Chile privatized its Social Security system 20 years ago.

[Muzzle Tough]

In principle, I am against putting Social Security tax dollars into the stock market.

However, as a practical matter, I do have to acknowledge the success of Chile's privatizaion of its Social Security program.

http://www.bakersfield.com/24hour/world/story/1918710p-9872988c.html

Instead of paying social security taxes and wondering whether the government will ever deliver promised retirement benefits, Chilean workers bankroll their own retirements and manage their nest eggs.

<snip>

Two decades after Chile's military dictatorship scrapped the country's broken and bankrupt government-run social security system and replaced it with privatization, forced retirement savings by everyone who gets a regular paycheck is a way of life.

<snip>

Still, about 7 million Chileans in the nation of 15 million are now investors in the longest running government-mandated private pension experiment on the planet. They don't pay the government a single peso to fund their social security, and half regularly funnel 10 percent of their income into retirement accounts they both own and decide how to invest.

"The best thing about it is I didn't give my future to the government," retired tax lawyer Juan de Dios de Vergara said while making minor pension changes at an office run by Summa Bansander, owned by Spain's Banco Santander. "I assumed my own risks, made my own decisions and the funds belong to me, so I get the earnings."

Countries from Mexico to Sweden have adopted the system or elements of it amid concerns that government-based social security benefits will be slashed when retirees outnumber contributors.

The Chilean system also helped feed an unprecedented expansion for South America's most market friendly economy, and has drawn attention from President Bush, who has made privatizing part of the U.S. system a top second term goal.

<snip>

Pinera compares the underfunded U.S. social security system to the Titanic heading toward an iceberg, saying the Chilean example "shows that a system of personal retirement accounts can work superbly."

<snip>

[vpigrad]

1. Shows it can work?

WTF! It shows that most people end-up left-out in such a system.

[madrchsod]

2. it all depends on the set of figures that are used

would you want all your money in the stock market when there were no one checking the cooked books? who`s going to take the cut for investing your money and how much. it`s all bullshit on many levels esp when you look past the bullshit and find out the ss fund is solvent till 2042 and beyond with some adjustments. what has hurt ss is the draining of well paying jobs in the usa and the lack of any wage raise in the united states,in fact wages are falling across the board. it`s all a steaming pile of bullshit from the republicans,who since ss was placed into law, have done everything possible to destroy ss...but not on our dieing bodies will these thugs succeed.

[Skink]

3. A good quote

They are not afraid of a failure they are afraid of Social Securities glowing success.-Krugman

[imenja]

4. somehow I'm not comfortable using Pinochet as a model

Thousands of Chileans were tortured and murdered during his privatization schemes. I find something obscene in pointing to economic changes from that period as some sort of marvel. In addition, workers wages dropped dramatically under Pinochet. He used the military to repress unions and thus forcibly lower wages.

[shraby]

5. I'd also have to look at the poverty level

in that country...number of young people in poverty and the number of old people living in poverty

[imenja]

7. Statistics here!

Chile has the ninth worst disparity between rich and poor in the world, according to this chart another DUer pointed me to yesterday.

http://www.infoplease.com/ipa/A0908770.html

[Ruffhowse]

6. Yeah, right, that's what we need, having people basically gambling with

their retirement funds. By it's very nature, privatization assumes that many will choose risky investments and some will lose. But of course the financial community gets an enormous windfall (and these folks are vastly Republican and contributors to Chimpy's regime) by all the fees they get to collect. Also, if the stock market really tanks, which is always possible, who's going to take care of all the old folks who are now paupers? The whole idea is a conservative's wet dream for milking the big bucks in the Social Security system for their own profit. Bad, bad idea.

[rooboy]

8. Acknowledge the success??? ROFLMAO...

LOOK AT THE FIGURES.

[mcscajun]

9. Can we look at Argentina while we're at it?

The partial privatization of their Social Security program in 1994 precipitated a financial crisis from which they have yet to recover. The cause was simple -- the privatization deprived the government of revenue. Argentina was forced into round after round of borrowing, and ultimately, their debt level became unsustainable.

When the bailout came, finally, part of the agreement was to reduce Social Security benefits by 13%. So, the solution became the problem.

Yes, by all means, let's look to other countries' examples. Let's just be sure we know what we're looking at...

[DireStrike]

10. No need to "wonder whether the government will deliver" ...IF

We can keep fascists and hyper-rightists out of office. The current SS system is fiscally sound and 10 times as efficient, in terms of administrative cost, as plans for privatization.

[shrike]

11. THIS is success?

"If the lack of regular contributions continues, nearly half the work force retiring over the next 30 years won't save enough to fund their own minimum pensions."

[seasat]

12. That's one of my big sticking points with Shrub's scheme.

If his scheme goes through, the people that will voluntarily move their contributions to a private account will be the same people that already have an IRA. These will mainly be people that have some savy as how to invest their money and probably won't need SS anyway. These will also be the higher income earners whose percentage of income is much larger and will represent a greater shortfall to SS. The end result will be that the wealthy will retire with plenty of cash while the poor will be left with an underfunded system and will eventually have to have their benifits cut. Basically, it's a scheme to throw things back to total private retirement as before the creation of SS. We had double the senior poverty rate before SS and we'll have it again a couple of decades down the road under Shrub Inc.

[shrike]

13. You nailed it

I have no idea how the working and middle classes will be able to afford Bush's policies.

Take the Health Savings Accounts, for example. A family will be "expected" to put away more than $800 a month to fund a $10,200 annual HSA. That's like a second mortgage or rent payment. How are people supposed to buy food? Keep a roof over their heads? Pay the electric bill?

Privately-funded retirement? How many people do you know who have the extra cash and acumen to benefit from such a scheme?

"Are there no prisons? Are there no workhouses?" Ebenezer Scrooge lives.

[elsiesummers]

14. Gore had it right - keep funding at 6% and an additional 2% to private acc

And an additional 2% forced saving to private accounts. This way, SS would remain fully funded and hopefully solvent, or only in need of smaller benefit cuts.

The idea that they are supposed to project and have any gov't plan figured out past 2070 is insane - they can't even project a budget out for four years accurately, let alone ten. They have no idea how future birth rates or immigration will affect SS.

Cutting into the current 6% contribution is a deliberate way to reform (=dismantle) Social Security - which is an insurance program and not a savings plan - it's really a tax cut with no real plan for future retirees.

The most obvious way to solve any problems with social security would be to tax all earned income, including the 300Kplus CEO salaries, at 6% - but they won't do that - not shrub's constituency. But, Lindsey Graham's plan was worst of all - taxing the 90K to 160K - further reducing upward mobility without targetting the highest earners.

They wouldn't need 1 Trillion plus plan change revenue except that Bush is doing absolutely anything he can (think of his IRA lifetime accounts) to support/reflate the stock market.

That is what I think the Soc Sec plan is really about - keeping an ever increasing amount of money flowing into the stock market because it's a giant pyramid scheme.

Both partys have been guilty of this (things like IRA "improvements" and dividend tax cuts are aimed at boosting the stock market).

Leaves us all in a pickle - you don't want to be left out of the pyramid scheme (the stock market - can't afford to), but you don't want to be the last one on board while those in the know bail, either.

[Lefty48197]

15. Wasn't that Pinochet the facist that implemented that?

.