Incentives matter: the Mr Market LOOOOOVES death squads

Originally published at:


Seems pretty pay-walled to me.

Am I doing something wring?

Pinochet was given direct, on-the-ground assistance by economists from the University of Chicago including Milton Friedman

Unfortunately, Pinochet interpreted Friedman’s views about the usefulness of helicopters in a profoundly non-libertarian way (though big-L Libertarians always find ways to excuse the regime’s practises “because Commies.”).

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I typoed - try again!


Still takes me to the elsevier pay-walled site.

This (from the Marginal Revolution link) works though:

Thanks for highlighting the paper. Looks interesting.


There’s a J.K. Galbraith quote in which he says something to the effect that “as a good liberal, I’d like nothing better than to see the Pinochet regime collapse, and I can think of no better way of accomplishing that than to have them follow Mr Friedman’s recommendations.” It’s a nice burn, but Chile seems to be doing more or less OK these days, so it’s possible that the Chicago School isn’t a guaranteed recipe for disaster (at least not if you’re a capitalist; poor folks will experience things differently).

I don’t know what would have happened if Allende had retained power. Based on what I have read of him, he seems to have been an admirable and able man. Still, even without overt outside interference, leftist governments in Latin America haven’t always had the greatest track record when it comes to economic growth and stability. Part of that may be due to the very phenomenon described in this post: that rich investors flee from anything with a hint of ‘socialism’, while rushing to embrace any strongman who promises ‘order’ and stable markets (plus guarantees that they can expatriate their profits). Allende’s Chile would probably have been starved of investment (foreign or domestic) for this reason, making economic growth difficult.

Of course, while dictators look attractive to investors, I’d be willing to bet that a country with a real and flourishing democracy will always do much better in the long run than any dictatorship, no matter how many sweetheart deals the caudillo offers to foreign investors.


This one really takes the cake Cory. That the stock market would fear nationalization and be happier when that doesn’t happen has 0% to do with how that’s enforced or accomplished. But you knew that, because you presumably read what you posted:


I came here to say the same. It’s almost not newsworthy at all, except in the sense that stock markets do not reflect the well-being of a society.


Stock markets are the worst markets.


The paper is one of those papers that takes something that everyone assumes to be true and then tries to prove it, yes.

They can be useful.

Someone has to check whether bears really do shit in the woods. In this case, it turns out they do. They can prove it - with graphs and everything.


This is important. I wish this happened more often. There are so many “common sense” assumptions that don’t stand up to scrutiny. Think how much better the world would be if we tested our assumptions before acting on them.


Are there, tho?

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Chile also abandoned many neoliberal policies quickly and 30% of its income comes from state owned mines.

Their success was in the rise of tech requiring copper and the price of copper skyrocketing, and they have things like state-sponsored private pensions and public healthcare and keep a reserve for stimulus spending. As much credit as the Chicago School likes to take, they went against the grain as much as followed the advice.


That they don’t care how it happens is exactly the point.


I knew that was coming. But it’s a point that illuminates nothing, because the left also has to figure out the accomplish-and-enforce issue. It isn’t exactly in a position to be throwing stones on this topic; ends-justify-the-means is the root problem here and that’s something that lefties engage in plenty. Perhaps the more important issue is Political Death Squads and the ends-justify-the-means mentality which enable them and much other fuckery, and not which ideology they are in service of.


You mean to say money motivates people, to do heinous crimes no less?


Yes, for instance, that it’s a more dangerous time than ever for police officers. The statistics on police deaths in the line of duty show this not to be the case, but it’s a very common belief.


My takeaway: So basically, stock markets are evil. Got it.

But we weren’t discussing the right and left. We were discussing the stock market. Do lefties not own stocks?

If we’re splitting all of humanity into right and left, does it make much sense to accuse the left as being just as bad as the right? If we’re talking about bad behaviour (to put it mildly) are we not in agreement that the behaviour is bad, and that it’s perfectly sensible to discuss how to limit that?

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No, stock markets don’t care. They are very efficient and very effective. It’s just that what they are efficient and effective at is not necessarily something you want. Which is something I have the gravest difficulty explaining to the cheerleaders of capitalism. “It’s so effective, it must be good!” Yes, well, Hemlock’s pretty effective too.

People, on the other hand, are evil. Abundantly so.

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