Friday, January 22, 2010

An antipoverty campaign that actually worked

Libertarians are often criticized for being callous (not true) about marginalized individuals – poor people. The criticisms generally stem from the fact that a libertarian view is that governments need not create anti-poverty programs to help these people (which never work anyway); they can be helped by privately funded charities. In fact a libertarian view may point to how a statist government actually aggravates poverty with wrong headed policies like minimum wage, licensing etc. which can create an underclass of dependent individuals. A libertarian might suggest that less government interference and a freer trade environment would reduce poverty and dependence.

This week in the Globe’s Report on Business, Neil Reynolds describes how Chile joined the OECD (Organization for Economic Co-operation and Development), the club of 30 developed nations effectively shedding its undeveloped status. This happened as a result of policies put in place over the last 20 years by “the Chicago boys”, 25 Chilean economists who studied under Milton Friedman at the University of Chicago in the ‘70’s and ‘80’s then introduced free market reforms in the place of Chile’s statist economy. As a result Chile becomes the first country in South America to join the OECD and has seen the number of Chileans living below the poverty line decline from 46% 25 years ago to the current 14%. Chile continues to grow its wealth and stands as an example to how an effective anti-poverty program can work.

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