On Chile and Haiti... Saturday, March 13, 2010
While plenty of compassion and aid has been poured out for the earthquake disaster in Haiti, relatively little media attention has been given to Chile for its tragedy. The reason for this ought not to surprise us. While Haiti suffered an earthquake measuring 7.0 on the Richter scale and the earthquake off the coast of Chile earned an impressive 8.8 – Chile seemed to fare better than Haiti did. After the enormous emergence of poverty and destitution in Haiti following the earthquake, people all over the world expected the same response coming from Chile, especially considering the magnitude of the shock. Despite all common-sense predictions, Chile is making significant progress toward rebuilding its nation. The same cannot be said for Haiti. Still in a constant state of chaos and unrest, Haiti makes the perfect case for a policy of laissez-faire economics.
Many people are quick to lend their support for the struggling island nation, and as humans we should be willing to give generously for those in duress. The humanitarian drive behind so much of the support is commendable. What people don’t ask, however, is what caused such poverty. The earthquake didn’t give the Haitians a low standard of living. Yes, it destroyed infrastructure, resulted in casualties, and sent the country into martial law. Make no mistake, however; Haiti was not a prosperous nation before the earthquake. The entire history of Haiti is one of poverty, repression, arbitrary foreign intervention, and consecutive military dictatorships.
Chile, on the other hand, has been a nation of prosperity and recovery since Milton Friedman’s famous discussion with then-dictator Pinochet. The Index of Economic Freedom places Chile at a 77.2% – the 10th most free country in the world, between Denmark and the UK, and by far the most free country in the entire South/Central America and Caribbean region. Since the Chilean-Chicago economists had their way, Chile has experienced remarkable growth and, as such, its citizens are more able to deal adequately with catastrophic events such the recent earthquake (the strongest Chile has experienced in 50 years).
The major difference between these nations is not geographical or social but econo-political. Chile’s government claims a measly 18% of GDP in spending and allows a rather wide berth of economic decisions to be made by citizens and firms. Haiti is more familiar with a command and control approach. If Haiti had followed a freer economic policy decades ago, this earthquake would be handled far better and its current chaos would be relatively short-lived.
In an analogous twist, Haiti can be considered the foolish little piggy who built his house out of straw. Guess how Chile built its house when the wolf came to huff and puff?
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