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Chile Gets A Chance To Revive Its Economic Miracle

Maybe we need to learn the economic lessons from Chile.

The chart below shows that when Chile adopted the Milton Friedman economic model of free enterprise and low taxes back in the 1970s, the Chilean people saw the fastest rise in output and living standards in all of South America.  The economic miracle was built on a foundation of  property rights, a low flat tax, privatization of the Social Security system, and the deregulation of key industries.

Between 1975 and 2015 per capita income in Chile quadrupled to $23,000, the highest rate in Latin America. As a result, from the early 1980s to today, poverty has fallen from 45 percent to 8 percent.

But over time, left-wingers took back control of the government by claiming they would combat “inequality,” and they reversed the reforms.  The economy faltered. Making matters worse, in October 2020 voters approved the idea of rewriting the Constitution in order to dismantle Chile’s free-market policies.

But Chile may be on the comeback.  In the presidential election, Conservative José Antonio Kast, the brother of one of the architects of the reforms, overtook left-wing candidate Gabriel Boric in Sunday’s voting and is on track to win in the decisive second round next month.  Overall, candidates of the right won 53% of the vote.

“This is the first time I will vote for a right-wing candidate. I consider myself a leftist, but today I am 100% sure I will go for José Antonio Kast,” said Rodrigo Álvarez, a 48-old sociologist and public administrator.  Most Chileans evidently agree with him.

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