Friday, March 5, 2010

How Laissez Faire Ideologues Praise Regulations.... sometimes!

The other day, a friend of mine who is obsessively pro-laissez faire and sees everything through the distorting lens of free-market economy posted this WSJ op-ed on his FB page :

How Milton Friedman Saved Chile, Milton Friedman gave Chileans the intellectual wherewithal first to survive the quake, and now to build their lives anew by Bret Stephen.

The title speaks for the whole piece. Stephen's thinking is that thanks to Friedman, "Pinochet appointed a succession of Chicago Boys to senior economic posts" and the liberalization drive made the "Chileans South America's richest people" which in turn allowed them to have stricter codes and enforce them, which has now saved lives.

My first issue with this is that it is pretty lame for the deputy editorial page editor of the Wall Street Journal to use two terrible human tragedies to support his ideological agenda. Clearly, the op-ed is shallow and doesn't even try to contextualize the situations.
It also fails to mention that the earthquake in Chile was centered offshore, deeply underground in a relatively unpopulated area while Haiti's earthquake struck closer to the surface and right on the edge of Port-au-Prince.
Of course, it goes without saying that Chile is wealthier, better prepared, with strict building codes, better emergency response and a history of seismic catastrophes that makes them aware of the risks - unlike Haiti. That part is so obvious that it is pretty useless to write about it.

Finally, and that's the most beautiful part, the irony of free-market ideologues supporting strict regulations (in building codes) is worthy of Jon Stewart's Daily Show.
Thank you, Mr Krugman for pointing this out :
Friedman wasn’t exactly fond of such codes — see this interview in which he calls such codes a form of government spending, because they “impose costs that you might not privately want to engage in”.
And for contextualizing Pinochet's economic miracle.

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