1970’s Chile

Despite $1 million in bribes from the CIA, Salvador Allende was elected President of Chile on a platform of nationalizing key mining and telephone industries. The Washington Ad Hoc Committee on Chile coordinated with the CIA to deliver a plan to President Nixon: suspend aid, stoke military discontent through bribe and power deals, use ensuing economic and political turmoil to overthrow Allende, and cement free trade and privatisation of important industries.

A university exchange with the University of Chicago since 1957, again funded by the Ford Foundation, had created a surplus of "Chicago Boys," free market minded economists. These intellectuals were entrusted by the CIA with creating the "BRICK," a 500 page reform manual; this manual was delivered to Pinochet's military leaders days before the military coup occurred, Sept 11, 1973. Though no protest occurred, 13,500 civilians were arrested and imprisoned. A state of fear was created as random people were killed or 'disappeared.'

As the economy crashed and inflation reached 375%, Michael Friedman flew to Chile and advised that "Gradualism is not feasible," and the free market shock therapy must be administered without hesitation to have full effects. He called for more immediate cuts to social funding and protections like price controls, more privatisation.

In 1982 Chile's faltering economy crashed again, surviving only on the strength of the mining industry (which hadn't been privatised for fear of mass outrage). A 'corporatist' alliance of police, state, and multinational companies, with some re-nationalized companies, allowed the economy some revival. However, Chile experienced massive poverty with only a well-connected elite achieving wealth and higher standards of life. The Ford Motor Corporation, as well as US media and intellectuals, praised Pinochet's economic wisdom.

Lesson learned: the formula works. Combining a political shock (the coup) with ensuing fear and torture tactics ensures that market changes will occur without protest, without public awareness.