key term - Chicago Boys

Definition

The Chicago Boys were a group of Chilean economists who studied at the University of Chicago under Milton Friedman and became instrumental in shaping economic policy during Chile's military dictatorship from 1973 to 1990. Their approach emphasized neoliberal principles, advocating for free markets, deregulation, and privatization as solutions to the economic crises faced by the country.

5 Must Know Facts For Your Next Test

1. The Chicago Boys implemented radical economic reforms in Chile that included massive privatization of state-owned enterprises and deregulation of industries.
2. Their policies initially led to severe social consequences, including increased unemployment and inequality, which sparked protests and discontent among the population.
3. The economic strategy was characterized by austerity measures intended to stabilize the economy but often resulted in short-term pain for many Chileans.
4. Despite initial hardships, Chile experienced notable economic growth during the late 1980s, leading some to view the Chicago Boys' policies as ultimately successful.
5. The legacy of the Chicago Boys continues to influence Chile's economy today, with ongoing debates about the effectiveness and morality of their neoliberal reforms.

Review Questions

• How did the Chicago Boys influence economic policy in Chile during the military dictatorship?
  • The Chicago Boys profoundly influenced Chilean economic policy by introducing neoliberal reforms that prioritized free markets and minimal government intervention. Their strategies included privatizing state-owned enterprises and reducing tariffs, aiming to revitalize an economy plagued by crisis. While these reforms initially caused significant social unrest and economic disparity, they fundamentally reshaped Chile's economy for decades.
• Evaluate the short-term impacts versus long-term outcomes of the Chicago Boys' economic policies in Chile.
  • In the short term, the Chicago Boys' policies led to rising unemployment, inflation, and social discontent among Chileans due to austerity measures. However, over time, these same policies contributed to substantial economic growth and stability in the late 1980s. This duality presents a complex picture where immediate hardships were followed by a period of increased GDP growth and investment, sparking debate about the overall effectiveness of their approaches.
• Discuss the broader implications of the Chicago Boys' reforms for global neoliberal movements in subsequent decades.
  • The Chicago Boys' reforms in Chile served as a model for neoliberal policies adopted worldwide in the following decades, influencing governments in Latin America and beyond. Their emphasis on deregulation and privatization resonated with political leaders seeking economic reform during times of crisis. This spread of neoliberalism has sparked ongoing debates about its impact on social equity, labor rights, and public welfare across various nations, shaping the global economic landscape well into the 21st century.

Related terms

Neoliberalism:

An economic philosophy that promotes free-market capitalism, deregulation, and a reduction in government spending in order to enhance individual entrepreneurship and economic growth.

Augusto Pinochet:

The Chilean military dictator who came to power after a coup in 1973, implementing harsh political repression and significant economic reforms based on the ideas of the Chicago Boys.

Milton Friedman:

An influential American economist whose ideas on free markets and monetary policy greatly impacted the development of neoliberal economic policies worldwide, including in Chile.