“I thought I knew Chile well, I had friends and acquaintances on the left and the right. Yet nothing had prepared me for the metamorphosis that the country went through in September 1973. People were absolutely silent, as though they had been struck dumb, cowed as much by a sense of failure as by the prevailing atmosphere of fear and repression. I travelled up and down the country, to find that there was in fact no resistance to speak of, certainly no civil war. Most people were exhausted by the previous three years of daily political struggle, and simply surrendered to the new regime. The first crimes of Pinochet's terror squads were committed against those who had given themselves up voluntarily. For more than a decade, they ruled Chile as though it was an occupied country.” – Richard Gott, New Statesman

In the Keynsian 60s, the think tank honchos turned to Sweden when they wanted to find a model of the welfare state. In the 00s, we imagine that the Bush gang are looking to Chile, circa 74. The commander in chief, significantly, is going to visit Chile soon – his first second term trip abroad. So much of what Pinochet did – the impoverishment of the working class, the stripping of elementary rights from unions, the privatization of every possible service – which led, in 84, to a program of nationalization that dwarfed Allende, as the IMF made it clear that the state would be punished for the perilous debts amassed by these same private services – and the use of the money in pension plans both private and public to float the whole enterprise must look like the future from the Bush perspective. A perspective of an ownership society, in which the top 5 percent of the owners are able to perpetuate their advantages over the bottom 95 percent by institutionalizing it, while deluding themselves with the image of a "dynamic" free market economy. It is an answer to the Schumpeterian nightmare at the base of every rightwing gesture -- that the liberal culture that emerges from liberal economics will subvert that very economic system.

It took the majority of Chile’s population up to the nineties to recover from Pinochet’s “economic miracle.” There’s a nice account of this in a book we were reading on the plane up to Albany last week – The Blood Bankers. James S. Henry, the author, a former analyst for McKinsey, concentrates on the amount of money that flowed from foreign banks and international agencies that kowtow to foreign banks into the hands of the worst and the most murderous in Latin America from the 70s to the 90s. We will probably do a post on his excellent account of the rip-off of Venezuala by its elite – an edifying tale that has not even been touched in American accounts of the “pro-democracy protests” against Chavez. Those accounts, of course, made the recent vote of confidence in Chavez incomprehensible in the usual places – the Economist’s Latin American desk, the New York Times, etc. In the case of Chile, the Chicago boys did pull off a real miracle – they created the greatest depression in Chile’s history in 1983, and then turned the slow ascent from the depths into a study in triumph. That ascent, not coincidentally, deepened the abyss between the owners and the producers. Inequality wasn’t just a side effect of Pinochet’s program – it was an intended consequence.

We imagine that kind of thing is what is behind the indifference with which Bush has dealt with inflation. Inflation, after all, will only wipe out the indebted class – and as the Bush people know, the members of that class can be satisfied merely by making sure that Janet Jackson is forbidden from showing her tits on tv ever again. And they always have their credit cards.

But there is another aspect of Pinochet’s program that has its counterpart in the Bush culture – making their self-created failures baselines to judge their ‘successes.” Failure, such as the failure to take seriously threats in 2001, are ascribed, ridiculously, to the malign after effects of some Clinton voodoo – so that Bush’s supporters seriously advance the proposition that the lack of another attack on the country is a sign of Bush’s anti-terrorist success. If an attack comes and it kills less than 3000 people, that will be taken as another triumph. In the era of the remedial president, the standards have to be suitably altered. In the same way, the rotten economic record is pumped up anytime some favorable monthly statistic comes down the pike – its favorableness depending on the comparison with some past failure.