Statists Don’t Get It

In the Wall Street Journal editorial “How Milton Friedman Saved Chile,” Bret Stephens credits Milton Friedman’s collaboration with Augusto Pinochet for saving the lives of thousands of Chileans who otherwise would have perished in the recent earthquake. He argues that the economic policies of Friedman and the Chicago Boys are why Chile had sufficient wealth for quality building construction.

“The poorer the country, the likelier people are to scrimp on rebar, or use poor quality concrete, or lie about compliance.”

That statement is true, but the problem with Stephens’ argument is that he does not look at the other side of history. Most obviously, Pinochet’s policies did not help those who were killed or tortured by his regime. It also has not been seen what kind of wealth could have been created without a parasite like Pinochet ruling the country.

But what kind of responsibility does Friedman bear for what actually happened? Stephens says that Friedman once “wryly noted that he had given communist dictatorships the same advice he gave Pinochet, without raising leftist hackles.”

That might sound good at first – Friedman is just trying to work within the system he has been given to alleviate suffering. But when a man becomes an icon and example, he should be held to a higher standard than this. Top-down economic liberalization in Eastern Europe could have made life better for millions of people – but it probably would have gone by the Chinese example, in which an especially tyrannical regime survives by reorganizing oppression in a way that is profitable for Western capitalists.

Stephens himself alludes to a situation of regime failure with the statement that,

“Pinochet had been mostly indifferent to the Chicago Boys’ advice until the continuing economic crisis forced him to look for some policy alternatives.”

The comfortable parasite attempts to maintain its host.

Thus the inherent problem of working with government: those who seek power will exploit whatever they can to get it. People who worked outside of government channels – the underground printers, the smugglers, and the everyday folks who turned away from government promises – played a huge part in the actual collapse of especially tyrannical regimes in Eastern Europe. The governments were not able to recuperate from crisis and things spun out of their control. If more Eastern Europeans had been exposed to libertarian thought (ideas about maximizing individual liberty, not maximizing the profits of those who can buy freedom) who knows what Eastern Europe would look like today?

Naomi Klein, a major critic of Friedman whom Stephens specifically names for ridicule, responded to the editorial with an article entitled “Chile’s Socialist Rebar.”

The rebar is socialist because,

“Chile’s modern seismic building code, drafted to resist earthquakes, was adopted in 1972. That year is enormously significant because it was one year before Pinochet seized power in a bloody U.S-backed coup.”

It is not certain whether Klein understands that Stephens is arguing building codes mean little if there is not enough wealth to actually meet the standards. However, she does note that economic conditions for most Chileans were better before Pinochet, so the argument could be made from her article that Stephens is factually incorrect.

Unfortunately Klein, like Stephens, believes that state power is beneficial. When “Chileans believed in their state” good things happened. What should be believed about the state is that it is an instrument for the politically ambitious to work with the social and economic powers of their choosing to force their decisions into the lives of other people. With the state, our lives and standards are supposed to be based on the preferences of those who rule us, not by our own values.

Like many commentators, Klein conflates the term “free market” with state privileges for capitalists. It appears that her economic solution is for everyone to become a Keynesian.

An actual free market is the alternative to the state commands that Stephens and Klein look to. If the word “market” makes you feel like you’re going to be sold, then pick a different term and work with its libertarian connotations.

A true free market. It is free exchange among individuals without a layer of coercion creating power differentials. It is the practice of liberty and solidarity that levels power and best secures each individual being equally respected authority over her own life, and no authority over another’s life. It is the yard sale, the peaceable pot trade, the radical union, the gift economy, the alternative currency, the internet trading network, the tunnels under borders, the paper stolen from government presses. It is any way that people organize to consensually meet their needs and satisfy their desires apart from authority or in opposition to authority. It is anarchy, and it is the best hope for the future.