Economic Freedom and Market Reforms in Latin America With Sebastian Edwards | Hoover Institution

[upbeat music] This is the Capitalism and Freedom, the 21st Century Podcast, the official podcast of the Hoover Institution's Economic Policy Working Group, where we talk about economics, markets, and public policy. I'm John Harley, your host. Today, we are at the Hoover Institution's 2026 Monetary Policy Conference, where I'm joined by my special guest, Sebastian Edwards. Sebastian is one of the world's leading authorities in Latin American economics, international macroeconomics, and economic development. A Chilean economist, Professor Edwards, uh, received his PhD in economics from the University of Chicago in 1981. That same year, he joined the faculty at the UCLA Anderson School of Management, where he remains on the faculty today. Over the course of his career, Sebastian has served in a number of policy positions, including as chief economist of the Caribbean and Latin America at the World Bank. He is, uh, the author of numerous books, including most recently, The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism. Sebastian, welcome to the podcast.

John, thanks so much for having me.

So I, I wanna, uh, start with your background. You grew up in Chile, and you got your PhD in economics from the University of Chicago in 1981. One, what drove you to study economics growing up in Chile, and what was it like at the University of Chicago? Why did you choose there, and what was the environment like at the time in your formative years?

[clears throat] Um, well, um, Chile is, uh, a very long country and a very interesting one, so people that, uh, look at the map and they see this spaghetti-looking country on the west, uh, of, uh, South America, they usually wonder, "Well, how is it there?" When I was growing up, it was an economic disaster. Uh, inflation was, um, year in, year out, around 30%. Per capita growth, maybe one half of 1%. And Chile was, uh, declining from an economic point of view, a country within, uh, Latin America. And in particular, uh, it looked very bad relative to Argentina, and we'll talk some more about Argentina, um, I think. Um, the, the neighbor to, uh, to the east, on the other side of the Andes. And so I, I come from a generation where there was a, a lot of concern about the future of, uh, Chile, and there was, uh, a sense that, um, economics was something that had to be fixed one way or another. And that's why I decided to, to do, to do economics. Um, and, um, during the first part of my university studies, uh, there was a socialist experiment of Salvador Allende, um, and things went from bad to worse. And I... What, what I think, John, is very interesting is that now, uh, here at Hoover, there is this, uh, interest, uh, uh, uh, Victor, uh, Davis Hanson and, and Niall, uh, Ferguson have been writing about what socialism was really about because there is some interest among young people. And, um, after that, the, uh, coup came, the Pinochet coup, and, um, couple of years, uh, later, I did go to Chicago. Uh, Chicago was extremely exciting at the time. Um, exciting, um... I, I was there for five years or f- four years. I, I don't know, four to five years. And I think every year, the Nobel Prize