The miraculous story of the rescue of 33 Chilean miners would have captured hearts and minds anytime.
But at a time like now, when so much cynicism prevails, when we expect newspaper headlines to report about human behavior that disappoints rather than inspires, this story is particularly poignant.
Undoubtedly, the post-rescue news will focus on the 33 individuals who played the starring roles in this wondrous saga.
But there is another story that screams for attention. That’s the story of the remarkable little country, Chile, where it all took place.
Economist Mark Perry points out that the rescue mission – remarkable for both what was achieved and how quickly it happened – came as result of the best, cutting edge technologies from around the world – the United States, Germany, Japan, and South Korea – rapidly arriving on site and being deployed quickly and efficiently.
The fact that Chile is one of the most economically free nations in the world is thus critical to appreciate in understanding how this great success occurred.
Consider, in contrast, that one reason the BP oil spill cleanup operation did not proceed as quickly as it could have was because Jones Act regulations allowing only US flagship vessels to operate in our domestic waters precluded use of foreign flag ships.
Chile stands out as an example of achievements only possible when people commit to freedom and free markets.
It boasts the highest per capita GDP in South America and the third highest in the Western Hemisphere. Last December it became the first South American country to be invited to join the exclusive club of the world’s top industrialized nations, the OECD – Organization for Economic Cooperation and Development.
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But back just a little less than 40 years ago, Chile was a typical, poor South American nation, with intrusive government and sluggish growth.
How was it transformed?
Read a short essay called “How the Power of Ideas Can Transform a Country,” by one of the leaders that made it happen – Jose Pinera.
He relates how, in the mid- 1950s, the Catholic University of Chile signed a cooperation agreement with the Department of Economics of the University of Chicago, then home to the world’s top free market economists, including the legendary Milton Friedman.
Thus began the education of a generation of young Chileans in the wisdom of economic freedom. Beginning in the late 1970s, these young leaders, with newly minted PhDs, helped implement new economic reforms in Chile protecting private property and promoting free trade.
A graph showing annual economic growth in Chile over the last hundred years looks like a hockey stick. From the early part of the twentieth century until 1980, the line is flat, averaging less than one percent growth per year. But beginning 1980, growth takes off in a vertical surge, averaging over 4% per year.
One of the most sweeping reforms, done by Jose Pinera, then Chile’s Minister of Social Security, was the transformation of Chile’s government Social Security system, identical to what we now have in the U.S., to a system of individually owned private retirement accounts. Chile’s payroll tax based government system was broken and bankrupt, as ours is today.
The reform, enacted in November 1980, restored the solvency of Chile’s retirement system and brought personal ownership and wealth to Chilean workers. After 30 years, these personal accounts have averaged annual returns of 9.2% above inflation.
Writing about the decision to take on this ambitious reform, Pinera notes: “I remember reiterating to my team that there was nothing as satisfying in life as to do something others deem impossible.”
Surely a sentiment that the team who just rescued the 33 Chilean miners must feel today.
At a time when Americans struggle for our own soul, we can look to Chile as a source of inspiration for the very ideals of freedom which drove what we recall as the American dream.
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