I’ve repeatedly praised Chile’s pro-market reforms (see here, here, and here) and I’ve repeatedly condemned Venezuela’s shift to socialism (see here, here, and here).
But if you don’t have time to read all those columns, this chart from the Maddison database tells you everything you need to know.
Simply stated, Chile’s reforms have delivered huge benefits while’s Venezuela’s statism has produced misery. Quite a contrast.
I’m sharing this data because there’s a controversy about the roles of two prominent American economists (both were awarded the Nobel Prize).
- Milton Friedman is associated with Chile’s shift to free markets and some people think that his role was tainted because Chile was a dictatorship.
- Joseph Stiglitz is associated with Venezuela’s embrace of socialism and some people think that his role is tainted because Venezuela has become a dictatorship.
To begin our analysis, let’s start with this tweet from Noah Smith.
For what it’s worth, I don’t like making accusations of bad faith without proof. So I start with the assumption that both Friedman and Stiglitz oppose dictatorships.
But if one of them might be guilty, I feel very confident in asserting that it’s not Friedman. If you’re interested in learning more, you can see what others have said by clicking here, here, and here.
You can also see what I wrote back in 2021 explaining why it is good that Friedman seized opportunities to proselytize for good policy. If you’re pressed for time, here’s the most-relevant excerpt.
…we should encourage engagement with distasteful governments. I certainly don’t endorse China’s government or Russia’s government, but I’ve advised government officials from both nations. Heck, I would even give advice to Cuba’s government or North Korea’s government (not that I’m expecting to be asked).
The bottom line is that Friedman’s modest interaction with government officials in Chile was based on good motives, just like I assume Stiglitz’s interaction with Venezuelan officials had good motives.
But there is a difference. Friedman’s advice was right and Stiglitz’s advice was wrong! Just look at the data. Assuming we care about real-world evidence, it’s game, set, and match for Friedman.
