Upheaval: Turning Points for Nations in Crisis

by Jared Diamond

what policies did Allende adopt upon becoming president? Even though he knew that his candidacy had been supported by only 36% of Chilean voters and had been opposed by the Chilean armed forces and the U.S. government, he rejected moderation, caution, and compromise, and instead pursued policies guaranteed to be anathema to those opposing forces. His first measure, with the unanimous support of Chile’s Congress, was to nationalize the U.S.-owned copper companies without paying compensation; that’s a recipe for making powerful international enemies. (Allende’s pretext for not paying compensation was to label company profits already earned above a certain rate of return as “excess profits,” to be counted against compensation and cancelling out the compensation owed.) He nationalized other big international businesses. He horrified the Chilean armed forces by bringing large numbers of Cubans into Chile, by carrying a personal machine gun given to him by Fidel Castro, and by inviting Castro to Chile for a visit that stretched out to five weeks. He froze prices (even of small consumer items like shoe-laces), replaced free-market elements of Chile’s economy with socialist-style state planning, granted big wage increases, greatly increased government spending, and printed paper money to cover the resulting government deficits. He extended President Frei’s agrarian reform by expropriating large estates and turning them over to peasant cooperatives. While that agrarian reform and o...