During the years of Pinochet’s shock treatment, 45% of Chileans fell into poverty, but the richest 10% of Chileans watched their incomes grow by an average of 83%. Although their policies didn’t improve life for the vast majority of Chileans, they did funnel wealth to the governmental and corporate elites. In order to save his country, Pinochet had to do what Allende had done years before: Nationalize major industries and put a firm hand on the economy.ĭespite the terrible results of this first experiment, Chile was the beginning-it was the Chicago School’s first major victory in the war to overthrow the New Deal and similar programs around the world. Inflation ran rampant while unemployment climbed to a crushing 30%. Free-market capitalism had put all of Chile’s assets in the hands of speculators and financial institutions, who proceeded to run up a massive $14 billion debt. The only ones benefiting from the shock therapy were foreign corporations and a few Chilean financiers who made a great deal of money on market speculation.īy 1982, Chile faced total economic collapse. Inflation skyrocketed, many people lost their jobs as the market flooded with cheap imports, and starvation quickly spread. The reality is that the Chicago School’s extreme free-market experiment was a disaster.

Chile’s economic growth that the Times and the Post praised didn’t actually happen until the mid-80s, a decade after Pinochet tried Friedman’s economic shock therapy, and long after he’d radically changed course.

The shock doctrine book