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THE KIWI RIVERMAN POST

THE KIWI RIVERMAN POST

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Chile's Socialist Rebar: Chile...

Naomi Klein: It is Chile's democratic, socialist roots, not the free-marketers who prevailed after Pinochet's coup, that are to thank for the strict building codes that have protected citizens from the earthquake.
.Haiti: A Creditor, Not a Debtor Haiti
Naomi Klein: It is we in the West who owe it reparations.
.The Courage to Say No Global Warming & Climate Change
Naomi Klein: The G-8 powers are willing to do just about anything to get a deal in Copenhagen. But the urgency doesn't come from a desire to stop climate change.
..A particularly distasteful case in point. Just two days after Chile was struck by a devastating earthquake, Wall Street Journal columnist Bret Stephens informed his readers that Milton Friedman's "spirit was surely hovering protectively over Chile" because, "thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse.... It's not by chance that Chileans were living in houses of brick--and Haitians in houses of straw--when the wolf arrived to try to blow them down."

According to Stephens, the radical free-market policies prescribed to Chilean dictator Augusto Pinochet by Milton Friedman and his infamous "Chicago Boys" are the reason Chile is a prosperous nation with "some of the world's strictest building codes."

There is one rather large problem with this theory: Chile's modern seismic building code, drafted to resist earthquakes, was adopted in 1972. That year is enormously significant because it was one year before Pinochet seized power in a bloody U.S-backed coup. That means that if one person deserves credit for the law, it is not Friedman, or Pinochet, but Salvador Allende, Chile's democratically elected socialist President. (In truth many Chileans deserve credit, since the laws were a response to a history of quakes, and the first law was adopted in the 1930s).

It does seem significant, however, that the law was enacted even in the midst of a crippling economic embargo ("make the economy scream" Richard Nixon famously growled after Allende won the 1970 elections). The code was later updated in the nineties, well after Pinochet and the Chicago Boys were finally out of power and democracy was restored. Little wonder: As Paul Krugman points out, Friedman was ambivalent about building codes, seeing them as yet another infringement on capitalist freedom.

As for the argument that Friedmanite policies are the reason Chileans live in "houses of brick" instead of "straw," it's clear that Stephens knows nothing of pre-coup Chile. The Chile of the 1960s had the best health and education systems on the continent, as well as a vibrant industrial sector and rapidly expanding middle class. Chileans believed in their state, which is why they elected Allende to take the project even further.

After the coup and the death of Allende, Pinochet and his Chicago Boys did their best to dismantle Chile's public sphere, auctioning off state enterprises and slashing financial and trade regulations. Enormous wealth was created in this period but at a terrible cost: by the early eighties, Pinochet's Friedman-prescribed policies had caused rapid de-industrialization, a ten-fold increase in unemployment and an explosion of distinctly unstable shantytowns. They also led to a crisis of corruption and debt so severe that, in 1982, Pinochet was forced to fire his key Chicago Boy advisors and nationalize several of the large deregulated financial institutions. (Sound familiar?)

Fortunately, the Chicago Boys did not manage to undo everything Allende accomplished. The national copper company, Codelco, remained in state hands, pumping wealth into public coffers and preventing the Chicago Boys from tanking Chile's economy completely. They also never got around to trashing Allende's tough building code, an ideological oversight for which we should all be grateful.

Thanks to CEPR for tracking down the origins of Chile's building code.

Acknowledgements:NEWSTRUST: Naomi Klein, The Nation, March 8,2010


About Naomi Klein:

Naomi Klein is an award-winning journalist and syndicated columnist and the author of the international and New York Times bestseller The Shock Doctrine: The Rise of Disaster Capitalism (September 2007); an earlier international best-seller, No Logo: Taking Aim at the Brand Bullies; and the collection Fences and Windows: Dispatches from the Front Lines of the Globalization Debate (2002).

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• Milton Friedman did not save Chile | Naomi Klein (guardian.co.uk)
• Ben Cohen: Pinochet Did Not Make Chile Safe for Earthquakes (huffingtonpost.com)
• The Chicago boys and the Chilean earthquake (3quarksdaily.com)
• comparing earthquakes: Chile vs. Haiti (schansblog.blogspot.com)

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Overseas technology companies will have to find Kiwi directors within New Zealand...

Google, Microsoft, TelstraClear, Cisco and Dell are among technology companies that would have to find Kiwi directors for their New Zealand businesses if moves to tighten up company registration processes are approved.

Commerce Minister Simon Power is considering whether all New Zealand-registered businesses should be required to have at least one New Zealand-resident director after receiving a report from officials which engaged in "targeted consultations".

The rule change is one of a package of measures floated by Mr Power in January, after it was discovered an Auckland-registered shell company, SP Trading, had been implicated in shipping arms to Iran.

Mr Power said it would be consistent with requirements in other countries, including Australia, Canada and Singapore.

A spokesman for the minister says that if the Government decides to press ahead, that would probably require a change to the Companies Act and interested parties would be able to have their say at a select committee.

Mr Power said there had been an increase in the number of businesses registering with the Companies Office that had only overseas shareholders and directors. They comprised about 5 per cent of more than 1125 firms that were newly registered in January.

Microsoft, Cisco and Google's New Zealand subsidiaries all have just two directors – the minimum number allowed – all based in the United States.

Google and Dell refused to comment.

Microsoft New Zealand managing director Kevin Ackhurst says it would comply with any requirements and didn't see any particular upside or downside "but I haven't seen the full details of the proposed changes, so it is hard to comment on what might come in place".

Cisco New Zealand managing director Geoff Lawrie says the company would not shirk from legal responsibilities but he is unsure what having a New Zealand director would mean.

"We don't have a board structure. That is consistent with just about every international organisation represented here I would think."

Mr Lawrie says that from the point of view of preventing undesirable activities by shell companies, it might be more important that companies had a "responsible officer" in New Zealand rather than a resident director.

TelstraClear believes efforts to harmonise regulations between Australia and New Zealand could mean that having only Australian directors may remain allowable, even if the law is changed.

"The governments of New Zealand and Australia are working toward a single economic market framework to ensure transparent and ethical business practices," says spokesman Chris Mirams. "The initiative is designed to form a seamless trans-Tasman environment for established, credible businesses such as TelstraClear, that operate on both sides of the Tasman."

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Institute of Directors chief executive Nicki Crauford forecasts some overseas firms might seek to appoint a "token" local director if caught by the rule change. But she would not recommend anyone take on a company directorship without proper payment as a board seat comes with the risk of "huge liabilities".

The practicalities for overseas-owned firms were unclear. "If they currently hold their board meetings in the United States, then are they going to fly a New Zealand resident to those once a month and is it going to be practical for that person to be legitimately involved in the business?

"I suppose they could dial-in, but I guess if they never physically go to a board meeting they would not be terribly effective in the role."