The Chile difference

BBC:

While the human tragedy of the earthquake in Chile will be long-lasting, the impact on the country's economy is expected to be "limited and short-lived".

Despite the Chilean quake being stronger than the one in Haiti in January, the difference between the two nations is vast.

Haiti is the poorest nation in the Western Hemisphere, while Chile is the world's 46th richest. More pressingly, Chile is widely regarded as having the best-run economy in the whole of Latin America.

In the immediate aftermath of the two quakes, this meant that, thanks to Chile's stringent building regulations, far fewer buildings collapsed than in the Caribbean nation.

And as both countries rebuild, while Haiti is all but totally dependant upon overseas aid, Chile has the financial clout to recover without recourse to foreign support.

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Since the country returned to democracy in 1990, successive left-leaning governments have combined a free-market economy with prudent government spending.

Instead of wildly spending the country's vast copper reserves - it has one-third of the world's supplies - governments have saved a lot of these funds.

As a result, Chile has one of the lowest government debt to economic output ratios in Latin America.

At the same time, its inflation rate is currently at 1.5%, and the Chilean interest rate is 0.5%, where it has been since August of last year.

Taken together, these all mean that Chile has a strong credit rating. This will make it relatively easy and cheap for it to borrow any funds it needs on the international markets to aid the reconstruction work.

Meanwhile, the forthcoming Pinera-led government is expected to continue the prudent economic approach of its predecessor.

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Chile owes its good economy to the advice given by Milton Friedman when its economy was suffering from high inflation at the same time it was in the doldrums. Bret Stephens looks at the Chicago school solution proposed by Friedman and how it worked. Strict building codes also limited the damage and loss of life in Chile.

Reading about Chile and its embrace of the free market makes you wonder how much better off we would be if Obama believed in it.