The amazing story about how the University of Chicago and the Chicago boys changed the course, economy and history of Chile.

1. Chile: Education and
Neoliberal Economic Policies
By:Nelly Cardinale
EDU 7260 Comparative
International/Global
Higher Education
11/06/2011

2. Origins of Neoliberal Policies
• According to Valdés(1995) in 1955
– the Pontifical Catholic Univ of Chile and the
Univ of Chicago created a joint collaborative
doctoral level economics degree program.
– The program offered educational grants for
students who were admitted (Valdés,1995).
• The plan was a response to a act passed by the
US Federal Agency for International Development
meant to provide aid for developing countries
and was titled,”Project Chile” (Valdés, 1995).
– Project was initially funded by the Ford Foundation, the
International Co-operative Alliance (ICA) and the
Rockefeller Foundation (Valdés, 1995).

3. Origins of Neoliberal Policies
• The purpose of the doctoral program was to teach
neoliberal economic principals which advocate
free-market policies and the transfer of former
government regulated services to private industry
(Silva,1991;Valdés,1995 ).
• The intended outcome was for the newly trained
economists to introduce reforms that would revive
the economy of Chile(Valdés,1995).
– Between 1955 and 1963, thirty students took advantage
of the grants, traveled to Chicago to study and became
know as the, "Chicago Boys” (Silva,1991).
• In 1973, a oppressive military style government took over in
Chile. The government leader appointed the Chicago Boys to
key government positions in Chile (Valdés,1995).

4. List of the Chicago Boys
(Notice that there is one female on the list).

5. Origins of Neoliberal Policies
• One of the educators in the joint Pontifical Catholic
Univ of Chile and the Univ of Chicago program was
the famous economist, Milton Friedman, who won a
Nobel Memorial Prize in Economic Sciences in 1976.

6. Origins of Neoliberal Policies
• Another educator in the joint Pontifical Catholic Univ
of Chile and the Univ of Chicago program was the
famous economist, Gary S. Becker, who also won a
Nobel Memorial Prize in Economic Sciences in 1992

7. Economic Neoliberal Reforms
during the 1970s
• According to Taylor (2003) the Chicago Boys
spearheaded the following changes:
– Privatized the health industry (Taylor, 2003).
– Introduced international agricultural trade (Taylor,
2003).
– Proposed labor laws that mandated raises tied to
inflation (Taylor, 2003).
– Disbanded collective bargaining units (Taylor,
2003).
– Allowed workers to chose traditional Social
Security or privately run IRA’s(Edwards &
Edwards, 2002).

8. Results of the Economic
Reforms
Source: Charts
World Bank: World development indicators for Chile 2002

9. Economic Results
• According to the Organization for Economic
Co-operation and Development (OECD)
website(2010), the country of Chile became
the first South American country to join it’s
membership on Jan-11-2010.
– This organization is comprised of 34 countries
which have the richest economies in the world.
• The purpose of the organization is so that governments
of these countries can work together to solve common
worldwide economic, social and environmental
problems
• Most of the members are developed countries
– however Chile was invited and joined as a developing country

10. Current members of OECD
Source: Table OECD Website

11. The President of Chile during
the OECD Ceremony
Source:Photo OECD Website
President Michelle Bachelet accepts the official OECD
membership certificate during a ceremony held in the
White House of Chile on Jan 11th, 2010. She is also a
pediatrician and her presidential term ended March
11th, 2010.

12. The New President of Chile
• The new president is Sebastián Piñera and he started
in March 2010.
– According the Harvard Gazette website he:
• is a former college professor of Economics who earned his
doctorate from Harvard University.
• plans to elevate the Chile’s status of a developing country to a
developed country by the end of this decade
• is allocating four billion dollars to education in order to update
the technology systems in both the K-12 and higher education
school institutions.
Source: Photo Harvard Gazette Website

13. 1980’s K-12 School Reforms
• The Chicago boys also:
– Decentralized the schools and gave the
control to municipalities (Taylor, 2003)
• Taylor (2003) states that they
Implemented a new Voucher System
which:
• created and funded new voucher-based private
schools
• funded traditional public schools using vouchers

14. 1980’s K-12 School Reforms
• According to Carnoy (1997) the voucher plan
also eliminated :
– teacher unions and contracts at all schools
– national curriculum standards
• This new system:
– paid money directly to schools based on
parental choice(Taylor,2003).
– did not affect traditional private tuition-
based schools (Silva, 1991).
– allowed the voucher-based private schools
to charge fees in addition to the vouchers
(Carnoy, 1997).

15. 1990’s K-12 School Reforms
• According to Foxley(2004) in 1991, the
school day was extended to 8 hours
– teachers were given raises to compensate
for the extra working hours.
• faculty unions were restored
• tenure was restored for teachers and
school educators
• computers and Internet service provider
contracts were purchased by the
government for all schools.

16. Success of Voucher
Schools in Chile
• According to Mizala and Torche(2010), the k-12
private-voucher supported schools have only been
moderately successful in raising academic
achievement when compared to traditional private-
tution based schools.

17. Higher Education Reforms
• According to Espinosa (2002) in 1981, the
Chicago boys proposed that:
– students be offered loans instead of grants and
scholarships
– college tuition and fees be implemented for the
first time
– the country encourage and approve the creation of
private institutions of higher education
– higher education institutions solicit donations and
take out loans as additional funding sources
– the country reduce the tax revenue usually
allocated to help support public universities

18. Higher Education Structure
• According to Ramírez (2005) in 2002, five types of
higher education institutions existed in Chile.
Source: Chart © Nelly Cardinale Created with
Data from (Ramírez, 2005).

19. Higher Education Structure
Source: Graphic OCIDES Tertiary Education in Chile 2009

20. Higher Education Undergraduate
Enrollment 2005
• According to the Chilean Ministry of Education website, in
2005, the higher education undergraduate enrollment rates
were:

21. For-profit Institutions
• Ramírez (2005) further asserts that in 2000,
Laureate Learning (formally Sylvan) bought out
the,”University of the Americas”.
– However, according to Kinser and Levy(2005),
• Chile does not permit universities to operate as for-profit
institutions, therefore this institution continues to be a
private non-profit college.
• In contrast, most of the professional institutes, voucher-
supported private schools and centers for technical training
centers in Chile are currently classified as for-profit
institutions.

22. First Community College
• According to Li(2010)
– the first community college was created with the
help of LaGuardia Comm College of NY and is
currently run by the Central Univ of Chile and
located inside its’ campus
• students can apply the credits towards the pursuit of
a four year degree at Central Univ
– students earn Associate Degrees from both colleges
– the joint degree program offers exchange opportunities for
both faculty and students
– the program is meant to remove the stigma of attending a
center for technical training
– it is more affordable than attending a technical training
school that are usually for-profit institutions.

23. First Community College
• According to Li(2010) the college’s executive
director hopes that the program will help facilitate
social mobility for many students and help meet the
employee needs of local industry.
– According to the Community College of Santiago (n.d.)
the majors offered are:
• Network security and administration
• Programming
• Telecommunications
• Business Management
• Accounting

24. Internationalization of Higher
Education
• According to Ramírez (2005) in 2003 the universities
in Chile had active collaborative educational
agreements in many parts of the world:
Source: Table (Ramírez, 2005).

25. Pressing Contemporary Issue
• According to Bernasconi (2007) in 2006
Chile finally signed a act called the
Quality Assurance Act (QAA).
– This act will create a uniform system for
accreditation for all of the higher education
institutions in the country.
• Participation in the system will be voluntary
except for undergraduate programs in the
health and education fields.
• The system is two-tier with a public national
education commission licensing and
supervising private companies in charge of the
institutional evaluations.

26. Pressing Contemporary Issue
• According to The Economist (2011) for the last
five months, both high school and college
students have been protesting:
– They want control of the entire education system
turned over to the Chilean government
– They are demanding more government spending on
education. Currently
• the Chilean government pays 15% of the total percent of
education costs which is the lowest of all of the OECD
countries.
• 40% of all education expenses are paid for by families which is
the highest amount when compared to the other OECD
countries.

27. Pressing Contemporary Issue
• The Economist (2011) further reports that in the
case of a college education, the students are
demanding:
• the end of college tuition and fees
• loans issued by the government instead of local banks
• The Times Higher Education(2011) also reports that
– high schools students were the first set of protesters
demanding better quality secondary schools.
– college students want better quality assurance standards
for both college and technical learning centers
• It is apparent that the QAA has not yet been formalized
– College students are demanding the end of for-profit
higher education institutions
– Even though regular universities and colleges in Chile cannot legally
become non-profit, students complain that the colleges use tax loop
holes to make a profit.

28. Government Response
• According to Merco Press(2011)
– the president of Chile is proposing a 4 billion dollar
budget to be applied towards education.
• it will be mostly funded from the sale of copper which is
Chiles’ primary export.
• According to Times Higher Education(2011), the
president:
– is proposing the creation of new scholarships for
students from the lowest income families
• the students do not seem satisfied with this proposal
• According to Al Jazeera(2011)
– the Chilean government plans to create a commission
of experts which will study the issue and recommend
a solution

29. The Protests are Still Ongoing
• According to Al Jazeera(2011) the protests are now
getting violent
– On Thursday October 6th, 2011, police used tear gas and
water canons to stop the protesters.
• as a result, several bystanders and some members of the media
were injured.
• According to Times Higher Education(2011), the
protest is very likely to end soon regardless of the
outcome:
– since students cannot afford to continue to skip classes
without the risk of academic failure.

30. Similarity to the Occupy
Movement in the US
• The Chilean students’ protests are similar to
the Occupy movement in the US.
– In both cases:
• students and others are protesting about the high cost of
higher education.
• people want free higher education and interest free loans
for related expenses.
• students demand that education loans be issued by the
government and not by commercial banks.
– Both protests are really about social and financial
inequalities.

31. An Image from the
Occupy Movement
Source: Photo The Examiner Website

32. An Image from the
Chilean Student Protest
Source: Photo Sulekha News Hopper

33. Conclusions and Implications
• It is a great surprise to find out that Chile which is a
developing country was and still is ahead on its’
time when it comes to higher education
globalization and internalization.
– In contrast US colleges and universities are playing
catch up
• Chile is also ahead of us in gender inequality
– our country has yet to elect a female president
• We can learn from Chile about voucher school
programs which are similar to charter schools in
the US.
– After all of these years, the voucher program there has
not significantly raised student achievement, therefore it
seems likely that charter schools systems in the US may
also not be the answer to low student achievement.

34. Conclusions and Implications
• It is interesting that a decade after Chile eliminated
collective bargaining and tenure for educators, it restored
them.
– Perhaps this is an institution that the US should not consider
eliminating in any way.
• It is obvious that educational internalization efforts between
the University of Chicago and the Pontifical Catholic Univ of
Chile changed the course and history of Chile.
• I do not think that this country would have become a member of
OECD if it were not for the, “Chicago Boys”.
• I also believe that Chiles’ economic success caused other
countries to also adopt neoliberist policies and that these
changes altered the course and economies of many other
countries in the world.
– This is the most compelling reason why US higher education
institutions should continue internationalization efforts, it may be the
catalyst that changes the world, one country at at time.

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