US-Latin America issues with Fausta Rodriguez-Wertz

GUEST:  Fausta Rodriguez-Wertz, editor of Fausta’s Blog, joins me for a discussion of the latest US-Latin America stories of the week……We will look at the latest from the Mexican cartels……the new book about Fidel Castro and drug traffic……

Click to listen:–jorge-ponce


Chile: Happy Independence Day to a real success story in Latin America

Our friends down in Chile will enjoy another anniversary of their independence in 1810:

“Today, September 18 is celebrated in Chile as their Independence Day. It is remembered with the fiestas patrias or “national parties.” The celebrations kick off in early September and can last for weeks. All over Chile, people celebrate with food, parades, reenactments, and dancing and music. The national rodeo finals are held in Rancagua, thousands of kites fill the air in Antofagasta, in Maule they play traditional games, and many other places have traditional celebrations. If you’re going to Chile, the middle of September is a great time to visit to catch the festivities!”

Yes, it’s a great day to eat some good food and dance a little ‘cueca”.  By the way, watching Chileans dance “cueca” is really a treat:

Chile has another reason to celebrate today. It’s economy is the jewel of Latin America, as reported by IBD recently:

“In 30 years, Chile has gone from being a Third World country to a developed one, raising per capita income to $17,000, achieving 6% to 7% GDP growth most years, and attracting billions in foreign investment.

It didn’t happen in a vacuum.

The country was the first nation to try free-market reforms as articulated by the great economist Milton Friedman, whose ideas were still new in 1974.

When Gen. Augusto Pinochet was asked by Chile’s legislature to take over in September 1973, he created a MacArthur-style caretakership and turned the job of cleaning up a ravaged economy over to a group of University of Chicago-trained economists.

Known as “Chicago Boys,” they found a nation that was a mess after the short Marxist dictatorship of Salvador Allende and four decades of bad policy, including state-owned industries, heavy protectionism and massive bureaucracy. Special interests — unions and corporate monopolies — controlled major parts of the economy. Property rights were battered.

The Chicago Boys rescued their country with three critical economic reforms: fiscal control, privatization of social security and free trade. It not only worked, it quietly freed the nation from even the military regime and created the vibrant democracy Chile is now.

First, Finance Minister Sergio De Castro made the central bank independent. He ended subsidies and cut government spending. He slashed bureaucrats from 700,000 to 550,000. It was a painful austerity in the absence of a big private sector.

In the first four years of the new government, Chile’s economy surged 32%.

Next, economist Jose Pinera, Chile’s Labor and Social Security Minister, privatized social security. The plan helped the government balance its books and let workers choose between personal retirement accounts or the bankrupt state-run pension system. Workers could keep their own money, invest it, decide when to retire, and, best of all, owned their pensions as property they could leave to heirs. Some 97% of Chileans switched.

Pinera’s privatized accounts not only outperformed the state system by a factor of 10, but the savings they created provided capital to rebuild the country.

The last step came as Chile slashed tariffs and opened itself to the world. It signed more free-trade pacts than any nation, 58 at last count, which gave it access to 2 billion customers, an outsize market to swim in for a relatively small nation.

That enabled the country to specialize in what it did best — seafood, fruit, wine and its traditional mining exports. Its citizens got rich.

All three pillars upon which Chile’s stunning transformation rests can be duplicated in any country, which is why so many imitate these reforms.”

It is also a stable democracy and that is very important too.

There is a country with prosperity and political stability in Latin America called Chile.  In fact, it also has a few things to teach us, specially its private retirement accounts and commitment to free market economics.

Thumbs up to our Chilean friends and do the “cueca”!  You’ve earned this day of celebration.

P.S. You can hear our look at Chile with Fausta Wertz & Michael Prada here.

Remember Chile’s 9-11

From My View:

As we remember the brave men and women who died in the terrorist attack 12 years ago, we also look south to something very consequential that happened in Chile 40 years ago:

“Chile’s armed forces stage a coup d’état against the government of President Salvador Allende, the first democratically elected Marxist leader in Latin America. Allende retreated with his supporters to La Moneda, the fortress-like presidential palace in Santiago, which was surrounded by tanks and infantry and bombed by air force jets. Allende survived the aerial attack but then apparently shot himself to death as troops stormed the burning palace, reportedly using an automatic rifle given to him as a gift by Cuban dictator Fidel Castro.”

Allende was elected in a 3-way race in 1970.  His presidency divided the country and created economic chaos, i.e. food shortages, labor strikes, and rampant violence.

The nation was in turmoil and President Allende had lost control of the situation.

Please don’t get fooled with the international left’s romantic and nostalgic recollections of the Allende years.  They were bad for Chile.

Of course, Allende was elected and nobody likes to see a military “coup” replacing what voters selected.

At the same time, Allende was trying to transform the Chilean economy way beyond what anyone had voted for:

“He embarked on what he called “the Chilean path to socialism,” nationalizing the copper industry that had been dominated by U.S. companies and using the money to fund land redistribution while improving health care, education and literacy.

The embrace of socialism, which included a three-week visit by Cuban leader Fidel Castro, was a Cold War nightmare for U.S. President Richard Nixon, who approved a covert campaign to aggravate the country’s economic chaos and helped provoke the military takeover.

The Sept. 11 coup initially was supported by many Chileans fed up with inflation that topped 500 percent, chronic shortages and factory takeovers. But it destroyed what they had proudly described as South America’s strongest democracy.”  (AP)

Pinochet’s term was not easy either.  There were serious human rights violations.   We can not overlook those excesses when we praise the work of “The Chicago Boys” in the economy.

Where is Chile today?  Chile is the jewel of Latin American economies.  It is no longer a 3rd world country and enjoys a very stable economic and political environment.

Is Chile better off today?  I say yes but I respect those Chileans who lost loved ones during a very difficult period.

Like in Egypt recently, there are times when elected leaders push the country into chaos and the army has to step in and clean things up.

Finally, Pinochet left power after losing big in a plebiscite in 1988.   Chile began its return to democracy the next year and here we are.

At the end of the day, Pinochet’s legacy is a prosperous and non-communist Chile, as Paul Weyrich wrote when Pinochet died in 2006.

P.S. You can hear my discussion with Fausta Wertz and Michael Prada about this.


Urging ODCA to push for an investigation of the deaths of Oswaldo Paya and Harold Cepero

In this video, Osmel Rodríguez of Movimiento Cristiano Liberacion (MCL) urges the Christian Democrat Organization of America (or ODCA, for Organización Demócrata Cristiana de América) to seek an independent investigation of the deaths of MCL leaders Oswaldo Payá and Harold Cepero.

In Spanish / En español

Chile Celebrates A Different Kind Of May Day

Everyone knows what castro’s idea of May Day is – tanks, turbas, thugs and long, long, long speeches about dictatorship of the proletariat and yanqui imperialismo. It’s hard to mess up a holiday to the extent he has.

castro and Allende: Love

But over in Chile, a nation that in 1973 escaped castro’s grasp, fought him off and kicked out his 40,000 goons –err, ‘trainers’ — before he could create a second slave state (he tried), May Day has a different meaning: worker empowerment.

What happened there 30 years ago today is something that looks like a small thing that turns out wasn’t such a small thing.

Chile swapped its castroite food ration books for La Libreta pension savings books – which are full of money. José Piñera shows what one looks like.

May 1 marks the 30th anniversary of the world’s first pension privatization. It took Chile’s bankrupt Social Security system and turned it into a system of personal retirement accounts. Investor’s Business Daily in ‘Chile’s Private Social Security System Turns 30‘ describes why Chile’s pension reform succeeded and why it can work here, too.

By privatizing pensions, Chileans liberated themselves not only from castro, whose calling card was murder – even of his obedient pawn, Salvador Allende – but from Otto von Bismarck, too.

Chile had a Social Security system exactly like ours that was borrowed from the Prussians in 1925. (Ours came in 1935). These Bismarckian set-ups, where a younger group of workers pays the retirement of an older group of workers, sound good in theory but they always goes bankrupt. That’s because of demographics – more workers taking benefits than paying them in. On top of this, all kinds of special interests are grabbing at the money coming in – which is why our ‘trust fund’ is bankrupt. Well, Chile had the same thing in 1980.

But unlike us, Chile privatized and changed its fate forever. On Nov. 4, 1980, the same day the great Ronald Reagan was elected U.S. president, Chile passed a law saying pensions would go private. Had we done that too on that date, we’d all be taking home something like $55,000 Social Security pensions instead of $18,000 pensions (see IBD link above) we get now.

The system’s architect, Labor and Social Security Secretary José Piñera specifically chose May 1 for the implementation to change the meaning of the holiday. Instead of a nasty castrofest, May 1 became a day of real dignity for workers.

Chile maybe didn’t know so at the time, but it was enacting the biggest de-castro-ing agent ever invented. Nobel-prize-winning economist Gary Becker said as much. Money was yanked out of the greedy, grasping hand of big government and put into individual accounts where workers make all their own choices – what to save, how to invest, when to retire.

And by a law embedded in the 1980 constitution by Pinera himself – no government can ever lay a hand on these accounts. Result: workers started to care about the entire economic fate of the country because it affects their pensions, instead of what they could extract as special interests from the government. A culture of property and personal responsibility took root.

That’s toxic to the likes of castro and all the new waves of pawns he’s got out there claiming redistribution is the answer.

Meanwhile, Chile’s accumulated savings soon came to equal 100% of GNP and as savings built all that extra cash went on to develop the country. That’s why Chile is a nice place to live – it didn’t happen out of nothing. It now looks and feels just like California during its better days except with highway signs in Spanish … and the country has NO NET DEBT. Eat your heart out, bearded beast!