I'm parking the link to this article about the myriad problems with Chile's pension system - the same system that was supposed to be the model for us to follow when we destroyed the most successful social program our country has ever known. Remember, no less an intellectual giant than our own Brierney One wrote about the wonders of the Chilean system. And he's going to be writing about it again when the drive to destroy it starts up, like clockwork, in the next presidential election. I want to be able to find it when that happens.
The Chilean system of personalized accounts managed by private funds has inspired a score of other countries since the pioneer effort to create it here 25 years ago. It is endorsed by President Bush, who has called it "a great example" from which the United States can "take some lessons." Here at home, though, dissatisfaction with the system has emerged as one of the hot-button issues in the election, a runoff that will take place on Sunday.
"Most people perceive the costs of pensions and the pensions themselves as unfair," said Patricio Navia, a political science professor at New York University and at Diego Portales University here. "Many of those who started work when the system was first adopted are realizing that they have not been able to contribute enough to get a significant pension," Mr. Navia said, adding that they resent "overhead costs that are so high" and that have led to record profits for the pension funds that manage contributions automatically deducted from workers' paychecks.
And this is my favorite part because it's so flippin' obvious but never got much attention during what passed for a debate on the issue over here: (emph mine)
But skeptics point to another developing problem: many young people, who should be enrolling in the system early to accrue maximum benefit, are staying out or paying in very little. Some cannot afford to contribute beyond the obligatory minimum payment, which is 10 percent of wages, while others are either self-employed or have been hired by companies as low-paid independent contract workers and therefore do not have to contribute at all.
"The bottom line is that this system does not work with this labor market," said Andras Uthoff, an economist who is director of the social development division of the United Nations Economic Commission for Latin America here. If trends continue, he added, "only a small percentage of people are going to be able to finance meaningful pensions. What happens then to the rest?"
I'd like to get an answer to that from the next right wing kook who starts beating the privatization drum while pocketing donations from the people who thrive on the always low wages in our service economy.
Mother Jones had an article on this topic.
...10 months ago, back when Social Security was a larger, looming issue.
Nice of the NYT to give us timely reporting. Or something. And since I'm biased, I won't even read the NYT article and just assume the Mother Jones one was better. :)
http://www.motherjones.com/news/outfront/2005/03/jose_pinera.html
Posted by: tas | January 12, 2006 at 01:54 AM