When is a murderous dictatorship not so bad?
A number of pundits seem eager to ask this question as once inspiring popular uprisings, from Egypt to Syria to Ukraine, start looking less and less likely to have happy, democratic endings. In The New York Times last month, columnist Roger Cohen raised the question about Egypt, proposing that, in the long run, a little iron fisted rule is something we—or, rather, Egyptians—could learn to appreciate.
Cohen’s column wasn’t filed from Cairo or Kiev, though. It was filed from the symbolic hometown of fans of the brutal-modernizer genre: Santiago.
Back in Chile for the first time in many years, I find Santiago doing its best to be like other cities: the global wrap, the global muffin, the global high-rise, the global Irish Pub, global sushi, global malls, global brands, global coffee shops and the global ATM.
How did this happen? You can thank dictator Augusto Pinochet, who ruled the country from 1973 to 1990.
Make no mistake, Cohen thinks Pinochet was a nasty guy: “Nothing can excuse what Pinochet did. He murdered the innocent.” And yet…
His success in transforming the Chilean economy (I recall interviewing his youthful “Chicago Boys” and being struck by the intensity of their drive to privatize and modernize) provided the basis for export growth, free trade, an independent central bank and a limited state sector — achievements a democratic Chile has been able to build on to become the most prosperous country in the region.
Cohen isn’t alone in this line of thinking. “Iraq needs a Pinochet,” declared Jonah Goldberg in the Los Angeles Times. So does Egypt, according to Charles Krauthammer and the editorial page of The Wall Street Journal.
The most appropriate gut reaction to this may be moral revulsion—3,000 people killed or disappeared so that you can enjoy your global sushi at the mall? But it’s also worth asking whether story is even true. Was Pinochet’s dictatorship really a time of prosperity, growth and openness against an unfortunate backdrop of torture, terror and repression? Is the healthy OECD democracy we see today a result to his wise if brutal stewardship?
In fact, no. The “economic miracle” Milton Friedman ascribed to Pinochet is one of the great false narratives of modern economic history. The miracle he oversaw was really just a series of boom-bust cycles: two periods of rapid growth bookended by two deep recessions: the first precipitated by a “shock treatment” of monetary contraction, privatization and deregulation authored by his University of Chicago-trained cabinet ministers in 1975; the second, a catastrophic debt crisis in 1982. In the immediate aftermath of the free market reforms in the mid 70s, Chile had the second lowest growth rate in Latin America: Bankruptcies were rampant, national output fell 15%, unemployment surpassed 20%, and salaries fell 35% below 1970 levels1. Not to mention the corruption, from the fire sale of state properties to politically connected investors, to Pinochet’s personal embezzlement of millions later found in secret bank accounts in Washington, Miami and elsewhere.
Average per capita GDP growth over the entire course of the dictatorship was less than 2%, significantly lower than the four Christian Democrat and Socialist governments that succeeded him. The poverty rate, hovering at 40% by the time Pinochet left office, was cut in half within a decade with an upsurge in social welfare spending, and stands at 14% today. The numbers are clear: the true Chilean economic miracle occurred after Pinochet, under democratic, leftist governments.
Whatever policies Pinochet’s civilian successors inherited from him weren’t from the free market shock period but from the post-debt crisis cleanup, a departure from orthodoxy that began with kicking out the Chicago Boys, expanding public payrolls, reinstating the minimum wage, and nationalizing the banks. Some they were stuck with, like Chile’s privatized social security system, once the shining example to the world championed by the World Bank, until it wasn’t. By 2008, the government found it in in drastic need of an overhaul, citing low rates of coverage, high administrative fees eating up to 33 cents of every dollar spent, and low average benefits necessitating government subsidies for retirees who would otherwise live out their last days in poverty.
Then there’s the glaring inconsistency of Codelco, Chile’s massive national mining company and the one public enterprise Pinochet did not privatize, which was also Chile’s largest by far. The company was, in fact, created under Pinochet to manage holdings including mines that had been expropriated from U.S. mining companies by the Socialist government Pinochet had overthrown. He never sold it off because, by law, 10% of all state mining profits went directly into the military’s budget. Copper makes up half of Chile’s exports, and most of that is from Codelco. So that export-led growth part of the story was largely on the back of an enormous (and enormously profitable) state-run business.
“Yet,” says Cohen, “Pinochet’s legacy is still controversial, battled over between left and right.” Except that it’s not. That may have been so 30 years ago, but today Chileans pretty much universally reject the man and all that he stood for. That goes for the Chilean right as well: Sebastian Piñera, current President Michelle Bachelet’s successor/predecessor and the first elected right-wing president since the return to democracy, bragged that he’d voted against Pinochet in the referendum that ousted him from power (Piñera also ran on a platform that borrowed heavily from the left, including promising to expand Bachelet’s network of state-funded daycare centers). A poll conducted on the 40th anniversary of his 1973 coup found just 9% of Chileans think Pinochet’s rein was “good.”
Whatever controversy about Pinochet that persists today mostly exists on the editorial pages of U.S. newspapers. So before pundits take up the battle on behalf of others in need of a benevolent dictator, they might look elsewhere for role models. Don’t forget, Assad was a modernizer as well.