Chicago Boys

The Chicago Boys (c. 1970s) were a group of young Chilean economists most of whom trained at the University of Chicago under Milton Friedman and Arnold Harberger, or at its affiliate in the economics department at the Catholic University of Chile. The training was the result of a "Chile Project" organised in the 1950s by the US State Department and funded by the Ford Foundation, which aimed at influencing Chilean economic thinking. The project was uneventful until the early 1970s. The Chicago Boys' ideas remaining on the fringes of Chilean economic and political thought, even after a 500-page plan based on the Chicago School's ideas called the Ladrillo -- "The Brick" -- was presented as part of Jorge Alessandri's call for alternative economic platforms for his 1970 presidential campaign. Alessandri rejected Ladrillo, but it was revisited after the 1973 Chilean coup d'état on 11 September 1973 brought Augusto Pinochet to power, and became the basis of the new regime's economic policy. Eight of the 10 principal authors of "The Brick" were Chicago Boys.

Juan Gabriel Valdés, Chile's foreign minister in the 1990s, described the Chile Project as "a striking example of an organized transfer of ideology from the United States to a country within its direct sphere of influence... the education of these Chileans derived from a specific project designed in the 1950s to influence the development of Chilean economic thinking." He emphasised that "they introduced into Chilean society ideas that were completely new, concepts entirely absent from the 'ideas market'".^[1]

Chile Project

In 1953 Albion Patterson, director in Chile of the US International Cooperation Administration (the organization which would become USAID), met with Theodore Schultz, chair of the University of Chicago economics department, and came up with a plan to counter the developmentalism of which Chile was a leading example. "What we need to do is change the formation of the men, to influence the education, which is very bad", Patterson had previously told a colleague.^[2] The plan was simple - to send Chileans to train at the University of Chicago's economics department. Patterson initially approached the University of Chile, the country's leading university, to set up an exchange program, but was turned down after the dean demanded input into who in the US would be training his students.^[3] Unwilling to permit this, Patterson went instead to the much more conservative Universidad Católica, which had no economics department at all, and accepted the program.^[3] In 1956 that School signed a three-year program of intensive collaboration with the Economics Faculty of the University of Chicago (the "Chile Project").

The program was funded by the Ford Foundation and saw the creation of the Center for Latin American Studies at the University of Chicago, at which 100 Chileans pursued advanced degrees from 1957 to 1970. In 1965 the programme was opened to other Latin American countries, with a presence particularly from Argentina, Brazil and Mexico. The programme saw 40-50 graduate students in the department at any one time, around a third of the total - and compared to just 4 or 5 Latin American students in other comparable programmes.^[4] An internal review from the Ford Foundation found that "although the quality and impact of this endeavour cannot be denied, its ideological narrowness constituted a serious deficiency". It nonetheless continued to fund the program.^[5]

A number of the program's graduates took up posts in the Catholic University's economics department; by 1963 12 of 13 faculty members were Chile Project graduates, "rapidly turning it into their own little Chicago School in the middle of Santiago".^[1] Program graduates - whether of the Chicago School itself or of the Santiago offshoot - became known as the "Chicago Boys".^[1]

Only some of them went later for postgraduate studies at the University of Chicago, where they enrolled in Arnold Harberger's Latin American Finance Workshop and Milton Friedman's Money and Banking Workshop. The whole group was heavily influenced by the Chicago School of Economics, and especially by the writings and public policy proposals of Milton Friedman. Their proposals were not central to Chilean political debate until 1973, where the debate focused on how best to take developmentalism forward and all three major political parties in the 1970 elections favoured nationalization of the copper mines.^[6] The first reforms were implemented in three rounds - 1974-1983, 1985, and 1990.

Key Chicago Boys

Chile

Some key Chilean Chicago Boys were:

• Jorge Cauas (Minister of Finance, 1975–1977)
• Sergio de Castro (Minister of Finance, 1977–1982)
• Pablo Barahona (Minister of Economy, 1976–1979)
• José Piñera (Minister of Labor and Pensions, 1978–1980, Minister of Mining, 1980–1981) (although his PhD is from Harvard)
• Hernán Büchi (Minister of Finance 1985 - 1989) (although he did his MBA in Columbia University)
• Alvaro Bardón (Minister of Economy, 1982–1983)
• Juan Carlos Méndez (Budget Director, 1975–1981)
• Emilio Sanfuentes (Economic advisor to Central Bank)
• Sergio de la Cuadra (Minister of Finance, 1982–1983)
• Miguel Kast (Minister of Planning, 1978–1980)
• Martín Costabal (Budget Director, 1987–1989)
• Juan Ariztía Matte (Private Pension System Superintendent 1980-1990)
• Maria Teresa Infante (Minister of Labor 1988-1990)
• Joaquín Lavín (Minister of Education, 2010–2011, Minister of Planning 2011-present)
• Cristián Larroulet (Minister of Segpres, 2010–present)
• Juan Andrés Fontaine (Minister of Economy, 2010–2011)

Elsewhere in Latin America

Although the largest and most influential group of so-called Chicago Boys was Chilean in origin, there were many Latin American graduates from the University of Chicago around the same period. These economists continued to shape the economies of their respective countries, and include people like Mexico's Francisco Gil Díaz, Fernando Sanchez Ugarte, Carlos Isoard y Viesca, Argentina's Adolfo Diz, Roque Benjamín Fernández, Carlos Alfredo Rodríguez, Fernando de Santibañez and Ricardo Lopez Murphy as well as others in Brazil, Peru, Uruguay, Costa Rica, and Panama.

Other military regimes of the seventies, such as the Ernesto Geisel presidency in Brazil, followed a radically different economic orientation, based upon the idea of overcoming underdevelopment through government spending and centralized planning.

See also

• Miracle of Chile
• Berkeley Mafia
• Jeffrey Sachs
• John Perkins
• Augusto Pinochet
• Universidad del Desarrollo
• The Shock Doctrine

References

1. ^ ^{a b c} Klein, p62
2. ^ Klein, Naomi (2007), The Shock Doctrine: The Rise of Disaster Capitalism, London: Allen Lane, p59
3. ^ ^{a b} Klein, p60
4. ^ Klein, p60-61
5. ^ Klein, p61
6. ^ Klein, p63

Further reading

• Valdés, Juan Gabriel (1995), Pinochet's Economists: The Chicago School of Economics in Chile, Cambridge, Cambridge University Press. ISBN 0-521-45146-9
• Constable, Pamela, and Arturo Valenzuela (1991), A Nation Of Enemies: Chile Under Pinochet, New York, W.W. Norton. ISBN 0-393-30985-I (paperback)
• Fontaine Aldunate, Arturo (1988), "Los Economistas y el Presidente Pinochet", Zig Zag

External links

• Video clip - Chicago Boys and Pinochet, on PBS
• Is Chile a Neoliberal Success? analysis of Chicago Boys' policies in Dollars & Sense magazine
• Audio clip - 'Chicago Boys' Leave Lasting Legacy on Chile's Economy, National Public Radio
• How the Chicago Boys Wrecked the Economy An Interview with Michael Hudson by Mike Whitney
• The Chicago Conspiracy - A film about the influence of the Chicago Boys and radical currents in Chile against their legacy