The Chicago Boys were a group of young economists who participated in the exchange program between the Catholic University of Chile and the University of Chicago beginning in 1955. Some participants later attempted to bring the ideas of the Chicago School to the troubled economies of South America.
Between 1955 and 1964, the United States Agency for International Development financed an exchange program whereby personnel from the University of Chicago traveled to the Catholic University of Chile to improve its Department of Economics and Chilean students hand-picked by the Chicago staff received scholarships to study at Chicago. Professor Arnold Harberger of Chicago was most heavily involved with the project, traveling frequently to Chile; Milton Friedman taught a class in basic economic theory that every student was required to take. Under the tutelage of their professors, many of these students adopted free market ideals and brought them back to South America when their time in Chicago was over.
The students who returned to Chile from Chicago began "promoting free market economics ... as a way out of the economic stagnation that plagued the Chilean economy. In late 1972, when it seemed likely that Allende's policies would push the economy to the breaking point, ... [the Chicago Boys] began putting together a plan for economic recovery. By the time of the coup, ... they had assembled a 189-page draft of diagnosis and proposals, which they gave to the generals." (It is worth nothing that, thanks to their training, our students were almost the only economists in Chile who had not been involved with or favorable to the Allende government.)
For the first year and a half, the generals did little with the proposals. Instead, they put the military in charge of undoing the damage that Allende had done. Not surprisingly, the military were largely ineffective. In 1975, when inflation still raged and a world recession triggered a depression in Chile, General Pinochet turned to the "Chicago Boys" ... and appointed several of them to powerful positions in the government. – Two Lucky People, p. 398
When the Chicago Boys were finally given the chance to give the inflation-crippled economy their proposed "shock treatment," the economy rapidly expanded. Between 1973 and 1995, per capita income in Chile rose two and a half times and inflation decreased from 500 percent per year to only 8 percent..
Unfortunately, Milton Friedman suffered at the hands of a public who failed to understand his involvement with the military government of Chile. Although Milton had only traveled to Chile once and was nowhere near as involved in the exchange program as Arnold Harberger, the notoriety Milton had gained through his connections with Barry Goldwater and Richard Nixon, and especially his Newsweek columns, made him a target. Milton received hate mail from colleagues, politicians, and the public and faced protests at many of his speaking engagements; indeed, a protester interrupted his acceptance speech at the Nobel Prize ceremony in 1976. The protesters believed that Milton was supporting a fascist military junta; in fact Milton had only met Pinochet once and found him largely unreceptive to free market ideas. In the end, Milton maintained that he would preach free market ideas to anyone who would listen on the off chance that those ideas might lead to greater freedom in the future.