As Chile’s finance minister from 2006 to 2010, you received numerous accolades. In particular, you were praised for not spending the huge profits that Chile reaped from its copper resources. You put much of those profits in reserve, then used them in leaner times for stimulus efforts. Is this your proudest accomplishment as Finance Minister?
At Yale I studied with a great economic historian, Carlos Díaz-Alejandro, who taught me that in the history of Latin America, many natural resource booms ended in disaster. When commodity prices rose, governments overspent and went into debt; when prices fell, painful budget cuts, recessions, and financial crises (sometimes) followed. I was determined not to let this happen again. So we put into place some rules 12
Groton School Quarterly
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to guide spending decisions, and passed a bill to create two rainy-day funds to hold the money we saved. Was it difficult to withstand the pressure to spend?
It was. I had no gray hair going into the job, but accumulated quite a bit during four years as finance minister. More The candidate preparing to cast his vote seriously, the key was that President Michelle Bachelet, my boss at the time, What do you teach at Columbia’s School stood firm against pressures. As she of International and Public Affairs? liked to say, fiscal prudence is a progresWhy has it been important for you to sive idea: when governments misbehave teach over the years (at Harvard, NYU, and things eventually blow up, it is poor and now Columbia)? and vulnerable families who suffer most. My family and I are based in Santiago, Chile, but we spend a couple of months Those economic stimulus packages made a year in New York (during the winter, your popularity soar. What was it like regrettably) while I teach two short to suddenly become one of Chile’s most courses at Columbia: one on political admired leaders? economy and the other on macroecoWe were probably the only people on nomics in emerging markets. In the the planet who got a lift from the fall political economy class, I try to teach of Lehman Brothers and the meltdown the students everything I wish someone of Wall Street. Since we had very little had taught me before I became minispublic debt and quite a few dollars in ter. That is why some of the students the bank, Chile could mount a pretty call it the “how to be a minister” class. sizeable stimulus package. We were able I hugely enjoy teaching those to launch an emergency public works classes, which have students from all program and make one-time payments over the world. They bring fresh perto poor families. This meant that the spectives to age-old issues in economics same crisis that lasted three years in and politics. For me, teaching is the the U.S. and six years in Spain, in Chile challenge of expressing complex ideas only lasted for a couple of quarters. It in simple ways, and doing so in a way also meant that critics of the rainy day that motivates students to learn further. funds had to eat their words and that And as you try to do that as a teacher, the approval ratings of the president you also learn and delve deeper into and her team went up overnight. Then those ideas. It is a lot of work to do well, I discovered a weird thing about polibut it can be tremendous fun. tics: when you rise in the opinion polls, people who spent years criticizing you How else are you spending your time in the nastiest way suddenly discover currently? they support you, and claim to the press they always did. I am still very active in political and policy debates in Chile and Latin America. I helped start a public policy You’ve run for president of Chile. Would think tank in Chile where a number of you consider doing that again? young researchers do wonderful work. Running for office is exhilarating and a I also do consulting and public speaktremendous experience. It is also very ing to pay the bills. And I wish I could hard on your family. Doing it again do as much running and skiing as I like would require an extended family to, but one knee has been acting up caucus. recently.
Inés Galaz
personae
peculiar referendum: if Pinochet won, he would stay on for eight more years; if he lost (or so we hoped), he would go. So I figured that was the time to return home. I applied and got a traveling fellowship to finish writing my dissertation in Chile. A think tank there offered to host me. But the truth is that the following year I did little research, and spent almost all of my time on the campaign to win the referendum and topple the dictatorship. I still get teary-eyed when I remember what we Chileans know as the NO campaign—the campaign to get out a NO vote against Pinochet. It is pretty rare that you get to remove a dictator by drawing a line on a piece of paper and putting it in a ballot box. But that is what happened in Chile in 1988. A majority of Chileans did vote NO. That night, thousands of people marched down the Alameda, Santiago´s main thoroughfare, down to La Moneda presidential palace. I was among them. Once we got there, a young woman approached one of the heavily armed policemen who guarded the palace and gave him a flower. The picture made the front page of newspapers the next morning. It was the kind of moment you never forget.