Shock treatment

Greg Grandin

Milton Friedman had no idea that his six-day trip to Chile in March 1975 would generate so much controversy.

He was invited to Santiago by a group of Chilean economists who over the previous decades had been educated at the University of Chicago, in a program set up by Friedman's colleague, Arnold Harberger. Two years after the overthrow of Allende, with the dictatorship unable to get inflation under control, the "Chicago Boys" began to gain real influence in General Augusto Pinochet's military government.

They recommended the application of what Friedman had already taken to call "shock treatment" or a "shock program" -­ immediately halting the printing of money to finance the budget deficit, cutting state spending 20-25 percent, laying off tens of thousands of government workers, ending wage and price controls, privatising state industries, and deregulating capital markets. "Complete free trade," Friedman advised.

Friedman and Harberger were flown down to "help to sell" the plan to the military junta, which despite its zealous defense of the abstraction of free enterprise was partial to corporatism and the maintenance of a large state sector.

Friedman gave a series of lectures and met with Pinochet for 45 minutes, where the general "indicated very little indeed about his own or the government's feeling." Although he noted that the dictator, responsible for the torture of tens of thousands of Chileans, seemed "sympathetically attracted to the idea of a shock treatment."

"He reveled in the controversy and the frisson of being ushered into speaking engagements via kitchens and back doors to avoid demonstrators."

Friedman returned home to a firestorm of protest, aggravated by his celebrity as a Newsweek columnist and ongoing revelations about Washington's and corporate America's involvement in the overthrow of Allende.

Not only had Nixon, the CIA, and ITT, along with other companies, plotted to destabilize Allende's "democratic road to socialism," but now a renowned University of Chicago economist, whose promotion of the wonders of the free market was heavily subsidized by corporations such as Bechtel, Pepsico, Getty, Pfizer, General Motors, W R Grace, and Firestone, was advising the dictator who overthrew him on how to complete the counter-revolution ­ at the cost of skyrocketing unemployment among Chile's poor.

The New York Times identified Friedman as the "guiding light of the junta's economic policy," while columnist Anthony Lewis asked: if "pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?"

At his university, the Spartacus Youth League pledged to "drive Friedman off campus through protest and exposure," while the student government, replicating their own version of the Church Commission hearings that was just then investigating US crimes in Chile, convened a "Commission of Inquiry on the Friedman/Harberger Issue."

Everywhere in the press the name Friedman was paired with the adjectives "draconian" and "shock," with small but persistent protests dogging the professor at many of his public appearances.

In letters to various editors and detractors, Friedman downplayed the extent of his involvement in Chile, fingering Harberger as more directly involved in the mentoring of Chilean economists. While defensive, he nevertheless reveled in the controversy and the frisson of being ushered into speaking engagements via kitchens and back doors to avoid demonstrators.

He enjoyed exposing the double standard of "liberal McCarthyism," pointing out that he was never criticized for giving similar advice to Red China, the Soviet Union or Yugoslavia. In recounting an episode when a man was dragged out of the Nobel award ceremony after shouting "down with capitalism, freedom for Chile," Friedman delighted in noting that the protest backfired, resulting in his receiving "twice as long an ovation" than any other laureate.

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