[Marxism] Why Pinochet did not privatize Codelco

Louis Proyect lnp3 at panix.com
Wed Mar 15 10:06:44 MST 2006


Standard Schaefer: During Pinochet's privatization of industry he kept 
control of CODELCO, the huge and highly profitable state-owned copper 
producer. Under Pinochet, it began to produce more than ever before, 
becoming one of the most profitable companies in the world, according to 
Fortune magazine. How did this jibe with the neo-liberal ideology?

Michael Hudson:Chile's mineral-rents are so high that their privatization 
would bring a price that would provide the government with so much money 
that it could not use it productively without becoming essentially a 
public-sector economy, which is just what the Chicago monetarists do not 
want to see. They are against seeing governments control vast amounts of 
money, on the premise that it would be squandered on bureaucracies and 
insider dealings. In Chile's post-Pinochet case this fear does not seem 
unrealistic, given the experience of its privatizations to date.

Meanwhile, even Friedman has noted the difference between economic rent ­ a 
free ride ­ and profit earned from active investment, when he said that a 
rent tax is the "least bad" tax. The world market price of copper is 
substantially above Chile's costs of production, at least its direct costs 
before being loaded down with crypto-costs that absorb revenue in 
tax-deductible ways such as interest, insurance, re-insurance, management 
fees, dividends and so forth. Privatization would turn over this "free 
lunch" to private buyers.

full: http://www.counterpunch.org/schaefer10202003.html

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