Tuesday, March 02, 2010
How Milton Friedman Saved Chile
1. MARCH 1, 2010, 9:39 P.M. ET
How Milton Friedman Saved Chile
Milton Friedman gave Chileans the intellectual wherewithal first to survive the quake, and now to build their lives anew.
By BRET STEPHENS
Milton Friedman has been dead for more than three years. But his spirit was surely hovering protectively over Chile in the early morning hours of Saturday. Thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse.
Earthquake magnitudes are measured on a logarithmic scale. The earthquake that hit Northridge in 1994 measured 6.7 on the Richter scale. But its seismic-energy yield was only half that of the 7.0 quake that hit Haiti in January, which was the equivalent of 2,000 Hiroshima-sized bombs exploding all at once.
By contrast, Saturday's earthquake in Chile measured 8.8. That's nearly 500 times more powerful than Haiti's, or about one million Hiroshimas. Yet Chile's reported death toll711 as of this writing was a tiny fraction of the 230,000 believed to have perished in Haiti.
Chile's presidential palace survived the quake intact. Haiti's did not.
It's not by chance that Chileans were living in houses of brick and Haitians in houses of straw when the wolf arrived to try to blow them down. In 1973, the year the proto-Chavista government of Salvador Allende was overthrown by Gen. Augusto Pinochet, Chile was an economic shambles. Inflation topped out at an annual rate of 1000%, foreign-currency reserves were totally depleted, and per capita GDP was roughly that of Peru and well below Argentina's.
What Chile did have was intellectual capital, thanks to an exchange program between its Catholic University and the economics department of the University of Chicago, then Friedman's academic home. Even before the 1973 coup, several of Chile's "Chicago Boys" had drafted a set of policy proposals which amounted to an off-the-shelf recipe for economic liberalization: sharp reductions to government spending and the money supply; privatization of state-owned companies; the elimination of obstacles to free enterprise and foreign investment, and so on.
In left-wing mythology - notably Naomi Klein's tedious 2007 screed "The Shock Doctrine "the Chicago Boys weren't just strange bedfellows to Pinochet's dictatorship. They were complicit in its crimes. "If the pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?" wrote New York Times columnist Anthony Lewis in October 1975. In fact, Pinochet had been mostly indifferent to the Chicago Boys' advice until the continuing economic crisis forced him to look for some policy alternatives. In March 1975, he had a 45-minute meeting with Friedman and asked him to write a letter proposing some remedies. Friedman responded a month later with an eight-point proposal that largely mirrored the themes of the Chicago Boys.
For his trouble, Friedman would spend the rest of his life being defamed as an accomplice to evil: at his Nobel Prize ceremony the following year, he was met by protests and hecklers. Friedman himself couldn't decide whether to be amused or annoyed by the obloquies; he later wryly noted that he had given communist dictatorships the same advice he gave Pinochet, without raising leftist hackles.
As for Chile, Pinochet appointed a succession of Chicago Boys to senior economic posts. By 1990, the year he ceded power, per capita GDP had risen by 40% (in 2005 dollars) even as Peru and Argentina stagnated. Pinochet's democratic successors all of them nominally left-of-center only deepened the liberalization drive. Result: Chileans have become South America's richest people. They have the continent's lowest level of corruption, the lowest infant-mortality rate, and the lowest number of people living below the poverty line.
Chile also has some of the world's strictest building codes. That makes sense for a country that straddles two massive tectonic plates. But having codes is one thing, enforcing them is another. The quality and consistency of enforcement is typically correlated to the wealth of nations. The poorer the country, the likelier people are to scrimp on rebar, or use poor quality concrete, or lie about compliance. In the Sichuan earthquake of 2008, thousands of children were buried under schools also built according to code.
In "The Shock Doctrine," Ms. Klein titles one of her sub-chapters "The Myth of the Chilean Miracle." In her reading, the only thing Friedman and the Chicago Boys accomplished was to "hoover wealth up to the top and shock much of the middle class out of existence." Actual Chileans of all classes living in the aftermath of an actual shock may take a different view of Friedman, who helped give them the wherewithal first to survive the quake, and now to build their lives anew.
2. March 2, 2010 2:38 PM
by Alan M. Dershowitz
An Intelligence Agency Misused Passports: OMG!
The complaints leveled against Israel by European countries and Australia, regarding the alleged misuse of passports by the Mossad in the assassination of Mahmoud al-Mabhouh, ring hollow and smack of blatant hypocrisy. Whoever did kill Mahmoud al-Mabhouh—whether it was the Israeli Mossad or someone else—clearly did have their agents use stolen or forged passports. Big deal.
Every good intelligence agency uses stolen and forged passports. The British have been especially adept at this means of spycraft. No country that uses fake passports in their intelligence operations has the moral authority to complain about the alleged misuse of passports in this case. The only ones that have a legitimate grievance are those individuals whose passports may have been misused without their knowledge.
I guess it's the job of foreign ministries to complain publicly when other nations do what they themselves do secretly. Hypocrisy is, after all, the homage that vice pays to virtue. I'm reminded of the famous scene in Casablanca, when officer Renault declares, "I'm shocked, shocked to find that gambling is going on in here!" A croupier then approaches Renault, and hands him a roll of currency: "Your winnings, sir."
The hypocrisy in this case seems even more blatant than usual. Is it because Israel is the alleged offender, and the world has gotten accustomed to singling out Israel for double standard condemnation?
Shortly after the terrorist attacks in Bali, which killed a large number of Australian tourists, I had the opportunity to meet with the Australian Prime Minister. I was writing a book at the time on preemption, and I asked him whether he would have authorized a preemptive attack on the terrorist who killed Australian citizens, if such an attack would have saved their lives. His response was that Australia would have done anything it could, to prevent these terrorist attacks. Anything, I guess, except misusing passports? Is there anybody who believes that Australia would not have used forged or stolen passports to prevent the Bali massacres? If Great Britain could have stopped the London subway attack by misusing passports, would M6 have allowed the terrorism to go forward in the name of preserving passport integrity? Of course not. The same is true of Spain with regard to the Madrid bombing and to every other country in the world that seeks to prevent terrorism. Well, if the Mossad did in fact kill al-Mabhouh, they too did it to prevent the killing of their innocent civilians.
The Israelis are always accused by their enemies, and sometimes even by their friends, of taking "disproportionate" action to stop terrorists. But what could be more proportionate than a carefully planned and specifically targeted attack on an admitted terrorist who boasted of being an active combatant? Whoops! I guess I forgot about those darn passports. That must be the disproportionate action complained about. Saving innocent lives, on the one hand—misusing passports on the other. I guess the right moral resolution, according to some foreign ministries, is to let innocent victims die—at least as long as its only Israeli victims.
It's interesting, and disturbing, that more criticism is being directed against Israel for allegedly using stolen passports than for allegedly killing a terrorist. That's because no Western country wants to appear to be sympathetic to a terrorist. The "victims" of passport fraud are innocent civilians, but the injury they have suffered pales in comparison to the injuries—deaths—prevented by the well-deserved death of Mahmoud al-Mabhouh.
If the deaths of a small number of innocent civilians is deemed "proportional" to the killing of a terrorist combatant, than surely the discomfort of a small number of innocent victims of passport fraud is proportional.
The high dudgeon expressed by foreign ministries over stolen passports is worse than hypocritical. It undercuts the war against terrorism.
There ought to be concern, among Western democracies, about how easy it is to use forged or stolen passports. Dubai should be conducting an investigation, but the focus should be on how simple it was for those carrying these phony passports to get into their country. The misuse of passports is, after all, a primary tool used by terrorists to smuggle themselves into Western countries, from which they can engage in worldwide terrorism. There are thousands of forged and fraudulent British passports circulating around the world today. Many are in the hands of terrorists. That should be the focus of any investigation, not the occasional and controlled misuse of passports by Western intelligence agencies to combat terrorism.
Whoever sneaked into Dubai using fake passports may have done that country a service in warning them to tighten up their passport procedures. Next time it may be a terrorist who tries to enter the country. Wait! Isn't that exactly what happened when al-Mabhouh walked through security using a real passport with his real name? I guess in Dubai you don't have to use a fake passport if you're a terrorist, but you do if you're trying to stop terrorists—at least if the terrorism is directed only against Israel. I guess Dubai is less concerned about letting terrorists into their country with real passports than in letting those who would stop terrorism into their country with fake passports. It's a topsy turvy world out there.
3. Why Palestinians Riot Over Jewish Heritage Sites
4. Why Leftist professors at Ben Gurion University Riot over Jewish Heritage Sites:
Tuesday, March 2, 2010
Will Ben Gurion University Professor David Newman (politics) have the courage of his convictions and call upon Israel to turn the Western Wall over to the Palestinian terrorists?
In the Jerusalem Post this week the leftist Newman expresses his opposition to Israel Preserving the Tomb of the Patriarchs and other Shrines as its Heritage:
'Obviously, places have to be treated with respect and preserved,
especially if they have particular mythical meaning for specific groups, or
if people have given up their lives at these sites as part of the national
struggle. But if they are being promoted as a way to strengthen the
political claims of one side while ignoring the places important to the
other, or as a means of making a political statement concerning the control
of land, then it is highly questionable whether we are in fact sanctifying
or desecrating these places. If, through our choice of sites, we only throw
additional fuel on the flames of conflict, then we have achieved exactly
the opposite of what the government set out to do.'
He lists the Tomb of the Patriarchs in Hebron and Rachel's Tomb near Bethlehem as places Israel has no business being.
We note how he nowhere in his article calls on the Muslim world to relinquish control of the Dome of the Rock in the name of relaxing tensions and creating a more peaceful world.
Meanwhile, Tel Aviv University's Rachel Giora heading group calling on the rock group "Pixies" to boycott Israel.
5. The Reut Report: http://www.jpost.com/Opinion/Op-EdContributors/Article.aspx?id=170037