Chilean Economic Shock Therapy - 1279 Words

Chilean Economic Shock Therapy Chile is seen to be the quintessential model of liberal restructuring in Latin America in the late twentieth century. After the overthrow of the socialist regime of Salvador Allende in 1973, Chile’s government has implemented an authoritative economic restructuring program that replaced state intervention with market incentives and opened Chile to the global economy. This four-phase process transformed the economy from highly protective industrialized to an open free market economy based on agricultural exports. The process by which the Chilean economy was stabilized was termed â€Å"shock therapy.† Like other dramatic economic policy changes, the â€Å"therapy† caused the underlying social problems of†¦show more content†¦These reforms entail the last phase of the â€Å"shock therapy† program. Saying that high growth rates would not cover the badly needed increases in social spending, the government introduced a dir ect taxation. This placed a higher personal income tax burden on the upper middle class, eliminated tax privileges for the rich, and raised corporate profit tax. The Aylwin/Frei administrations increased fiscal spending on social and welfare programs. The government raised family allowances for the poor by 50 percent and introduced subsidies to support nutritional supplements for the lowest income households. Enhancing school feeding and mother-child nutrition programs did this most successfully. Drives to improve the quality of public education and vocational training for the unemployed foreshadow the spread of enterprises and small businesses in the Chilean economy. Chile’s labor movement expected and demanded much more power and economic benefits than the democratic regime could ever deliver. For example, the right to strike and an end of strike time limitation, and the right to collective bargaining were recently re-instated. Legislation has also benefited from legislation enhancing pension funds, longer periods over coverage for severance and increases in minimum wage. In the period between 1991 and 2000 the incidence of poverty has dropped by almost 40 percent while absolute poverty has dropped byShow MoreRelatedAnalysis of Naomi Klein’s book, The Shock Doctrine: The Rise of Disaster Capitalism1683 Words   |  7 PagesThe term the Shock Doctrine was created by journalist Naomi Klein in her book The Shock Doctrine: The Rise of Disaster Capitalism which refers to the idea that economic liberalists formed an entire industry take advantage of disasters such as natural disasters or military coups and privatize everything they can get their hands on. The name of this industry is the Disaster Capitalism Complex and it is comprised of the corporations and organizations that see recently shocked areas as ripe for the emplacementRead MoreOne Significant Change That Has Occurred in the World Between 1900 and 2005. Explain the Impact This Change Has Made on Our Lives and Why It Is an Important Change.163893 Words   |  656 Pagessocioeconomic circumstances and dynamics rather than standard but arbitrary chronological break points. In the decades that followed the Great War, the victorious European powers appeared to have restored, even expanded, their global political and economic preeminence only to see it eclipsed by the emergence of the Soviet and U.S. superpowers on their periphery and a second round of even more devastating global conflict. The bifurcated international system that resulted from the cold war standoffRead MoreDamodaran Book on Investment Valuation, 2nd Edition398423 Words   |  1594 Pagesvaluations, they will undoubtedly be asked to justify them. In some cases, the fact that valuations change over time is viewed as a problem. The best response may be the one that Lord Keynes gave when he was criticized for changing his position on a major economic issue: â€Å"When the facts change, I change my mind. And what do you do, sir?† Myth 3.: A good valuation provides a precise estimate of value Even at the end of the most careful and detailed valuation, there will be uncertainty about the final numbers