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The Fall of Chile; The Warning for America

Unleash Prosperity Hotline – Weekend Edition
Issue #241
03/12/2021, 03/13/2021, 03/14/2021
1) The Fall of Chile; The Warning for America

Folks, we don’t normally assign reading requirements at the Hotline, but we strongly recommend this story of the sad demise of Chile. And there will be a quiz on Monday!

The quick story: in the 1970s the “Chicago Boys” (led by Milton Friedman and other U Chicago free-market economists) redesigned the Chilean economic system with property rights, a low flat tax, privatization of the Social Security system, and deregulation of industries.

How’d the experiment work?  “Between 1975 and 2015 per capita income in Chile quadrupled to $23,000, the highest rate in Latin America (CNP 2016). As a result, from the early 1980s to 2014 poverty fell from 45 percent to 8 percent (CNP 2016).” 

That, ladies in gentlemen, is a true economic miracle.

The leftists always hated the free-market reforms, disparaged the Chicago boys as “fascists,” and spent decades attacking the policies (with the stooges in the American media echoing their protests) even as Chile was becoming the jewel of South America.

The Marxists invented a narrative of “inequality;” “the rich were getting richer and the poor were getting poorer;” and that capitalism is evil.

The intellectuals infiltrated all of the cultural institutions of Chile: the media, the schools, the universities, the Catholic church, the arts, television stations, the unions, and even the corporate board rooms. They spread their poisonous creed of collectivism to the populace.

Is any of this sounding familiar to our situation today???

In Chile – as in the U.S. – the leftists pulled off a political coup. In 2013, the left won the Chilean presidency, and the ineffective moderate government that took office in 2018 has done nothing to reverse the slide. In October 2020 voters approved the idea of rewriting the Constitution. That process will begin this year and may systematically dismantle Chile’s free-market reforms. Chile is in economic freefall. The poor are getting crushed. The rich are pulling their money out of the country.

They have arrived at “equality.” Nearly everyone is suffering.

THIS chilling tale is what our kids and college students should be learning in school! Fat chance.

2) Good Bye Hong Kong

More evidence that the quest for economic freedom around the world took a U-turn in 2020-21.

For the last 75 years, Hong Kong has ranked as one of the most economically-free places in the world (and became one of the richest). Milton Friedman in his classic “Free to Choose” pointed to this tiny island’s wealth and prosperity – a crowded city-state with no natural resources – as irrefutable evidence of the supremacy of free markets.

This year, for the first time, our friends at the Heritage Foundation have combined Hong Kong with China in their indispensable world Economic Freedom Index. According to the Heritage report: “we measure economic freedom only in independent countries where governments exercise sovereign control of economic policies.” They conclude that due to the hostile take-over moves by the communists in Beijing, Hong Kong no longer exercises that sovereign control.

This is a controversial decision by Heritage and has drawn some blowback. Hong Kong authorities say that the “one country, two systems” model is still intact and that freedom is “in our DNA.”

In last year’s index, Hong Kong ranked 1 and China 124 on economic freedom. Hong Kong’s GDP per capita ($48,000) is four times China’s ($11,000).  In a sane world, Hong Kong would be taking over China.  

The fact that the opposite is happening is depressing evidence that tyranny is on the march. 

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