The Economist and the Dictator

Just what is the connection between Milton Friedman and Augusto Pinochet?

The recently deceased Chilean autocrat Augusto Pinochet is responsible for banning political opposition, "disappearing" political enemies (and blowing some of them up in Washington, D.C.), ordering many thousands of deaths, and turning football stadiums into grim multi-purpose detention centers in which political prisoners were tortured and killed.

The recently deceased economist and journalist Milton Friedman is responsible for many path-breaking insights in economics and sustained advocacy for people's freedom to choose how to live their lives, free of officious government interference.

And yet, in both life and death, Pinochet and Friedman have been assumed by many to be two sides of some evil right-wing coin in which torture, despotism, and unrestricted free markets are all inextricably linked. The New York Times columnist Anthony Lewis declared in 1975 that "The Chilean junta's economic policy is based on the ideas of Milton Friedman…and his Chicago School…if the pure Chicago economic theory can be carried out in Chile only at the price of repression, should its authors feel some responsibility?" Such attitudes haunted Friedman to his death and beyond .

The reaction of some of the usual conservative suspects to Pinochet's death didn't help debunk this unfortunate association. Since he was a pro-American autocrat, who ultimately honored a plebiscite and stepped down, portions of the American right have always had an unhealthy affection for the general. National Review ran both a symposium and a stand alone piece by former editor John O'Sullivan marking Pinochet's passing, neither of which were much outraged about his crimes. O'Sullivan explicitly said , in the sort of bizarre moral prisoner exchange that partisan squabbling generates, that sure, Pinochet should suffer for his villainy—but only if Castro and Allende's associates do as well.

But if the filthy commies are hypocrites for only seeming to object to tyranny when it comes from non-commies, as the right is so quick to point out, what does that make the right-wingers who only seem to object to tyranny when it comes from commies (or Muslims)? Uh, well….hey, look over there! Castro! Don't let him get away!

Yes, it's true—Friedman gave advice to Pinochet. But it wasn't about how to find the best place at sea to dump the bodies of murdered political enemies. Despite the angry mobs of students who hounded Friedman everywhere from Stockholm (his Nobel acceptance ceremony in 1976 was marred by their presence) to Chicago because they held him to be some sort of puppet master for sinister Chilean policies, the reality of Friedman's "links" with Pinochet is far less dramatic.

For years, the University of Chicago had a program in partnership with the Catholic University of Chile providing scholarships to Chileans to study at Chicago. Pinochet's economic advisers were thus University of Chicago-trained, and known as the "Chicago Boys." But Friedman's only direct connection was when he was invited by fellow Chicago professor Arnold Harberger–who was most closely involved with the Chilean program–to give a week of lectures and public talks in Chile in 1975.

While there, Friedman did have one meeting with Pinochet, for less than an hour. Pinochet asked Friedman to write him a letter about his judgments on what Chilean economic policy should be, which Friedman did . He advocated quick and severe cuts in government spending and inflation, as well as instituting more open international trade policies—and to "provide for the relief of any cases of real hardship and severe distress among the poorest classes." He did not choose this as an opportunity to upbraid Pinochet for any of his repressive policies, and many of Friedman's admirers, including me, would have felt better if he had.

But that was the extent of his involvement with the Chilean regime—and it fit with a recurring pattern in Friedman's career of advising with an even hand all who would listen to him. It was not a sign of approval of military authoritarianism. Friedman, in defending himself against accusations of complicity with or approval of Pinochet, noted in a 1975 letter to the University of Chicago school newspaper that he "has never heard complaints" about giving aid and comfort to the communist governments to which he had spoken, and that "I approve of none of these authoritarian regimes—neither the Communist regimes of Russia and Yugoslavia nor the military juntas of Chile and Brazil. But I believe I can learn from observing them and that, insofar as my personal analysis of their economic situation enables them to improve their economic performance, that is likely to promote not retard a movement toward greater liberalism and freedom."

If you believe it is a moral duty to boycott government criminals without reservation, then Friedman did the wrong thing in talking to Pinochet and writing him a letter. But if any Chilean had a better life because of any free-market reform that Friedman or Chicago-trained Pinochet advisors helped push through, that's a small price to pay for any damage to Friedman's reputation.

But did any Chilean indeed have that better life because of free-market policies? It is a matter of faith among the left that Chile in fact had its economy destroyed by rampant Friedmanism. In an excellent article (not available online) that appeared in the August 1983 issue of Inquiry magazine in the midst of Chile's first severe recession after some early market reforms, called "Did Milton Friedman Really Ruin Chile?" Jonathan Marshall pointed out that both Friedman, who was too quick to declare permanent victory for free-market reform in Chile, and his detractors, who thought his policies had brought the nation to ruination, were missing some important details: "Friedman's own protégés abandoned laissez-faire economics at certain critical junctures, and these departures, not any maniacal monetarism, produced Chile's suffering."

Marshall particularly fingered Chile's very un-Friedmanlike insistence on fixing the price of the Chilean peso to U.S. dollars in the early '80s, creating an overvaluing of the peso that devastated the Chilean export market. He also noted Chile's continued system of crony capitalism in which those with access got special government credit, and bailouts when free-market risk hurt them. Those sorts of policies, as well as a worldwide collapse in copper prices, Chile's prime export, were to blame for Chile's early '80s recession, not a mad rush for too-free markets.

At any rate free-market-leaning reforms—especially when embedded in continuing intervention of various sorts—are no guarantee of instant results. Many popular debunkings of the idea that market reforms helped Chile rely on looking at fixed points in the past , as if they settle the question of any long term benefit. If Friedman was too quick to label Chile's economy an instant miracle, as he did in a Newsweek column in 1982 (while stressing that it is a "myth" that "only an authoritarian regime can successfully implement a free-market policy" since a free market is "the reverse" of military authoritarianism), his foes were too quick to condemn it as a disaster.

Some of them had good points, particularly about growth rates in the '70s and '80s that were possibly as much a result of regaining lost ground from recessions as of fresh and sustainable long-term growth. But the statistics from the past decade and a half show a Chile that in the long term has done better economically than most of Latin America—lower inflation, higher real per capita GDP growth, far lower incidence of extreme poverty, and less dependence on the IMF.

Nothing about Chile's economic successes excuses or mollifies Pinochet's crimes. Even Friedman's staunch libertarian fans can wonder about the ultimate propriety of his association, however brief or tenuous, with the dictator. As Austrian economist Peter Boettke once told me, many economists in his tradition—most of whom are hardcore libertarians—find the notion of working in even something as innocuous as public finance distasteful—like "bean counting for the mafia." Friedman didn't harbor such visceral disgust for government or those who govern. He was a policy realist, and tried to deal with the world as it was–to mesh his policy radicalism with the gears of power as they existed.

Friedman was ready and willing to tell the people responsible for all the wrong policies of the world what they needed to do to set things right, which meant he had to talk to them, making open assaults on their crimes ill-advised. He tried to move the world in a freer direction from the point reality presented him with.

"I have nothing good to say about the political regime that Pinochet imposed," Friedman said in 1991. "It was a terrible political regime. The real miracle of Chile is not how well it has done economically; the real miracle of Chile is that a military junta was willing to go against its principles and support a free-market regime designed by principled believers in a free market….In Chile, the drive for political freedom that was generated by economic freedom and the resulting economic success ultimately resulted in a referendum that introduced political democracy."

It may have been more morally satisfying to have no relationship with Pinochet, merely condemn him from afar. But in choosing to let his economic advice rise above political revulsion, Friedman almost certainly helped Chile in the long term–though it's important to remember that the "Chicago boys" were more responsible than Friedman himself, and that they were not following his prescriptions relentlessly or in any way under his direct instruction.

Undoubtedly, Friedman's decision to interact with officials of repressive governments creates uncomfortable tensions for his libertarian admirers; I could, and often do, wish he hadn't done it. But given what it probably meant for economic wealth and liberty in the long term for the people of Chile, that's a selfish reaction. Pinochet's economic policies do not ameliorate his crimes, despite what his right-wing admirers say. But Friedman, as an economic advisor to all who'd listen, neither committed his crimes, nor admired the criminal.

Senior editor Brian Doherty is author of This is Burning Man and the forthcoming Radicals for Capitalism .