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Interesting review of Cohen and DeLong, but why is it that wherever DeLong goes soon the wacko commenters appear? I do like his more formal writings.

when i lived in chile, i found pinochet to be as difficult as the blogger mentions. As for lack of diversity, I'm not sure i buy it. Chile has natives, mapuche, who are a sizable part (culturally, if not numerically) of chilean life. many mapuche words have crept into chilean, etc. additionally, they have the native easter ilsanders, who have their own bars and restaurants in valparaiso. RE: indigenous peoples, it felt much more like Mexico than the US. (seriously? you ever met a navajo?)
Further, as a (comparably) rich country, loads of foreign nationals have flooded in. bolivians digging ditches etc to cuban professionals. I think chile is much less homogenous than, say Costa Rica

I seem to recall you ridiculing the idea of fair trade coffee a while back.

Some quick comments on Ben Casnocha’s impressions and lessons from Chile:

1. Chile is hardly a Catholic country. The Catholic Church is still an important political force, but that’s all; it’s more important than the Teachers’ Union but it’s decisive only in few issues. La Concertación (the political coalition of Christian Democrats and other parties that have been governing Chile since March 1990) has used the Church to support many of its policies and contributed greatly to maintain the Church’s power. Indeed, Chile’s entrepreneurial culture is weak, but today this is not because of the Church but because since 1998 La Concertación has moved too much to the left. In particular, it has been supporting crony capitalism—an alliance between big business and big government.

2. Pinochet’s legacy is not as complicated as most foreigners believe. For 20 years, La Concertación mounted a huge campaign denouncing Pinochet for his crimes—while at the same time giving asylum to the late Erich Honecker and to his widow that still leaves in Santiago, both responsible for crimes in East Germany much worst than Pinochet’s. The campaign succeeded to put together Pinochet and Argentina’s Military Junta, the same Junta that in December 1978 was ready to declare war to Pinochet. The two experiences, however, were completely different—Argentina’s Military Junta was a consequence of a fight for power between two groups of Peronistas, whereas Pinochet was the consequence of the failure of Chile’s political system to stop a “Socialist Revolution† supported by Fidel Castro but rejected by at least 60% of Chile’s population (Congressional election of March 4, 1973). Concerning Pinochet’s economic legacy, most economists still don’t understand the critical role of copper in the transformation of Chile after September 1973 (Tyler’s late 2006 post on the Chilean economy is wrong in many ways, including his view on copper). It was the collapse of the price of copper in the second half of 1974 that triggered the economic reforms that set the foundations for the new economy; it was the huge investment in copper mines in the 1980s and early 1990s that led Chile’s high growth until 1998; and it has been the high price of copper that has supported low growth since 2004 (Note: one may argue that the large appreciation of the Chilean peso since late 2003 is indicative of a Dutch Disease effect). Although the many reforms of 1975-1998 changed the economy radically (since 1998, the few reforms have been in the direction of crony capitalism), high growth is still dependent on copper.

3. Santiago’s is a collection of separated neighborhoods. All large cities are collections of neighborhoods, but Santiago is still an extreme case. It has been changing because of the large investment in housing financed with bank loans. Most neighborhoods, including Providencia and the new business district of Isidora Goyenechea, are attractive because of their cleanness and safety. Argentines don’t come to visit Santiago, whereas Chileans go to visit Buenos Aires in large numbers (Western Argentines come to Chile’s beaches for their summer vacation but their number vary greatly with the relative cost of vacationing in the beaches of the two countries). In terms of tourism the score is Buenos Aires 98%, Santiago 2%, and in the subset of honeymooners BA 100%, Santiago 0%.

4. Yes, in Santiago the Peruvian food is good, but that’s is because there is nothing else to taste. The Chilean cuisine may be is not as bad as the English one, but one have to be a proud Chilean to try it more than twice a month.

5. Most locals feel that they’re not in control. To feel in control, the cost of protecting yourself must be low. For most people this is not the case—they cannot go to carabineros (they hardly help you and you will have to waste a lot of time) and good lawyers are too expensive, and despite some improvements administrative or judiciary processes take too long. Thus, people rely on older relatives and employers to solve problems under the reasonable assumption that they know better, albeit not much better. In the case of small entrepreneurs this lack of control affects both their personal and their business life.

6. Pellegrini, the Real Madrid coach, is highly regarded, but he’s not a model. Chileans know that he’s not the boss (Jorge Valdano is Pellegrini’s boss and the righ-hand of Real Madrid’s President Florentino Pérez, a typical businessman of the Spanish version of crony capitalism). In addition, Pellegrini’s career in Chile as player and coach was not good. Actually, Marcelo Bielsa, the Argentine coach of the Chilean national team that will participate in the World Cup, has been taken as a model, both because of his soccer’s game plan and because of his attitude to the game. When Bielsa was selected, none suggested to hire Pellegrini. And if Chile does well in the Cup, I’m sure many Chileans will vote Bielsa for president!!

7. Since the 1960s, Chile has not been far away. Today Chileans are only $1,500-2,000 and an overnight flight away from North America and Europe. If costs of transporting goods to NA and Europe were reduced at half or even a quarter of their current level, Chile’s structure of production would change little.

8. Who needs roots? As I said in # 5, older relatives are important to reduce the cost of protecting yourself. If you have roots, you may have a network of relatives and friends on which you can rely for your protection. If you move to other country and start a business, you may rely on fellow migrants to protect mutually but they may be your competitors and therefore not always it’s a reliable solution.

9. The country needs better goods and services. The problem of selling goods and services in world markets is not one of information, it’s one of having good products with reliable services.

10. Piñera is not right-wing. As their parents, all the Piñeras were Christian Democrats. For a long time many people in the center-right parties were concerned that he was still a Christian Democrat. Before being a businessman, Piñera had earned a Ph.D. in Economics at Harvard U. and was my colleague at both P. Universidad Católica de Chile and the UN’s Economic Commission for Latin America and the Caribbean.

These comments were written in front of Iglesia de El Bosque, Providencia, Santiago de Chile.

2. Ben's comments that drivers are sane in Santiago is hilarious. Driver's are scared for their lives in Chile. Talk about pedestrian right of way: you are sued out of nearly all your assets should you hit a pedestrian in Chile, no matter what the circumstances. The result is that pedestrians feel free to jump in front of traffic... It is a bit funny to watch but I wouldn't call it "sane".

@ E. Barandiaran
Lovely counter-post. The man on the spot. (Park bench with laptop? -- my imagination runs wild). How is small-particle air pollution in Santiago? I heard it got much worse after Argentina cut the gas pipeline. Now you have to burn wood and oil again? Always seemed silly for Chile to rely so heavily on unreliable Argentina for its gas. Does Bolivia still refuse to sell gas to Chile because of the War of the Pacific in 19C? Is it not somewhat ironic that Chile's high level of political and economic development has strengthened tiny indigenous communities and environmental activist groups that prevent adequate exploitation of hydroelectric power -- one thing Chile has a hell-of-a-lot of is water running fast downhill!

@ E. Barandiaran - You seem quite informed. It would be a pleasure to get together sometime in Providencia. If you're up for it, my email address: ben@casnocha.com

@ Bock - Compared to rest of South America the drivers in Chile are sane.

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