Sebastian Edwards' "American Default" unveils a little-known chapter of American economic history, focusing on President Franklin D. Roosevelt's controversial decision to abandon the gold standard during the Great Depression. The book meticulously examines the legal battles and political maneuvering surrounding the abrogation of the gold clause in government and private contracts, resulting in significant losses for bondholders. Edwards delves into the Supreme Court's rulings on this matter, highlighting the complexities of constitutional law and economic policy during a time of national crisis. The book offers a compelling narrative of how the U.S. government dealt with its debt obligations during a period of unprecedented economic hardship, providing valuable insights into the interplay between law, politics, and economics.
Sebastian Edwards' "The Chile Project" offers a comprehensive analysis of the economic policies implemented in Chile under the Pinochet dictatorship, often referred to as the 'Chicago Boys' experiment. The book examines the dramatic economic growth experienced by Chile during this period, while also critically assessing the high levels of inequality and unfulfilled promises that accompanied it. Edwards delves into the political context of the reforms, highlighting the role of the dictatorship in their implementation. He also explores the long-term consequences of these policies, including the controversial pension system and its impact on the Chilean population. The book provides valuable insights into the complexities of neoliberal economic models and their social and political ramifications.
Left Behind is the first book in the Left Behind series and narrates the story of the Rapture and its immediate aftermath. The novel follows characters such as Rayford Steele, a pilot, and Buck Williams, a journalist, as they navigate a world where millions of people, including all children and babies, have suddenly vanished. The story delves into Christian eschatology, particularly dispensationalism and premillennialism, and introduces the character of Nicolae Carpathia, who is revealed to be the Antichrist. The book sets the stage for the seven-year Tribulation period and the formation of the Tribulation Force, a group of Christians resisting the Antichrist's reign.
How did Chile's economic experiment reshape global economic thinking, and what can it teach us about the future of neoliberalism and populism in Latin America and beyond?
Sebastián Edwards is a professor of international economics at UCLA and writes about Latin American history, economics, and politics. His books include Left Behind: Latin America and the False Promise of Populism, American Default: The Untold Story of FDR, the Supreme Court, and the Battle over Gold, and most recently The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism.
Sebastián and Greg chat about the remarkable economic transformation in Chile over the last seven decades, the roots of neoliberalism and its global implications, the contemporary challenges facing Argentina, and what lessons can be gleaned from historical economic events like the U.S.’s default during the FDR era.
*unSILOed Podcast is produced by University FM.*
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Why could the U.S. justify a default while Argentina couldn't?
48:11: I think that the notion of excusable default is important. If there is an act of God, and the Great Depression was thought to be, in part at least, an act of God, that was one element. The other one is that I think the Supreme Court rulings were very detailed and pedagogical, and they explained that aspect of the justifiable default in a clear way. And the third one is that the devaluation was very large, from $20.67 to $35. So, the problem with Latin America is that most devaluation crises are very timid.
On Chile's horizontal inequality
56:01: Chile is one of the most unequal countries in terms of income, but also it's very segregated. [56:37] So, there is this horizontal inequality that I think is also important, and as the country developed and people got out of poverty, being treated in a disrespectful way by whiter citizens—there's also a racial component, but in Chile, it's not acknowledged all the time—but being treated without respect is not acceptable anymore. People get resentful, right? So, I think that all of that added to this quite unstable cocktail.
How inequality and slow growth created Chile's deadly cocktail
04:11: When you combine inequality with slower growth, then you have a really deadly cocktail. And that happened after 2014, and it made the criticism higher. And the third point is that there were some implicit promises that the supporters of the model made that did not happen. And that's mostly related to pensions—the fully privately run (not anymore, but originally) pension system based on individual savings accounts. The idea was that if things worked the way people thought they were going to work, workers would get a rate of replacement of about 70 to 80 percent of their income. It turns out they get about 25 percent instead of 70 or 75 percent, and people feel betrayed.
unSILOed with Greg LaBlanc 