miracle of chile

The "Miracle of Chile" is a phrase coined by Milton Friedman to describe the economic reform of Chile under Augusto Pinochet between 1973 and 1983. Pinochet, under the advice of Friedman and other US free market economists, launched an era of economic deregulation and privatization. To accomplish his objectives, he abolished the minimum wage, rescinded trade union rights, privatized the pension system, state industries, and banks, and abolished taxes on wealth and profits. Supporters of Friedman's view argue that subsequent events in Chile have vindicated his theories; because Chile's economy is noticeably stronger and more advanced than those of other Latin American nations, and that the development of a large middle class eventually forced the military junta under Pinochet to relinquish power to a democratic government. Critics use the term miracle of Chile in a sarcastic fashion, "Cinderella's pumpkin did not really turn into a coach. The Miracle of Chile is just another fairy tale." (1 -- p.72). They point out that the "miracle" began with a coup that overthrew the democratically elected Chilean president Salvador Allende (1971-1973), starting a dictatorship that would be responsible for extensive human rights crimes, including the political murders of at least three thousand Chileans. Critics also note that the unemployment rate increased from 4.3% in 1973, to 22% in 1983. Meanwhile, real wages declined by 40%. Pinochet promised to "make Chile not a nation of proletarians, but a nation of entrepreneurs". The experience of Chile in the 1970s and 1980s, and more particularly the model of authoritarian political control combined with neo-liberal economic policies, has influenced the policies of the Communist Party of China and been invoked as a model by economic reformers in other countries.