La Rouge Beret
Donor
In OTL Milton Friedman and the 'Chicago Boys' were credited with Chilean economic miracle. What if Argentina implemented the market reforms from the Chicago school?
WI Milton Friedman goes to Argentina
- Thread starter La Rouge Beret
- Start date
Orville_third
Banned
Perhaps Reagan might not have backed the Brits over the Falklands...
Argentina wouldn't be doing as well as today, either...
Argentina wouldn't be doing as well as today, either...
What happened in Chile is severely open to interpretation. Many prominent economists (e.g. Amartya Sen) argued that Friedman-style liberal economics had utterly failed in Chile, pointing to e.g. the lack of net economic growth during the neoliberal period and the massive surge in poverty during the same time.
Yes. According to the Penguin History of Latin America, the Chicago Boys' policies along with rising interest rates ended up causing a massive economic crash from 1982 to 1984. It also gave Chile a $17 billion foreign debt and the interest payments were about half of the export revenues! When Hernán Büchi became the finance minister, he moved away from the Friedman-esque policies somewhat, resulting in the "true" Chilean miracle.
Source: Penguin History of Latin America, 506-508.
They tried that in the late 1970s/early 1980s under the last dictatorship. The economy minister at the time was José Martínez de Hoz - with a twist in that it adopted a form of the tablita (basically a variation of the crawling peg). Needless to say, it really didn't do too well, where the economy crashed and the peso became wicked overvalued (leading to it being called "sweet money") to the point where when the government tried fiddling around with the mortgages it basically backfired - and eventually the tablita was broken - not to mention all the corruption and backroom deals going on. In that case, one could assume that the Falklands War was a way of covering up the mistakes in the economy because it was so severely mismanaged.
Does EVERY topic concerning Argentina go back to those bloody islands?
You said the peso was "overvalued". Was it tied to the dollar like it was under Menem, or was it some different kind of financial weirdness?
Does EVERY topic concerning Argentina go back to those bloody islands?
Not every topic, fortunately.
During the last dictatorship, the Argentine peso used a crawling peg against the dollar. However, they went one step further on the crawling peg via a variation popularly known as the tablita - basically, a series of controlled depreciations which were announced via a monthly timetable by the government, which would show the future value of the peso against the dollar. The results were interesting.
La Rouge Beret
Donor
Fascinating responses thus far.
For me, what I am trying to establish is what Argentina would look like, if it possessed good governance and sound fiscal policies from the 1960's onwards.
For me, what I am trying to establish is what Argentina would look like, if it possessed good governance and sound fiscal policies from the 1960's onwards.
Then your barking up the wrong tree with the Chicago boys and Friedman!
Chile didn't really do that well under Pinochet until it abandoned Friemanite policies...
In that case, I'd suggest looking up the Freiburg School, ordoliberalism, and the social market economy. (How good is your German?
) Although at first glance they would look similar to Friedmanite policies, in reality the free market is structured based on the "rules of the game". It would make an interesting alternative to structuralist economics, could help lower the inflation of the peso, and potentially make economic Peronism viable as long as the Dutch disease caused by its comparative advantage in agricultural products can be mitigated.
As I recall Friedman and the Chicago Boys did get some of their policies implemented during the Dirty War period of the late 70s and early 80s but those were part of why the Argentine economy was imploding so badly the dictatorship decided war with the British over the Falklands and their valuable flocks of penguins was a good idea.
The fact is Friedmanomics has a track record that is in many ways worse than Soviet command economics as they mostly succeeded in getting the same results faster. Under the advice of the Chicago Boys per capita income in Chile plummeted, poverty soared, and the manufacturing sector which had been steadily expanding under ISI policies collapsed. The only major sector of the Chilean economy to survive was copper mining and that was in part because it was one of the only major industries untouched by Friedmanite policies; in fact it remained a state owned and controlled industry throughout Pinochet's rule.
The fact is Friedmanomics has a track record that is in many ways worse than Soviet command economics as they mostly succeeded in getting the same results faster. Under the advice of the Chicago Boys per capita income in Chile plummeted, poverty soared, and the manufacturing sector which had been steadily expanding under ISI policies collapsed. The only major sector of the Chilean economy to survive was copper mining and that was in part because it was one of the only major industries untouched by Friedmanite policies; in fact it remained a state owned and controlled industry throughout Pinochet's rule.
Yep - along with the shattered tablita which in the long run actually made inflation worse, despite all appearances.
Yeah, all the contradictions in the Chilean miracle are very interesting to study. Of course, if one looks carefully enough there are a few gems which would be worth salvaging (including the eventual reduction of inflation), but apart from that?
La Rouge Beret
Donor
In that case, I'd suggest looking up the Freiburg School, ordoliberalism, and the social market economy. (How good is your German?
Smashing... I will give it a go.
Alternatively something I have been mulling over is the introduction of the New Deal economists that went to West Germany ITL. New Dealism + Peronism seems like a compelling mix at first glance.
At first glance - in actuality, according to the theory it's more free market-oriented than dirigisme, but more balanced IMO.