The Chicago Boys V. Salvatore Allende, Fidel Castro and Che Guevara

I am working on a theory that the climate war is the latest manifestation of western economic conflicts between left and right.  The culture war is now fought out on blogs –- or symbolically in the streets at rallies and riots.  In politics it is a pantywaist slapfest between progressives and conservatives. On the streets it is a consilience of many colours from anarchists to ecowarriors burning cars and looting businesses. Thankfully though not so much these days as thuggery, murder and genocide.  On climate blogs it is fought in science memes.  Factoids of more or less obscure origin fired at the drooling idiot on the other side.   From extreme ends of the spectrum.   That CO2 emissions are cataclysmic to CO2 is a great boon to humanity, nature and the planet.   The 10% – split about evenly between camps – of the population who give a damn.  The rest of us want a plan that preserves economies. 

The culture war has played out historically as a clash of economic principles.  Central planning and state control V. free markets, democracy and the rule of law.  The clash of economic values continues to this day in the climate war.  The left says we can have our cake and eat it too.   I say it takes prudent economic management on principles of Austrian school of economics theory to avoid booms and busts.  Manage money supply and cash rates to limit inflation.   The left today by and large want massive spending and government control.  They are for climate change. The right want no change.  Or better yet – a return to the good ole days.  They are ag’in climate change.  The problem for the left is expense, imprudence and impracticality.  The left is inclined to state control that drifts into despotic totalitarianism.  The problem for the right is that change is the one constant.    

The economic divide stood in stark contrast in Chile in the 1970’s.  Friedrich Hayek was there working to restore democracy, the rule of law and a sustainable economic system – and is fatally tainted by association it’s claimed.  Hayek was passionately committed to individual freedom, the rule of law and democracy.  His economics were quintessentially Austrian School – his Nobel Prize contribution – money and interest rate management in the business cycle, free markets and less government planning. Government is the price of democracy. Maybe 25% of GDP if we are lucky. The free marketeers were the Chicago Boys – a Chicago University economics group – the usual suspects – with whom Hayek was associated.  They shaped up against the might of the totalitarian world.  Represented in South America by Salvatore Allende, Fidel Castro and Che Guevara. 

‘Chile had experienced high inflation and only moderate growth during the 1950s and 1960s. Development theories promoted by the United Nations Economic Commission for Latin America (ECLA), established in 1948 and based in Santiago, were quite influential in Latin America during this period. Although such theories actually have a rich previous history in economics,12 the Singer-Prebisch dependency and import substitution models provided the leading development paradigm for most countries in Latin America. The theoretical program viewed protectionism and planning as the two most important imperatives for rapid development. It was in reaction to the success of this intellectual program and its theoretical framework, plus the strong influence of Marxist ideas within certain academic circles,13 that the “Chile Project,” the cradle of the “Chicago Boys,” was begun. The project that would so greatly influence Chile’s subsequent history had its origins in Albion Patterson’s Plan Chillán in 1953.14’ Caldwell, Bruce and Montes, Leonidas (2015) Friedrich Hayek and his visits to Chile. The Review of Austrian Economics, 28 (3). pp. 261-309. ISSN 0889-3047

Chile was an economic basket case before the coup.  The coup was brutal.  But was Allende in cahoots with Castro, Mao and Stalin? Castro spent a month touring the country.  ‘In June 1973, the Chilean Supreme Court openly criticized Allende, stating that the country was facing “a crisis of the rule of law”. Op. cit.  There was a massive strike, violence and civil unrest.  As the economy spiralled down the gurgler the tensions grew with one side blaming enemies of the people and the other side blaming it quite rightly on the reckless destruction of the economy by Allende and his henchmen.

A key to stable markets – and therefore growth – is fair and transparent regulation, minimal corruption and effective democratic oversight.  Markets do best where government is large enough to be an important player and small enough not to squeeze the vitality out of capitalism.  Markets can’t exist without laws – just as civil society can’t exist without police, courts and armies. 

Responses to the climate panic are evolving around the world.  Too many on land and water topics to count.  An agricultural revolution is happening in big and small farming.  Keeping and increasing carbon in soils is the foundation for food security.  And for stewardship of the richness of the world given to us.  Global commons managed by those they most matter to – armed with science and land title.  To conserve and restore their common resources and provide for current and future needs.  On energy – it’s time to bite the nuclear bullet.  With silicon carbide fuel cladding – developed by General Atomics for the US DOE – they can’t blow up like at Chernobyl and Fukushima.  New nukes are even better.  Costs are down and getting cheaper.        

In my books – the first casualty of the climate war was science in our internet expanded public arena. In the science world – science is as imperfect and vital as ever. And then truth flew out the window. What appears more often than not is deductive reasoning with little to zilch quantitative validation – the latter only appears in scientific literature. Newton warned us about that. Not science in other words. The culture war drags on.  Informed by historic currents in the zeitgeist and powered by memes on the internet – it boils down who is in control – the State or Joe Blow everyman?  The economic culture conflict has now subsided to a melee between democratic socialists and the Chicago Boys and friends – progressives and conservatives.   Like Hayek I am neither. I believe in democracy, the rule of law and individual liberty. I have my money on business, landowners and economic freedom fighters – to solve climate change and a host of global problems this century.     

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