THE CHICAGO BOYS
The French economist Jacques Garello , founder of the New Economists group, recalled in an editorial entitled "Ideas lead the world [1]: "This maxim of Keynes reflects the importance of the message of Milton Friedman, the one who will precisely erase Keynesianism from the world political landscape to replace it with the ideas of freedom. With Hayek, no one will have contributed as much to the advancement of economic science in the 20th century , no one will have had such an influence on the course of events [2]." Many people share his opinion, including Paul Krugman who devoted a critical article to the master of the Chicago School [3]. Friedman swung, he tells us, the pendulum from protectionism to free trade; from regulation to deregulation; from the minimum wage imposed by the government to wages adjusted to the market. Much more importantly, he continues, he persuaded the great and the good of this world that all changes in economic policy were the spearhead of the forces of progress and good.
History reserves its judgment. After his death in 1996, when the president of the University of Chicago announced the creation of a $200 million Milton Friedman Institute, more than a hundred professors signed a letter of protest: "Liberalism, as seen by the Chicago School of Economics, has certainly not had a beneficial effect everywhere. Many believe that it has had a negative impact on the entire world population ." And Friedman received the second prize of the Dynamite Prize in Economics awarded to economists who contributed significantly to the global crisis of 2008 (Alan Greenspan received the first prize!).
Everyone agrees on at least this point: he had and continues to have an immeasurable global impact. By general agreement, Milton Friedman was brilliant, knowing how to find punchy, off-the-cuff formulas that could only seduce the powers that be, always looking for simple advice on complex problems. Friedman was not stingy with it and willingly allowed himself to be quoted. But he offered the political world much more than the good slogans that enchant princes and crowds. He traveled the five continents, meeting presidents and prime ministers, drafting reform programs or simply inspiring concrete initiatives that changed the economic life of certain countries for better or for worse.
This is what happened in Chile in 1975. At the invitation of a private foundation, he gave a lecture in which he declared that "the free market would destroy centralization and political control." Enthusiastic disciples, called "Chicago Boys," trained at the Pontifical Catholic University of Chile in a partnership with the University of Chicago, implemented the model of the Economic School in three stages: economic liberalization, privatization of state companies, and stabilization of inflation. Augusto Pinochet, whose power of persuasion is well known, had the "capitalization pension" or the "education voucher" voted in, thus helping insurance companies, banks, and private schools to appropriate part of the public sector.
Although these reforms led to a massive increase in poverty and unemployment, they were considered a great success by the Encyclopædia Britannica . Milton Friedman declared that the Chilean experience was "comparable to the economic miracle of postwar Germany" - an interesting remark, to say the least, considering that this miracle was brought about by the interventionist ideas of Keynes, which Friedman and his school anathematized.
This is one of the characteristics of ideologues: they have no interest in the reality principle in general and the principle of contradiction in particular.
The failure of the Iraqi model
This is probably why they are particularly fond of think tanks that wipe the slate clean of costly habits and muddled cultural values, allowing them to create a reality that they want. For the ideology that interests us, the opportunity presented itself nearly forty years later in war-torn Iraq, where power passed into the hands of the American military. The "clean slate" was almost complete: nothing was left standing, literally or figuratively.
In a resounding article [4], Naomi Klein explains this experiment that wanted to show up the Marshall Plan: "In a few months, the post-war plan proposed by the neoconservatives was put in place: it was about transforming Iraq into a laboratory. If Leo Strauss [5]had given intellectual permission to invade Iraq, it was this other professor from the University of Chicago, Friedman […] who offered the manual on the reconstruction of a country secured by American troops. It was the consecration of the most ideological wing of the Bush administration."
In short, the aim, The Economist interjected at the time , was for Iraq, governed by the private sector, to serve as a model for all the economies of the region and why not the world. No expense was spared. The Bush administration advanced $20 billion for the reconstruction of the country, the equivalent of two-thirds of its GNP [6].
And Klein continues:
"All the policies were put in place that gave the green light to multinationals to help them pursue their quest for profit: small government, flexible workforce, open borders, minimum taxes […]. [7]"
Two months before the war began, USAID [United States Agency for International Development] had begun drafting a contract with a private company that would oversee “Iraq’s transition to a sustainable market economy.” The document stipulated that the company awarded the contract would seize “this unique opportunity to move forward rapidly given the circumstances”… And it was done.
Diplomat Paul Bremer was appointed civilian administrator, reporting directly to the Secretary of Defense. His mission was to direct the American occupation until the country could once again be governed by Iraqis. He accompanied the American occupation troops into Iraq starting on May 2, 2003. He admitted that when he arrived, “Baghdad was on fire, literally on fire.” “But even before the fires were completely out, Bremer launched his shock therapy, forcing more difficult changes into that scorching summer than the International Monetary Fund imposed in Latin America in thirty years. […] He set the tone by immediately laying off 500,000 government employees, most of them soldiers, but also doctors, nurses, teachers, publishers, and printers. Then he threw open the borders: no tariffs, no inspections, no taxes. “Iraq,” Bremer declared two weeks after his arrival, “is open for business.” [8]»
And a month later, he unveiled the centerpiece of his reforms. Before the invasion, Iraq’s non-oil economy was run by some 200 state-owned companies that produced everything from cement to paper to washing machines. Bremer, Naomi Klein tells us, announced the immediate privatization of all of these companies. This, he said, meant transferring inefficient state-owned enterprises into private hands. This was essential, he explained, to Iraq’s economic recovery. It was the largest liquidation of state-owned enterprises since the Soviet Union.
But that was just the beginning of Bremer's economic engineering, as Naomi Klein explains. In September, in order to attract foreign investors to Iraq, he passed extremely generous laws for multinationals. Law 37 cut their taxes from 40% to 15%. Law 39 gave ownership of Iraqi assets to investors in all sectors except oil and refining. And investors could repatriate all profits. They would have no obligation to reinvest them and they would be tax-free. Law 40 stipulated that foreign banks would be welcome to open up shop under the same conditions. The only laws that were kept were those imposed by Saddam Hussein that restricted unions and collective bargaining.
Contracts were signed with enthusiasm. A director of Procter & Gamble understood that acquiring the rights for his company represented a gold mine. 7-Eleven calculated that just one of its stores with a good stock could replace thirty small Iraqi stores. As for Wall Mart, it was making plans, as usual, to occupy the entire territory.
Like many social laboratories, this one ended in disaster. Money literally fell from the sky: in May 2004, a first cargo plane made the trip from the United States with $2.4 billion in its hold, all in bricks of $100 bills. And twenty other planes followed! And this was repeated over several years, bringing down a windfall on markets finally freed from the unbearable constraints on their growth. The money then gravitated into the basements of one of Saddam Hussein's former palaces and into military bases, then was distributed to various American ministries and contractors on the ground, all without any control.
It was, according to the Los Angeles Times , "the largest theft of funds in history." In January 2005, an official report by the inspector general for Iraq reconstruction, Stuart Bowen, reported that $9 billion intended for the reconstruction of Iraq had disappeared through fraud, corruption and other misdeeds.
They were not lost on everyone. A mentality was emerging in the economic preaching in praise of the business world: ripping off the government was seen as good business, a source to be exploited, like rivers, oceans, space. Exploitation justified everything because it created wealth.
Which probably partly explains why the resounding failure of the Iraqi economic plan did nothing to dampen the determination of those who were then advising President George W. Bush, known in the United States as neocons , which refers to neoconservatives who advocate totalitarian economic laissez-faire, combined with a moral return to what they call true "values," which include a certain contempt for the authority of science and the reality principle. The Iraqi failure was not seen as proof or even as a test, and one of those pages of history that is never consulted was quickly turned.
Science or not, neither the Chileans nor the Iraqis had a choice in the decisions that were imposed on them manu militari . And we will be careful not to mention these cases when it comes to denouncing government spending. The cost of the two wars has never been mentioned.
THE CHAIN SAW BOYS
Elon Musk chainsaw in hand, is in the process of slaughtering all public institutions which will be managed by the “ geniuses ” of the sector private chosen by Donald Trump
God Helps America!
Note
[1]. http://libres.org/glossaryedito/2350-milton-friedman--capitalisme-et-liberte.html
[2]. Frederick Leatherman, Neoliberalism is a Cancer. If Not Now, When? , chap. 24, part. 2,
[3]. “Who was Milton Friedman”, art. cit.
[4]. “ Pillaging Iraq in pursuit of a neocon "utopia " in Harper's Magazine, Baghdad year zero , September 2004.
[5]. In June 2004 Earl Shorris published an article in Harper's Magazine entitled "Ignoble Liars : Leo Strauss, George Bush, and the Philosophy of Mass Deception " which made the connection between the Iraq War and the philosopher Leo Strauss. This philosopher (1899-1973), who took refuge in the United States in the 1930s, was, according to some, the inspiration for George Bush's policies. To the point where some neo-conservatives are now called "Leo -Cons"! The Quebec philosopher Daniel Tanguay, from the University of Ottawa, is more nuanced. You will read with interest the article devoted to him in Le Devoir
[6].“ If it all works out, Iraq will be a capitalist’s dream " , The Economist , September 25 2003;
[7]. Naomi Klein, art. cit.