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Aug. 25, 2006 - Freedomain Radio - Stefan Molyneux
36:02
384 Chile and Free(r) Markets
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Good afternoon everybody, it's Steph.
I hope you're doing well. I am now testing out my new USB microphone.
So hopefully this will sound a little bit better.
And as I like to be a rambling man when I do my podcasts...
I thought that it also might be less crackly than the one that's going into the regular microphone jack.
So we'll see how all of this comes together, but I wanted to have a little bit of a chat about Chile.
Chile. I'm not exactly sure how you pronounce it, but it's definitely not Chile.
So Chile, for those of you who don't know, there's kind of an interesting history.
Between Chile and the Chicago School.
This is Hayek's alma mater and Friedman's.
And there's an interesting sort of connection or history between Chile and the Austrian economists.
The Chicago economists, the free market economists at the University of Chicago.
There's been a historical kind of exchange between the students in Chile and the students in Chicago, and that's given them quite a vision towards the free market.
And it's been very interesting to hear, or to read about for me, what's happened in Chile after they've started to put some...
And it's sort of important to see that this is like a little laboratory to see how sort of free market ideas work within a kind of statist environment once you get this transfer.
And there's lots of good statistics and so on.
So it might be worth having a little bit of – I'll just sort of touch on it briefly.
And it might be worth looking a little bit into it further yourself just to sort of make sense of it.
So for about the last 30 years, Chile has been trying to put together sort of unusually for a lot of third world or South American countries.
Chile has been trying to put together some sort of free market programs or freer market programs.
And it's sort of well worth looking at some of the results and some of the steps that have come out of it.
So I'll put some links to some articles up on the bulletin board at freedomainradio.com forward slash B-O-A-R-D. This is from a May 20th, 2003 article by Anna Edos called Chile 10 Steps for Abandoning Aid Dependency for Prosperity.
And she sort of divided it or he sort of divided it into 10 kinds of factors, 10 factors which have allowed Chile to achieve the highest per capita income in all of South America.
So, let's start with the sort of picture before, and this is an article called The Road to Serfdom After 60 Years by Christian Larrelais V, or the 5th.
And this is translated from, I think, the Spanish, obviously, so this may not be perfect English, but let's have a look at the before picture of what life was like in Chile.
And looking at Allende, A-L-L-E-N-D-E, was the leader of Who was a Marxist, or a socialist for sure.
And when he sort of got into power, like most people in sort of third world countries, he went into the whole socialist thing.
And... What happened was, two years after L&A put his socialist stuff in, you know, high taxes and nationalization of key industries and so on, Chile was almost in a civil war, had an inflation rate of about 600% per year.
The size of the state was about 60% of gross domestic product, and of course the gross domestic product was far lower than what you would have Within a sort of westernized semi-capitalist economy, the average rate of import duties was 100%.
100%.
And of course, the leftist kind of thinking, Marxist thinking, has had a very strong effect in South America.
Not many people know, of course, that Mexico was the first communist country at the turn of the last century.
And Keynesian And economics also had a very strong effect because, of course, a lot of the people who were educated in Western universities went overseas.
A lot of the people who ended up running these dictatorships or having key roles within these dictatorships came from Western universities.
And you can find this, the Paris influence in what went on in Cambodia under the Khmer Rouge is very strong and sort of a very strong indicator of what was going on in Western universities.
So, what happened was that Hayek's, they were called the Chicago Boys, kind of went down and began to have some sort of chat with the leadership in Chile, and it began sort of 1974.
The Chicago Boys that brought to Chile Hayek's ideas of the free market had the opportunity with the first oil crisis of 1974.
At the end of that year, they were able to lead the economy in a process of reform towards a free market.
And let's see what happened.
And we can say that import duties, which were up 100% in 1973, today, this is not sort of actually today, but relatively recently, today the effective import duty is 3%, right?
So it went from 100% to 3%.
The inflation rate was 600% in 1973.
In 2004, it will be 2%.
Corporate taxes in 1973 were over 40%.
Now they are 17%.
The size of public enterprises, this is the corporations that are owned by the state, was 39%.
Now it is around 6% of GDP. So it went from almost 40% to just over 5% of GDP. In 1973, we had a pay-as-you-go social security system, totally controlled by the state.
Now, I'll get to this a little bit later, now we have an individual capitalization system in which each worker chooses the pension fund in which to save for his retirement.
In 1973, enrollment in primary and secondary schools provided by central government was 90%.
But now, it is around 60%, but with a huge difference.
We have an indirect voucher system.
In which each family is free to choose a school.
So enrollment went from 90% of the public system to 60% of the public system because people have a voucher system by which to opt out.
I'm not a huge fan of the voucher system, but it certainly is a bit of a step up from only having state schools.
In 1973, we only had state universities or private ones that were indirectly controlled by the government.
Now 50% of university students are attending full private institutions that receive no state financial support.
That's very important, of course.
And what has occurred?
Our income per capita was duplicated, I think that means doubled, in the last 10 years.
It is around $9,600 a year, US one of the highest in Latin America.
But most importantly, the free market reforms had significant social effects.
In 1970, 21% of Chilean populations, the Chilean population, lived in conditions of extreme poverty.
Today, it is only 8%.
So, of course, this is all very measurable stuff.
As violence decreases within society, wealth, prosperity, freedom, independence, and, I think it's fairly safe to say, human happiness increases as a result.
So, when we talk about the positive effects of free market theories or free market systems, we're not talking completely in abstract isolation from measurable facts.
So let's have a look at how Chile did it, and of course this could be quite helpful in terms of communicating how we could do it here, because, boy, they were at 60% of GDP in terms of the government.
We're not that far behind.
So, trade policy.
This is sort of step number one. Trade policy.
Trade policy was one of the first things Chile reformed, beginning in 1974, with the dismantling of quotas and other non-tariff barriers.
In addition, the Chilean government established a uniform tariff rate of 10% on all imports, with the exception of a few agricultural products.
Those damn farmers, I'm telling you.
During a crisis in the early 80s, tariffs were temporarily increased to 15%.
And then in 1990, it began to get lower and lower.
Now, the lowering of tariffs had four important effects.
First, the influence of special interests and the corruption associated with them was significantly reduced.
With all sectors of the economy facing the same protection, the government could no longer offer special deals.
This is very, very important to understand.
When you get rid of the capacity for the government to provide favourites to special interest groups, people stop futzing around with special interest stuff and preying on the general population through state privilege and actually go out and get real jobs that are productive and useful to the economy.
Secondly, the flat tariff eliminated the distortions that usually retard domestic economic growth.
Third, exports increased considerably, from $3 billion in 1974 to $29 billion in 2000.
Now, this is sort of complicated.
We'll just touch on this very briefly.
But once you get rid of imports, tariffs and duties and so on, then more people want to sell to you.
Now, when more people want to sell to you, you then have the currency of the other country that you're We're good to go.
And fourth, the lowering of tariffs diversified exports.
The share of copper exports, for example, decreased from 76% of total exports in 1970 to 38% in 2001.
Non-traditional exports increased from 10% to 38% during the same period.
These numbers are very significant.
Not only are they new businesses and new opportunities, but they're real efficiencies.
I mean, this is why in Canada we don't grow bananas.
And so whenever you increase the amount of trade with other people, you increase...
The wealth of the country because you get to do that division of labor and specialization which occurs in a wide variety of different sort of markets and educational and language areas and meteorological areas and so on.
So that's very good.
So the second, the step two, is...
The fiscal burden, right?
So, the Chilean tax code went through two major reforms.
The first, in 1975, introduced a flat rate value-added tax of 18%.
The second, in 1984, simplified and reduced the corporate tax, which is currently set at 16%.
In 2002, the top income tax rate lowered from 45% to 43%, and we'd be lowered to 40% in 2003.
And according to the Centro de Estudios Publicos, a public policy foundation based in Santiago, Chile, tax evasion in Chile estimated around 22% of potential tax revenues is the lowest in Latin America and not significantly different from many developed countries.
Of course, that's really sad, and I don't consider this from 45% to 40% being a huge deal, but I don't imagine that it matters that much because the people in those income tax brackets don't pay much taxes anyway.
In addition to the tax reform, the reform of the mid-70s included a rationalization of public expenditures, which in prior years had gone out of control.
According to the CEP, measures to adjust public spending were implemented in three areas, public investment, public sector wages, and the elimination of most of the subsidies implicit in the operations of the state-owned corporations.
By 1976, government had a fiscal surplus of 1.37% of GDP, its average just under 1% since then.
Step 3. Government intervention.
The first of three major rounds of Chilean privatization began in 1934.
The first, which lasted from 74 to 83, included, most farms and some industries, as well as industries that had been acquired by the state during the government of President Allende.
Allende. This included mostly industries and banks.
The second round in 85 included public utilities plus the reprivatization of companies that had returned to the government during the 82 to 83 crisis.
The third round in 1990 comprised basic infrastructure through concessions and water companies.
A copper company, a bank, the principal oil company still remain in state hands, but the share of public enterprises of the GDP declined from 39% in 73 to 9% in 98, I guess gone down to 6% by 2004.
Step number four, monetary policy.
In 1989, a new law made the central bank independent.
The bank has a, quote, board of five members nominated by the president and approved by the Senate.
Each one has a ten-year term.
Every two years, there is a change in one of the board members.
They are independent from the government, cannot be removed from their position.
The Ministry of Finance has the right to participate in board meetings, but does not have a voting power.
Now, of course, this isn't exactly the same as a free market economy, but a heck of a lot better than it was before.
Prior to the reform, Chile's inflationary history was horrible.
Inflation from 1961 to 1989 averaged around 75%, reaching as high as 500% in 1974.
So this is just massive, massive printing of money in order to spend money and, of course, transfer it out of the country and so on.
The newly independent central banks set and reached inflation targets successively lower each year until inflation was at very low levels.
Since 2000, the target has become permanent to 2% to 4% annually.
And so, step number five, banking and finance.
Liberalization of the banking system began in the mid-70s.
The major reforms included the privatization of all but one state-owned bank, liberalization of interest rates, reduction in reserve requirements, and enlargement of the scope of banking businesses.
So that's all very, very good.
The liberalization of the banking system and stronger bank supervision has led to Increased penetration measured by the increase in deposits and loans as a percentage of GDP and more bank consolidation.
Banking loans amounted to 70% of GDP and total deposits to 61% of GDP in 2000.
These figures compare with 54% and 47% respectively in 1990.
So more people are putting money in the bank, which is good for the economy because it means that more money is available for loan to private businesses.
All of that stuff is very, very good.
Another major reform in the financial system, of course, the privatization of the pension system, something which is well worth examining if you get into debates around this kind of stuff with the people in America or in other places as well, of course.
And we'll talk to that a little bit more.
And the reform allowed individuals of the privatization of the pension system allowed individuals to save retirement money in fully funded privately managed accounts rather than relying on the government transfer program of collecting payroll taxes from the active population and transferring them to retirees as pensions.
Not good at all.
And pension funds have increased continuously since 1981, and in 2001 represented more than 50% of the GDP. This is very good.
Of course, if you've got people investing in pension funds, that's much better for the economy.
Sorry, it's not always better for the economy, because you don't know what these people would do if they weren't forced to do that.
But it's certainly better for the economy than just having productive people taxed and having the money given to retirees because that's just a simple income transfer which doesn't accumulate any capital for investment or make any capital available to entrepreneurs.
Step number six, capital flows and foreign investment.
In the mid-70s, the Chilean government took two major steps towards liberalizing foreign direct investment.
It enacted a decree law to define the rules for foreign investment.
It withdrew, also, from the Andean Pact, a regional organization whose protectionism and bias against foreign investment were incompatible with Chile's new development strategy.
This decree law has been recognized by the international business community as one of the most modern and flexible legal frameworks for foreign investment in the world.
There's non-discriminatory and non-discretionary treatment of foreign investors.
So foreigners are treated the same as domestic investors.
When the investment application is approved, the foreign investor enters into a contract with the state, a contract that neither the Chilean government nor a regulation can modify unilaterally.
So, not exactly the same as the free market, of course, but a heck of a lot better than what came before.
Foreign investment is acknowledged in the form of freely convertible currency, physical goods that can be imported, technology in any form that can be capitalized, capitalization of foreign loans and debts in freely convertible currency and whose contract was authorized by the central bank and capitalization of profits transferable abroad, right? So your money doesn't go into one of these roach motels that many states in South America and around the world run where you invest but you can't pull your money out of the country.
It's freely convertible and that's good.
That means people, of course, come in.
The policy of the Chilean state is in more favorable, sorry, is that in case more favorable regulations than those established in the contract are enacted, the investor has the right to request an amendment to reflect the new regulations.
This reform has resulted in a massive inflow of foreign direct investment, increasing from 12.7 billion in 74 to 94 to 35.9 billion in 95 to 2001.
That's all very, very good.
It's a very open policy for capital controls.
In 1990s, the government required that foreigners wishing to move funds into Chile make non-interest-bearing deposits at the central bank.
This is just the mafia, right?
If you want to invest, you have to pay us off.
In 1998, the percentage of money required to be deposited in the central bank was reduced to 10%, and later that year the rate was reduced to zero.
That's very good. This year, I guess this is 2004 or 2005, within the framework of the U.S.-Chile Free Trade Agreement, the Chilean government agreed to repeal the law.
Step 7. Wages and prices.
Wages and prices were liberalized at the beginning of the reform process in 1974.
That year, the government lifted restrictions on all prices in the economy.
This was a clear signal of an ascent market economy, which uses the price system as an information mechanism that leads to a more efficient allocation of resources.
This is standard stuff which von Mises introduced in the 20s, which is that if you control prices, then you control information which directs resources to the most efficient use.
So if you keep the price of lumber low, artificially low, but there's a huge demand for lumber, resources don't move towards the production of lumber because the price remains low.
Thus, the lumber shortages increase, and it's all very, very bad.
Wages were also liberalized.
Collective bargaining was suspended, and with the exception of the minimum wage and public sector wages, the government did not intervene much in the determination of private sector wages.
Property rights, contractual agreements in Chile are now probably the most secure in Latin America, and the local public administration is generally, generally honest.
So that's good.
Step number nine, regulations.
The reforms of the past three decades have simplified, where possible, and reduced the regulatory cost of doing business in Chile.
The liberalization of the labor market has made it more flexible.
Of course, this was labor immobility, which meant you had to stay in your job, unlimited compensation for labor dismissal, minimum wages, and special salary considerations.
The 1974 reform also established that negotiations between employer and employee would determine wages in the private sector.
Shocking! Absolutely shocking, of course.
You could hire and lay off people more easily.
You have reduced severance pay for layoffs.
And of course, we know that in France and in Germany, this is one of the reasons why their unemployment is so high.
And in 1974, reform made starting a new business in Chile more expeditious.
Applications are generally now approved within a month.
Isn't that nice that you can get approval to run a business within a month?
Chile, this is interesting.
Chile has an informal economy, but it's very small.
Franz Friedrich Schneider, professor of economics at Johannes Kepler University of Linz in Austria, an Austrian economist, did a study on the size of the informal economy in 110 countries around the world.
I guess by going and attempting to procure illicit substances.
That would be a fun research project, I think.
According to Schneider's study, Chile's informal economy is about 19.8% of gross national product.
The lowest proportion of informal economies to GNP in Latin America and lower than the informal economy in Belgium, Spain, Italy, Portugal and Sweden, all of which are developed economies.
Can you imagine? 20% of the gross national product is in the black market or the grey market.
Absolutely fantastic. And this is considered to be progress, right?
So, this is all very good, right?
I mean, it's not perfect, right?
But you sort of take it where you can get it, that it's really, really great in terms of what has occurred in Chile.
I mean, just for the average person, right?
The Libertopia doesn't exist yet, but it's very clear what's happened in terms of positive events within Chile, and it's a pretty good example of the application of free market economics.
And it's all measurable, and so on.
Now, let's have a quick look at the Social Security privatization that has occurred within Chile since 1981, and this is from an article written in 1999, by El Jacob Rodríguez.
My God, I'm so sorry to all my Spanish listeners.
I'm afraid I'm going to have to turn in my maracas.
And this is from the Cato Institute.
And this has been quite a trend.
Seven other Latin American countries, Peru, Colombia, Argentina, Uruguay, Bolivia, Mexico, and El Salvador have also privatized their retirement systems And this has happened in March 1999 in Poland and so on.
And so I think we can look at sort of the history of it very briefly.
In 1924, Chile became the first country in the Western Hemisphere to introduce a state-run retirement system when it established a retirement fund for manual workers.
And this, of course, is part of the general...
Leftist and communist influence that has been very strong in South America.
And in 1925, they created two more funds.
Soon these state-run, for public sector workers and journalists, right?
I want to make sure you bag the journalists early.
Soon these state-run collective capitalization funds evolved into a pay-as-you-go system in which the benefits of retirees were paid from the contributions of active workers.
This is the Ponzi scheme system that we've talked about in other areas as well.
In 1968, then-President Eduardo Frei, you know what, I'm not even going to try, some Spanish guy, summed up the chaotic nature of Chile's retirement program.
There are 2,000 Social Security laws in Chile.
Think what this means. 2,000 Social Security laws, together with the regulations and the agreements of the Social Security institutions, in other words, a growing monstrosity.
In the readjustment law of 1966, 46 new Social Security laws were introduced, followed by 44 in 1967 and 1,238 in 1968.
However, the executive has no means of stopping this monstrosity.
Each group of Social Security contributors has many laws.
Some are very small groups, very respectable, naturally.
There are some fabulous cases.
The racetracks have nice Social Security institutions.
What is worse is that the country is spending over 18% of gross national product on Social Security.
What fiscal budget can survive this?
By the early 1970s, the system had clearly gotten out of hand.
Contribution rates had increased from 16% to 26% of total payroll.
The government's contribution to the pension system had increased to about 38% of the system's total revenues, or about 4% of the gross domestic product, and the implicit debt of the system was over 100% of gross domestic product.
In addition, and this is of course true for the West now as well, demographic changes worked against the pay-as-you-go system in Chile.
The ratio of workers to retirees had declined from 10.8%.
In 1960 to 4.4 in 1970 to 3.2 in 1975 to 2.2 in 1980 when the pension reform law was adopted.
So, all very interesting stuff.
The way that the new system works, just very briefly, each month's workers are forced to deposit.
It just says deposit, but we know what the reality is.
Each month's workers are forced to deposit 10% of their wages in their own individual pension savings accounts.
The percentage applies only to the equivalent of the first $22,300 of earnings.
And since that level has remained unchanged in real terms during the first 18 years, the mandatory content has gone down considerably because wages have more than doubled.
And they are allowed to switch from particular schemes to another, and that's all been sort of allowed to them, which I guess is nice.
You know, they force you to pay money, but they let you switch between state-approved programs.
Still better than it was, but a long way from real freedom.
Now, the rate of return has been not too, too bad.
Basically, it's been a little over 10.6%, which is not bad at all, given that, of course, it's government run...
Oh, sorry, that it's somewhat privately run, but enforced.
So, given that the economy as a whole has grown, and this has been partly because you've gotten out of this Ponzi scheme...
And through these forced contributions have released a lot of capital towards entrepreneurs, then the average rate of return has been pretty good, 10.5%.
We'd all be pretty satisfied with that overall from our stock portfolios.
And one example of the result of this has been that if you look at the years between 93 and 95, old age pensions were between 51 and 57% higher than pensions under the old system, right?
So people have a huge amount more money relative to what they would have had under the old state-run Ponzi scheme.
And you could say, I mean, not relative to a totally free system, but after 18 years, Chile's private pension system has been a pretty good success.
Chilean workers are retiring with better and more secure pensions.
This reform, along with other free market reforms, which we mentioned before, the privatization of state-owned enterprises, Trade liberalization, labor reform, tax reduction has contributed to the extraordinary performance of the Chilean economy over the past 14 years.
This is from 1999, so a period during which it has been growing at an average annual rate of almost 7%, which is really quite startling and certainly far better than the West does.
The savings rate has increased from about 10% in the late 1970s to over 25% today.
The Chilean pension reform has also contributed positively to the functioning of the labor market.
So by reducing the total rate of payroll taxes, it has reduced the cost of labor, and thus it has encouraged job creation, and by relying on capitalization system, it has greatly reduced, if not eliminated, the labor tax component of the retirement system.
Indeed, the unemployment rate of Chile has decreased from about 15% in the mid-1970s to approximately 5% on average in the 1990s.
And there are other softer benefits as well, at least that are claimed in this article.
You can judge for them yourself, of course.
Chilean workers, through their pension accounts, have become onerous of the means of production in Chile, and consequently have grown much more attached to the free market and to a free society.
This has had the effect of reducing class conflicts, which in turn has promoted political stability and helped to depoliticize the Chilean economy.
Pensions today do not depend on the government's ability to tax future generations of workers, nor are they a source of election-time demagoguery.
To the contrary, pensions depend on a worker's own efforts, with the satisfaction and dignity that that produces.
As the political analyst Mark Klugman stated in testimony to the U.S. Senate in 1997,"...touching the pension savings account of the workers is indeed the third rail of Chilean politics." All the ingredients for success, individual choices, clearly defined property rights and contributions, and private administration of accounts are already present in the Chilean system.
If Chilean authorities address the system's shortcomings with boldness, it's still underfunded, of course, we should expect Chile's private pension system to be even more successful.
Blah, blah, blah. Okay, so this is just something too important to understand.
And I'm sure you do understand it, and then I'll end up with sort of one last comment.
The thing I would say that's important to understand is that freedom from violence, a drop in coercion produces prosperity, produces freedom, produces happiness, and all these kinds of good things.
And I'm sure we're all fairly aware of that.
But I think it's important to understand a little bit about what's going on in Chile, just so that you can look at these kind of 7% growths in the economy and the doubling or tripling of the income over 15 or 20 years.
As very real, very significant, very positive changes in a society.
But I'd sort of like to just end up this podcast talking about just a little bit of a cautionary note, or I guess you could say a little bit of talking about empathy.
It's very important to not make the mistake of confusing Chile for people.
Right? So one of the things that's pretty natural to us who try to look for the best in things is for us to say, well, that's great.
See, Chile has made a real turnaround.
There's been real progress here.
Chile is now on the right track, and Chile is better off, and so on, and so on, and so on.
Well... I'd just like to put forward the proposition not to rain on anybody's parade.
It certainly is a better thing for Chile to be where it is right now than where it was before.
But I want you just to think about...
Just think a little bit about the history of Chile.
And I know nothing virtually about the history of Chile other than what I've read here and a couple of other snippets I picked up along the way.
But I'd like you just to think about Chile, say, going back...
20,000 years, right?
So long before recorded history.
Chile going back for 20,000 years up until 1973, 1974 when all of this stuff began to get into motion.
And here you have, you know, 0.001% of the population having some slightly greater opportunities than everyone who lived and died and came before.
And imagine if you're 40 years old in 1973-1974 in Chile and you suddenly face this liberalization.
Well, what have you lost in your life so far?
Well, you've probably lost all your savings.
You've lost the opportunity or the chance to jumpstart your career and that's a problem, right?
So now all of the young kids coming after you Who have more economic opportunity are going to do a whole lot better.
You've probably become somewhat bitter over the actions of the government.
If you're 60, then your career is over, and a fat lot of good, all this liberalization is going to do you.
I mean, I guess there's some good in terms of not having your pension crash.
That's a pretty sorry benefit to get, in hindsight, for having your life stripped from you through the power of the state.
And I'd just like to spend just a moment For us to think about and remember everybody whose life is destroyed.
It's great that people going into Chile now have more economic opportunity than they did before, but...
There's a very, very tiny percentage of the people who've lived in Chile since the beginning of civilization there or the foundation of any kind of tribal system.
And it doesn't do a whole lot of good for this liberalization to occur for people who've already lived their lives in almost total slavery to the state in one form or another, left-wing or right-wing tyrannies.
And this is true when you think about things like Soviet Russia.
Well, it was communist, and then it was free.
And the problem, of course, with talking about collective concepts like the Soviet state or something like that, is that, no, a bunch of people were enslaved, as the Soviet system went on for 70 years.
And so people lived and died within that slavery.
If you die the day after the Berlin Wall falls, you're not freed.
And so I'm not trying to sort of say that we shouldn't try and liberalize.
Of course we should. But I just think it's important for us to remember that there are enormous people who've paid the ultimate price and continue to pay the ultimate price, which is their liberty, their economic independence, their sovereign consciousness.
And throughout the world, every day that goes by is a day that a man marches closer to death in tyranny.
And when we free people later on, in the due course of moving civilization forward, as we free people later on, there'll be a whole lot of people to whom it benefits not at all.
In fact, it's almost embittering, right?
I mean, if I was 65 and just retiring...
After living a life of crap, overtaxation, massive inflation, not enough to provide for my kids, no way to plan for my own retirement effectively, if I was 65, just retiring, and lo and behold, the taxes were cut in half, what I would do, I mean, yeah, I'd be happy for the next generation in an abstract kind of way, but what I would do is I would look back on my life and say, my God!
I want that money back that they took from me.
And you never get it back.
When the state liberalizes, like as is mentioned here in Chile, the pensions rose by 50% after the semi-privatization occurred of the pension system.
Well, that's great.
But what about all the people who had retired previously, who had their income stripped by 50%?
Should they get their money back?
Well, of course they should. Can they?
No, of course not. So every bit of freedom is a bit of ash in somebody's mouth to whom it comes too late.
And that's just something important to understand when we talk about freedom, that there is a certain amount of embitterment, I think, that occurs.
I can't really fight it or say that it's wrong.
It seems to me quite a rational response to having been shafted your whole life through arbitrary state power.
I can certainly see how people would feel that way.
And so, I'd just sort of like to point out that we should recognize that every day that goes by is somebody else's life going down the drain of the barrel of the gun of the state.
And when we free them, we don't free a country.
Certain people benefit, other people, it's simply revealed to them how badly they were screwed by the power of the state.
So, I'd just sort of like to mention that so we don't sort of imagine that Chile became free and that's better, right?
It is better, of course, but it's not that Chile became free.
Certain sections of Chile became free.
Other sections of Chile will never be free because their economically productive lives are gone and everything that they could have had has already been stripped from them and they can't get it back.
So that's just sort of a cautionary point to mention.
When you talk about freedom with people, that there is this reality that, yeah, it's been great for some people in Chile, but a lot of people in Chile just got kind of screwed.
And there's no way, it seems, I mean, I think in a just society you would, but we're talking about a status society, which is quite the opposite.
Thank you so much for listening.
I hope that you will check out at youtube.com forward slash freedomainradio the new series on philosophy, which I've been working quite hard on.
And I hope that you enjoy the rap intro to number five, I think it is.
And look forward to your donations.
You can sign up for one-time donations at freedomainradio.com or you can do 17 bucks a month, which I would really appreciate to help me offset the expenses of Freedom Aid Radio.
And I also would appreciate if you would take a few minutes to fill out the listener survey, that would be helpful for me as well.
Thank you so much for listening as always.
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