Thatcher, the legacy

x thatcherpinochet[Translation of an article from El Clarín of Santiago, Chile, for April 9, 2013. See original here.]

by Pedro Miguel

The first instance of Thatcherism took place six years before Margaret Thatcher arrived at the head of the British government; specifically, it began on September 11, 1973, when a group of military men — urged on by Richard Nixon, his secretary of state, Henry Kissinger, then Vice President Gerald Ford and George Bush, senior, who was serving as Washington’s representative to the UN — destroyed Chilean democracy, assassinated thousands of citizens, kidnapped, jailed and tortured tens of thousands. Tens of thousands more were to leave in exile. Once installed, the dictatorship headed by Augusto Pinochet dissolved Congress, declared political parties illegal and, a couple of years later, handed economic management over to a small group of post-graduates from the University of Chicago, where Milton Friedman was teaching, hence the name Chicago Boys: Sergio de Castro, José Piñera, Jorge Cauas, Pablo Barahona…

Until then, no state had been subjected to so devastating an economic dismantling as that carried out by the military regime’s operators, who transferred most of the public property to private concerns, confiscated pension funds to shift them to financial speculation, reduced public spending by 20 percent, fired three of every ten public employees, liquidated the savings and home loan systems, deregulated the labor market and significantly increased the sales tax. The social costs were almost as devastating as the political repression itself: the gross domestic product fell by 12 percent, unemployment shot up to 16 percent and the currency supply from exports experienced a contraction of 40 percent.

Around 1977, the macroeconomic indicators turned around, propelled by the inordinate profits made by private businesses, particularly the administrators of retirement funds, profits that had a counterpart in the severe depreciation of the pensions they were in charge of. After the initial economic contraction, the next phase of growth (which lasted until 1982) was called a boom, or “the Chilean miracle,” by most of the media.

This was the first test of what Margaret Thatcher was to apply in England beginning in 1979. With the arrival of Ronald Reagan at the White House almost two years later, the model was repeated in the United States under the name “reaganomics”. Once established as official policy, neoliberalism was cast, with the name “conservative revolution,” from London and Washington onto the rest of the capitalist economies, beginning with the peripheral ones: Mexico slipped toward the paradigm beginning in 1982 and six years later fell into it in a spectacular way, with the fraudulent imposition of Carlos Salinas in the presidency; Argentina succumbed a year later, with the government of Carlos Menem; Peru’s turn came in 1990, when Alberto Fujimori, unknown until then, won the presidential election. Only a few examples.

This first cycle of neoliberal regimes had as its principal characteristics authoritarianism and/or militarism and corruption. The handing over of public goods to private businesses blurred the dividing lines between the business world and the political. Reagan made use of state terrorism against Libya, Granada and Nicaragua and he encouraged it in El Salvador and Guatemala and instigated drug trafficking through the Iran-Contra operation. Thatcher imposed a dirty war in Ireland against the independence activists and, in the war against Argentina resorted to a cruelty as extreme as it was unnecessary (remember the pointless sinking of the General Belgrano) and deployed nuclear weapons in a region that had chosen to ban them. Fujimori is currently in prison because of the serious human rights violations committed during his administration, part of which was a naked dictatorship; Menem pardoned those guilty of crimes against humanity.

Pinochet is dead. Reagan is dead too and now Margaret Thatcher has joined them. But they left second-generation heirs, like Sebastián Piñera – younger brother of the Chicago Boy who privatized Chilean pensions – Mariano Rajoy, operator of an implacable anti-people economic plan in Spain; the real boss of it, Angela Merkel; and Enrique Peña Nieto, a disciple of Salinas, a fan of privatizing public goods and trimming labor rights and an authoritarian if there ever was one. Only a few examples. Neoliberalism is in retreat in the world but the battle against the conservative revolution is not over yet.

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