Red White & Blue Hens

College students in Delaware who think right is right, and left is wrong. We study hard, party hard, and play hardball.

Monday, April 11, 2005

Social Security

I found a great article about the successful social security system in Chile. Lawmakers should do their research. The link is on my blog.

1 Comments:

  • At 9:19 AM, Blogger M. McKain said…

    Maybe lawmakers have done their research after all. This scheme wasn't and isn't all peaches and cream.

    "Advocates of Social Security privatization continually crow about Chile’s high returns under individual accounts. In concentrating on returns, however, they miss crucial parts of the story. They ignore the fact that Chile has cut social spending, raised taxes, and cut benefits in order to pay transition costs—transition costs that the government will continue to pay until 2050. They ignore exorbitant management fees that have, over a number of periods, cut these much-vaunted returns to nearly zero. Advocates also fail to mention that these individual accounts have increased economic inequality and left workers vulnerable to market downturns. Moreover, privatized systems must either require retirees to convert a substantial portion of their account into an annuity – which means that the account can't be passed on to heirs other than the spouse – or accept a high percentage of the very elderly outliving their account and falling into dire poverty. Once these factors are taken into account, the case for privatization becomes much shakier."

    Read more at http://www.econop.org/SS-SocialInsecurityChile.htm

     

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