http://www.cato.org/dailys/12-17-97.html
December 17, 1998
Chile’s Social Security Lesson For The U.S.
by José Piñera
José Piñera is Chile’s former secretary of labor and social security and is co-chairman of the Cato Institute’s Project on Social Security Privatization.title
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America’s Social Security system will go bust in 2010. As political leaders scramble to save it, they’ve overlooked an obvious free-market solution that works. They need only look at Chile.
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A blog comment spun me up on this one again. So, I pulled up the url to the Chilean solution. And, marveled that we had the answer in ’98 and did nothing with it. It was NOT just an academic answer, but a running system in a large country! In my world, a working field trial of an idea is evidence!
Here’s a fellow with a proven answer to “our” “social security insurance” problem.
(Note: I don’t have such a problem. I wrote off the theft decades ago. It’s nice of the robber to send me “statements” telling me how much they are going to restore to me. But, I’m not planning on getting it. AND, I object to the fact that it was stolen from me in the first place! I never agreed to it.)
It won’t work here because he was dealing with smart but illiterate people, Here in Amerika, we’re too smart for our own good.
Fool me once, shame on you. Fool me twice, shame on me. Fool me for decades, like American politicians do, and you deserve everything you get.
In Chile, the government served as a referee and “licensed” a bunch of investment companies to accept deposits. Due to the people’s illiteracy, the companies picked colored animals to be there logo. 93% of those illiterates opted for the new system. And, they were not limited to how much they could save for retirement — all tax free — and so the national savings rate is about 27%. What’s it in the US, negative 5?
Yup, we’re too smart for our own good.
Reinke Faces Life 
Does it really matter who started it? SSI was a bad idea in the first place. It’s an intergenerational wealth transfer scheme that is socialist at its heart. Unsustainable (demographics change), immoral (theft), ineffective (doesn’t accomplish the goal unless the goal is welfare for rich white women?), and inefficient (saving one’s own money would have a positive roi as opposed to ssi’s negative one). So what are YOU going to do about it?
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I have been incensed over SS for a long time. Your blog entries have also gotten me started again! Some facts about SS from my Credit Union:
1) SS is currntly taking in more money than it needs to pay beneficiaries. That surplus is being delivered to the U.S. Dept of the Treasury, which in exchange gives the SSA an IOU in the form of special nonnegotiable bonds. There are about $1.9M trillion worth of these government bonds in a file cabinet in West Virginia.
2) The time will come, probably within a dozen years, when there won’t be enough revenue from payroll taxes to pay the benefits currently promised. So when tax revenues going into the SS system start to fall short, the SSA will have the right to go to the Treasury Dept and start cashing in on those IOUs.
3) Hence the problem…the Treasury has already spent those funds! There is no money sitting around waiting to be given back. As a result, when SSA starts cashing in the IOUs, the Treasury is going to have to figure out how to raise the funds.
4) It will have to raise taxes, cut expenditures, or issue new bonds and the pass the debt on to future generations. SOMEONE is going to pay!
5) Some options discussed include cutting benefits by 1/3, or increasing taxes by 50-80% to keep the system going.
6) ARGGHHH !!! Whose idea was it to issue those ‘nonnegotiable’ bonds in the first place…who stole our money! I know who is stealing it now, but who started it?
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