NARRATOR: With the battle against the draft won and the creation of an all-volunteer force
a reality, Milton continues to press home his argument for minimum government and individual
freedom. He could not know that years earlier and eight thousand miles away, seeds of the
most public clash in his life had already been sown. Between 1955 and 1964 graduate
students from Santiago’s prestigious Catholic University had received scholarships to study
economics at the University of Chicago. Most of the students developed ideas on free markets
and freedom similar to those of Milton Friedman and others at the University. They became
known as the “Chicago Boys.” In 1970, with the support of Cuba’s Fidel Castro,
Chile elects the first Communist president in the Western World. Salvador Allende immediately
nationalizes basic industries and controls prices and wages. The Chicago Boys remain
quietly in the background. One of them is Rolf Luders, who earned his Ph.D with Milton.
ROLF LUDERS: Under Allende the rate of increase in prices annualized of the month of September
‘73 was one thousand percent. One thousand percent!
NARRATOR: There are food shortages and strikes. The basis of the economy is copper and the
miners strike dozens of times in just two years. The banging of pots and pans is the
sound of a revolution in the making. On September 11, 1973, General Augusto Pinochet leads a
military coup against Allende. It is covertly supported by the United States. Pinochet and
his generals bomb the presidential palace. Allende is either murdered or commits suicide.
The Chilean economy continues to decline. In time,Pinochet begins to listen to the Chicago
Boys as they offer their proposal for economic recovery.In the midst of the turmoil, Milton
Friedman accepts an invitation from a local foundation to speak
in Santiago about economicfreedom.
ROLF LUDERS: He said there’s one condition for me to talk to the press, that I can say
whatever I want to say, and I said sure, why don’t you do it and what do you want to
say? And he said, ’well, I want to talk about, you know, the benefits of a free economy
and so on. But I also want to say that a free economy has to be accompanied by a free democratic
elections and a free government.’ And I said, ‘well, maybe Pinochet will not like
that very much,’ and he said ‘well, that’s too bad, you know.’ As I recall, Milton
Friedman said opening the economy up to international trade was a key element of any economic reform,
free enterprise was absolutely correct. Getting rid of all these regulations which inhibited
entrepreneurships were great. It was a brief meeting, maybe half an hour or so, or forty-five
minutes. And that was it.
NARRATOR: And so Milton Friedman publicly and privately agrees with the Chicago Boys,
that a relatively short, but painful shock treatment is needed to save Chile from the
disaster of continued inflation.
ROLF LUDERS: Large groups of Chileans paid a high price for the change of system. This
meant low incomes, meant high unemployment, meant bankruptcies. You cannot have a free
economy without political freedom. And if you have political freedom, you need economic
freedom to preserve political freedom.
NARRATOR: In December 1976, Milton arrives in Stockholm to accept the Nobel Prize in
Economics. The news of his trip to Chile and his conversation with Augusto Pinochet has
preceded him.
MILTON FRIEDMAN: From the time we landed in Sweden we had 24-hour police protection. There
was this demonstration of about five thousand people in front of the Nobel ceremony place.
In order to go from the one place to the other, we had to go out of a back door. You know,
you people have such a distorted idea of what went on; let me tell you some facts. Number
one, I was offered two honorary degrees by universities in Chile before I went down,
I refused to take them, because those universities were being supported in part by public funds,
and I did not want to appear in any way to provide any support to the political system
in Chile. I’m not a representative of Chile, I’m not an advisor to Chile, I have no commitments
to the government of Chile.
(ceremonial music)
NOBEL ANNOUNCER: I now turn to you Professor Milton Friedman.
YOUNG MAN IN AUDIENCE: (Shouting & Blowing whistle) FRIEDMAN GO HOME!! FRIEDMAN GO HOME!!
MILTON FRIEDMAN: The young man had used his father to pass the ticket onto him, and he
came to the ceremony with the express purpose of making a disturbance.
(Young man still shouting at Milton)
NOBEL ANNOUNCER: I am very sorry for this incident-- it could have been worse.
(Laughter & Applause)
NOBEL ANNOUNCER: The Royal Swedish Academy of Sciences asks you to step forward and receive
from the hand of His Majesty, the 1976 Nobel Memorial Prize.
MILTON FRIEDMAN: Let me emphasize that the Swedish people were wonderful. There were
a very large number of people who came up to us and apologized for what had happened.
(applause)
NARRATOR: Now, some thirty years later, Chile is a far different place, although the scars
of the past are etched in stone at Santiago’s “Monument to the Disappeared.”
For the majority of its citizens, modern Chile has been called an “economic miracle.”
In one of the fastest growing economies in Latin America, Chileans are more affluent than at
any time in their history. That the more socialistic governments of the early 21st century have
reaffirmed the free market reforms of the 1970s and 80s would seem to be a “second
economic miracle.” These shoppers live in a society of single digit inflation and relatively
low unemployment. Chile has one of the highest literacy rates in Latin America. Record housing
starts reflect a solid middle class, and the quality of life in suburban neighborhoods
like this one, rivals that of North America or Europe. Chile is one of the world’s major
exporters of fruits and vegetables, especially during the Northern Hemisphere’s winter
months. Today, Chile is the second largest exporter of fresh salmon in the world,
and its award winning wine industry has become an international success.