To explain myself on Twitter. My view of Chile is simply this.

(1) Chile before Allende had already been a middle-income country. It had been a middle-income country since the 19th century. But its economic growth in the 20th century was relatively slow for its income level. Much like Argentina, Chile had been in relative decline since the early 20th century.

(2) Allende was a complete disaster. (I describe it here ) Allende’s economic administration was both a ‘short-term’ disaster of fiscal and monetary management; and a long-term structural disaster of increasingly ‘socialising’ the economy. Allende to some extent was unlucky because copper prices were falling during his tenure, but his mismanagement was extreme, Venezuela-like, in the face of the external shock. Yes, most Latin American countries have had balance of payments crises relating to commodities shocks, but seldom this extreme.

(3) Pinochet’s first austerity programme (1973–5) was absolutely necessary in the sense that Chile’s 30% of GDP budget deficit and hyperinflation had to be reversed. Sorry to say, but it’s impossible to get rid of that without severe pain. Privatisations were undertaken, in part, because subsidies to state-owned enterprises were a major drain on Chilean public finance. Pinochet was indeed lucky to see rising copper prices during his part of the 1970s.

(4) However, Pinochet also liberalised the capital account, letting in ‘hot money’ capital flows, much of which went into a real estate bubble in the late 1970s. Because of this, Chile faced the debt crisis in the early 1980s just as much as any other Latin American country. Copper prices also collapsed after the “Volcker shock” as well. The financial austerity in the face of the debt crisis erased the economic recovery of 1973–82. This was purely Pinochet’s mismanagement and incompetence. He was no better than Mexican presidents, in this regard.

(5) But that’s different from his structural reforms. Those largely survived him, albeit with more redistribution under democratic governments, more ‘light’ industrial policy, as well as capital account controls, which were actually implemented by Pinochet after 1982.

(6) Clearly, Chile is much closer to the neoliberal paradigm, albeit with anomalies, than Chile was in 1969 or 1973. Denying that is tantamount to denying that the rest of Latin America is also closer to the neoliberal paradigm today than it was in 1975 or 1980.

(7) But there is nothing special about Chile today. It has grown in absolute terms, of course, and, had an Allende-like regime persisted, Chile would probably be much poorer today. But the actually existing Chile is no closer to convergence with the rich countries than it was in 1930. Moreover, Chile’s GDP/capita is about the same as Argentina’s, but Chile’s median household income is lower, and Chileans work longer hours per year than Argentinians.