Prudence as a National Consensus
Despite the financial turmoil spreading across South America, Chile remains an isalnd in the storm. The country has pragmatism inits blood and its finance minister, Nicolás Eyzaguirre, has maintained rigid control over national spending. His former counterpart in Peru (see "Politics Torpedoes Growth") has had less success.
Nicolás Eyzaguirre is right to be modest about his
achievements as Chile's finance minister, even though he has
kept the country growing through Latin America's worst crisis
in many years. Argentina, Chile's neighbor to the east, is sunk
in a depression. In Peru to the north, protesters are attacking
the government's pro-market policies. Bolivia and Brazil have
little to show for their years of reform. How was Chile able to
find the road to stability and stay the course when so many
South American countries have stumbled, declaring free market
reforms unworkable or unjust? Many forget Chile's turbulent
recent history. In the 1970s it suffered under far-left
Socialist President Salvador Allende, and then his nemesis,
Gen. Augusto Pinochet. His military government presided over a
catastrophic banking crisis. Chileans took the lessons of those
traumatic years to heart, embarking on radical, but
well-planned free market reforms under Pinochet's finance
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