Life Is Not A Defined Benefit

by Star Parker - November 5th, 2007 Townhall.com

Twenty seven years ago, in November 1980, Chile, Dr. [Jose ] Pinera's home country, approved Social Security reform in which a tax-based, pay-as-you go government retirement system -- essentially identical to what we have here -- was replaced with an ownership based system of individually owned retirement accounts. Yes, in principle the kind of reform that President Bush proposed.

As the then youthful Minister of Labor and Social Security of Chile, Pinera was the godfather, mastermind, architect, navigator, and quarterback of the reform.

Key in execution was to allow every Chilean worker the dignity of choice.

They could choose to stay in the existing system, continue to pay payroll taxes, and qualify for government benefits at retirement, or they could get out and use those same funds to open and invest in their own personal retirement account.

Within months, 90 percent of the Chilean workforce opted out of the government system and into their own personal ownership regime.

The result has been more than just an enormously successful transformation of a failed government retirement system. Chile's social security privatization -- if I may use the word that politicians, even the conservative ones, choke on these days -- has been a driving piston in Chile's economic engine, now the most powerful in Latin America.

We have got to have radical reform here in America. One area where that is needed is in the system of social security. Our current system is nothing but generational slavery. Everyone knows that slavery is evil, unless it benefits us. The slavers of 200 years ago had completely rationalized why the system was good for them. Today our older people have completely rationalized social security. The young are completely opposed. A generation clash is coming if something is not done soon.

It is easy to argue that the current social security is the only way to handle taking care of our older generations. However Chile has shown there are better ways. I am not surprised that a former socialist nation like Chile has led the way. Experiencing socialism is sometimes one of the best ways to acquire the motivation to abolish it. Our current Social Security System is socialism and includes all the worst evils of that economic concept.