And substitute capitalism too.
Discussion
Well, capitalism worked in Chile (at the time it was called the Chilean Miracle), until the socialists arrived (starting with Ricardo Lagos) and began with the idea of redistributing the wealth that had been created in previous years. Now, after years of socialism, we are stagnant like the rest of Latin America.
What was different during the Chilean Miracle?
Sergio de Castro implemented ideas from the Chicago school (such as those of Milton Friedman), and HernΓ‘n Buchi then perfected what Sergio had built.
Some people believe that Pinochet was the liberator of the economy, but the truth is that, as a military man, he had no idea about economic schools, and the 10% economic growth when Chile returned to democracy had nothing to do with him, but rather with the βChicago boys.β
But what actually changed? Did you go on a hard money standard. Or you had a central bank but they stole less?
The ones I remember:
Previously, the state owned a large percentage of companies, and positions depended on political affiliation rather than efficiency. Change: Privatization.
There were strict import controls to βstrengthenβ the domestic economy, but this killed competition and stunted development. Change: The economy was opened up.
There were price controls, which increased shortages and the black market, and ration cards were created. Change: All of this was eliminated and the economy was liberalized.
The central bank printed money at a rapid pace and set interest rates for populist purposes, causing inflation of 500% officially and over 1000% if the black market was also taken into account. Change: The central bank became independent and completely technical.
But it wasn't perfect; it could have been privatized further, they could have moved towards 100% reserve banking, followed the gold standard, or allowed free competition of currencies. More could have been done, but it wasn't. In any case, it worked until those nostalgic for Allende's ideas arrived and reversed all the progress under the guise of equality.