and the WSJ would have us accept that the differences lay in the wise policy choices advanced by Pinochet’s economic advisers, and their absence in Haiti; indeed, he urges us to conclude that the essential distinction btw experiences in Haiti and Chile was the positive influence of U.Chicago-trained clones of Milton Freedman?
oh, please.
Stephens has reduced the tragedies to a mere backdrop to the “mis-underestimated” wisdom of the late libertarian economist and Cato Institute pillar, Milton Friedman. he’s offered a simplistic – not to mention transparently ideological – analysis that conveniently glosses over the distinct histories (national biographies and “places” in the global order, if you will) shaping the glaring disparities in the relative conditions and capacities of the two nations.
but the old axiom, “correlation-does-not-mean-causation,” is useful guide when trying to apply meaning to phenomena. and, in this case, one might just as easily argue that Friedman’s libertarian preferences for a weak central govt authority (except in law-enforcement and making war), the absolute privatization of wealth (no concern for wealth-concentration), on-your-own (savage) individualism, an unregulated free market, and the elimination of social service/ basic human entitlements seriously weakened Haiti’s capacity to respond to the crisis.
meanwhile, in Chile, a soc-dem’s radical policy legacy (defending the commons and generating the common-wealth) – which his usurper prudently left in place – was still paying dividends, after some 30+yrs.
’nuff said?
What Ty said.
Plus one additional point: the argument being made is essentially a quantitative one: some degree between government and lack of government. Friedman has surprisingly little to say about qualitatively different institutions. He famously said that there little difference between Nixon’s price controls and Soviet Russia’s controls. Shouldn’t democratic representation/questions of governance become principal concerns? The WSJ’s gloss reveals more ideology than it does anything else.
Ty: It’s a WSJ piece, not a peer reviewed article in the AER. Regardless, I could still cite a vast amount of literature on the connection between capitalist institutions and economic development That said, I still think Stephens makes a plausible argument in light of the Kahn paper I mention as well. The fact is that Haiti remains underdeveloped because it lacks the requisite institutions conducive to growth. No amount of sarcasm about Friedman will change that.
uchicagoboy: You’re right about qualitatively different institutions, but I think you overblow Friedman’s focus on the more/less government dichotomy. It’s really just a characture of free market economics and be the equivilent of saying Keynes or Galbraith simply wanted “more government.” Monetarism itself calls for specific institutional mechanisms and the rest of his program for Chile included recommendations that had qualitative distinctions. Do you really think that Friedman was indifferent to democratic concerns? If so, I don’t think you’ve read much on Friedman.
@Josh – i recognize the WSJ for what it is – they’d paint Jose Marti as a capitalist crusader if it served some specious and self-serving political argument. i also confess that my reading of Milton Friedman is limited to statements and articles attacking policies and initiative i support (like public education).
that said, Mr. Friedman, like most economists, lived in a carefully-constructed simulacrum: a virtual world where fully-informed individuals freely make rational decisions, and “democratic concerns” are those enabling the myriad micro-transactions that ultimately drive the market. the fact that most of us don’t live in this world doesn’t seem to faze them at all.
mrvr, i’m not convinced that “democratic concerns” was on the radar of Freidman or his U.Chi clones in Pinochet’s murderous usurper regime. where were their “democratic concerns” during the wholesale roundup/persecution of dissidents?
besides, i can also recall how educational vouchers, Freidman’s 1955 policy innovation, was unfolded in the wake of the segregationists’ campaign of massive resistance to the SCOTUS rulling striking down Jim Crow. across the south, promoters of private whites-only academies often cited Friedman’s voucher scheme as justification – and to my knowledge, the Nobel Prize winner never publicly denounced this odious connection.
lastly, Haiti’s problems are rooted in longstanding global political and economic relations expressly designed – in Washington and on Wall St. – to maintain Haiti’s subordinate and dependent status in the region.
Ty: I suggest you read chapter 1 of Capitalism and Freedom aptly titled “The Relation Between Economic Freedom and Political Freedom” where he lays out his argument that the former usually leads to the latter. It’s pretty clear, but you would have actually had to read Friedman’s work to know it.
And let me ask you something, would you condemn Paul Farmer for working with undemocratic governments on issues of public health? I’d hope not because Paul Farmer has little ability to turn them into democratic regimes, but he sure as hell help the people through advice on public health. How is Milton Friedman’s advice on curbing inflation (which hurts the poor much more than the rich) any different?
And again, regarding vouchers and segregation, if you had taken the time to read chapter 7 of the same book, he strongly condemns segregation (which was in fact taking place in the public school system of which you’re a proponent). He also started a foundation dedicated to school choice which collects all sorts of statistics on this sort of thing. Even today, your public schools are much more segregated than private schools or other public schools involved in voucher programs.
Instead of attacking Friedman based on faulty information someone gave you, maybe you should try reading him for yourself.
@Josh McCabe – re: “Instead of attacking Friedman based on faulty information someone gave you, maybe you should try reading him for yourself.”
please allow me to clarify what i said earlier; my reading of Friedman has been limited to articles written by him, and statements of his cited by other sources – often other cons. this exposure to Friedman’s work is, admittedly, fairly shallow so i will follow your advice and read Capitalism and Freedom.
however, in Chapt. 7, which is mostly a polemic against race-conscious public policies (like affirmative action), he rests his argument w/ the assertion that discrimination is expensive – and yet … obviously, hiring decisions based solely on rational-thinking would reflect the employer’s desire for the most productive/talented/skilled applicant. and yet, numerous studies of hiring preferences demonstrate that race is a significant negative factor, regardless of the relative qualifications of Black applicants. one study notes that certain employers will hire a White high school drop-out w/a prison record over a Black college grad w/o one. during the screening process, “black” surnames (and one supposes, non-Anglo last names) routinely hit the discard pile.
and while Friedman may have condemned the idea of segregation, market-driven remedy has had 150+ years to work its magic – and guess what, the indices of hyper-segregation in major SMSAs have increased, regardless of biz cycles. economic/social mobility are still fettered by non-rational habits of mind. so much for rationalism as a consistent platform for justice.
lastly, Friedman’s notion of “choice” is founded on the flawed assumption of a situation where all actors have essentially the same access to info and other resources, and that everyone holds the best interests of the child in highest regard. in my experience, none of these conditions is a given in the real world: charter schools regularly cherry-pick applicants, forcing weaker students and under-resourced families out of the mix. and, can anyone reasonably argue that the real “choices” of low-income families have not been seriously constrained in ways tracking their position in the socioeconomic structure? your insistence that “public schools are much more segregated than private schools..” is patently false, by any measure. perhaps you should broaden your reading beyond libertarians, instead of parroting talking points of groups bent on pursuing private interests w/ public funds?
Ty: I’m not going to sit here and defend everything Friedman has ever said. It’s way off topic for a post on Chile. If you’re going to hate on Milton Friedman then you’re going to hate on him. That said, I actually have read those studies. In fact, I’ve even blogged about a few of them here. I’m studying sociology for God’s sake, you can hardly accuse me of only reading libertarian works.