The Chicago boys have no good answer to the 'Pareto 80-20-rule' for wealth distribution, except their usual mantra of letting the free market rules work.
They have even less answers to the fact that the Pareto rule is a fallacy, as it is far too optimistic.
The reality is that less than 10% of 'the adults worldwide own 85% of global wealth, while less than 1% of the human population owns 40% of all resources, and their wealth keeps increasing to the detriment of ordinary people despite the claims of the Chicago school.
Multinational companies tend to build advanced systems for avoiding taxes.
"Every year crime, corruption, and tax evasion drain $1 trillion out of developing countries," said GFI director Raymond Baker, citing figures from GFI's 2008 report,
This report builds on the analysis put forward in our "Illicit Flows" report by more closely examining one particular form of financial outflow - trade mispricing - and showing how it removes money from a developing economy, in this case by depriving the government of tax revenue."
The typical, maybe unintentional, 'child' of the Chicago school was / is ENRON.
famous for its expertise in 'doctoring' accounts to avoid taxes; fraud and deliberately stealing from its own employees. By massive use of PR-firms and planting disinformation wherever they could, they trained American business leaders in unethical business practice and misled the American people for decades, while keeping a very close and cosy relationship with e.g. the Bush dynasty. The Milton Friedman followers - the Chicago boys - are warriors for the corporate version of globalisation, meaning unrestricted freedom for the big multinational companies and in reality 'Enrons' of all sorts.
New Orleans and hurricane Katrina
The Chicago school followers believe in making clean slates and starting things from the bottom. They realise that the only way you can make people accept e.g. privatised education, police, social and health services is by force: either having a war or create situations similar to war, or take advantage of natural disasters to impose their 'shock doctrine'. Democracy does not function in this context. The Pinochet murder-, disappearance and torture way of doing things is a model to others.
The Chicago boys therefore in reality are not interested in investing in and maintaining public infrastructure like solid bridges, solid dikes and other flood protection devices, and will lobby for spending public money elsewhere.
Their policy of exploiting crisis and disaster succeeded well in e.g. New Orleans, where the dikes protecting the city against floods were not adequately maintained, and hurricane Katrina as a consequence had 'free access' to the city and its people. Public services miserably failed, while private, for-profit companies, such as Bechtel and Blackwater with their lethal forces 'assisted' the population accept privatisation of all public services amazingly quickly, masquerading activities as aid and reconstruction. President Bush simply poured money into these kinds of corporations - there was no competition - no open tendering - just pouring money into these companies, without any concrete results demanded, no factual reports nor real accounts from the field required.
Neoconservative / neoliberal think tanks
The Chicago School doctrine was in particular supported by Presidents Reagan and Bush, Henry Kissinger, Maggie Thatcher, the 'neo-'liberal' think tanks, like Heritage, Cato, Heartland, Marshal institutes, the leaders of Enron and similar entities. Their policies have undoubtedly opened up for lots of good businesses, but also, and maybe even more so, facilitated corruption, organised crime and crony capitalism world wide.
The Tea Party activists - a new force in American politics - is depicted as a grassroots movement, but is in fact financed and manipulated by extreme right billionaires like David Koch and media moguls like Robert Murdoch.
The mafia and trade in garbage and toxic waste
The American mafia surged under the Bush period, and is closely connected to the Cosa Nostra in Italy, the Bulgarian and the Balkan mafias. Whoever actively opposes or competes with them, risk assassination by professional hit men brought in from e.g. Italy. The assassins fly out the same day they kill somebody, and American police has great difficulties in tracing them back to Palermo, Belgrade and Napoli. (See the movies 'The Godfather' and 'Sopranos')
The mafia, among other trades, specialise in the handling of garbage and toxic waste worldwide. They have no hesitation in e.g. driving tank trucks with tonnes of liquid toxic chemicals into dirt roads on the American farmland areas in the mid west and conveniently see to it that the tankers suddenly leak. They even drive entire tank trucks into marshlands and swamps and sink them there to avoid investigation. This is well documented, but as usual, it is very hard and dangerous to investigate and prove anything with organised crime. Witnesses and investigators tend to vanish mysteriously.
The coup in Chile 9/11 1973
It was the Chicago School that with the backing of Henry Kissinger and President Nixon helped organise the military coup in Chile 9/11 1973 through CIA and with the aid of coup leader Colonel Agosto Pinochet. Ever since, big multinational companies have had free access to Chile's free market.
The Argentina junta oppressed their own people, made 30 000 people simply disappear, were ardent followers of the Chicago school, and were advised by Henry Kissinger and the Chicago School.
Argentina was regarded as a Chicago boys' success story for several years (Naomi Klein, 2007: The shock doctrine, Penguin).
Two years after stopping a Communist Party coup in Moscow, Boris Yeltsin in 1993 staged a coup against the Russian parliament himself, and as a result gave free reigns to the notorious 'Oligarchs' of Russia, now more or less controlled by the former head of KGB/Russian mafia, Putin, also one of the major oil dealers of the world.
In the 1980's Milton Friedman had long talks with prime minister Deng Xiao Ping. Deng introduced the Chicago style capitalism, but without democracy (Also called 'Market Leninism').
Protests against this policy ended in the Tiananmen Square massacre, Beijing, in 1989.
Since then, there has been an amazing economic growth, and undoubtedly many millions of people have improved their standard of living.
BUT: The price tag is heavy:
The Chinese environment has suffered badly, and the 'Princelings' have also thrived, amassing multimillions of dollars, severely polluting huge areas of land, allowing anything from selling poisonous baby formula to hopelessly inappropriate building materials in earthquake prone areas, encouraging authorities to torture or kill anyone who protests.Whether the wealth will ever reach the broad masses of the Chinese population is an open question. Maybe the reality is that while 250 million people undoubtedly have increased their consumption rates, and have accumulated capital, 400 million people have paid the heavy price through the loss of livelihood when their farms have been polluted or lost its water supply, when poisonous air and water have made them refugees in their own country. There are more than 200 million 'vagrant workers' desperately seeking jobs, other hundreds of millions toil in slave-like jobs, while others simply have fallen into destituion, since their traditional land has lost its ability to produce, or has been stolen by ruthless princelings. In the chinese system, ordinary people who leave their home area will lose their social rights. The Chinese communist party knows full well that their market-leninism politics have created maybe even more poverty and utter destitution than wealth, and imposes draconian laws against human rights activist to keep the innumerable protests and revolts under control.
The corruption is so rampant, and the pollution and depletion of productive land and natural resources so severe that China might never be able to reach the superpower status it strives for.
"In 1979, Deng Xiao Ping started market reforms in China, which over the quarter century lifted hundreds of millions of people out of poverty. In the same year, Margaret Thatcher was elected Prime Minister in Britain, and initiated her radical reforms and a long period of growth. A year later, Ronald Reagan was elected President of the United States and also embraced free market policies. All three of these leaders professed inspiration from the work of Milton Friedman " A. Schleifer, professor
No doubt neo-liberalism without democracy has changed China - for the better for a few - but for grief for at least as many.
Chinese dream - posters in Shenyang, Manchuria. Photo: Åke Bjørke