I'm almost speechless...
Sharron Angle is further clarifying her calls for the privatization of Social Security, saying that Chile has done it successfully. That is, Angle is now speaking favorably of a system that was enacted by a military dictator.
"So when I said private, that's what I meant -- that I thought we would have to go just to the private sector just for a template on how this is supposed to be done," Angle told the CBS affiliate in Las Vegas. "However, I've seen been studying, and Chile has done this."
The station noted that Chile's private pensions system, which was originally enacted by the military dictator Augusto Pinochet, has been criticized for being subject to market volatility, though its proponents argue that it gives all citizens a stake in the market.
Well, almost. This is simply ridiculous! For all Sharron Angle's talk of Democrats "taking away our freedoms", she's now copying ideas from a brutal military tyrant who overthrew Chile's democratically elected government in 1973! Is this what Sharron Angle means when she talks about "Second Amendment Remedies"?
This is the reality of what happened to Chile thanks to Pinochet.
And this is the reality of how Pinochet's privatized pension program did NOT work... Unless you consider impoverishing seniors and adding additional unnecessary costs to the federal governent "working".
A quarter of a century since privatization took effect, Chilean's retirement security is on shaky ground. Recent reports by the World Bank and the Federal Reserve have highlighted some of the many problems with Chile's system. A combination of high management fees, low participation rates, unexpectedly heavy dependence on an inadequate safety net, and prohibitively high costs to government have led the system along a path of failure and left many Chilean workers with no reliable retirement plan. Is this really the model the United States hopes to replicate?
There are prohibitively high expenses and fees. Voracious commissions and other administrative costs have swallowed up large shares of personal accounts. It is estimated that roughly 28 to 33 percent one-quarter to one-third of contributions made by employees retiring in 2000 went toward fees.
There are low participation rates. Half of Chileans, primarily the poorest, do not contribute to a pension fund at all. The New York Times notes, "Many [Chileans]—because they earned much of their income in the underground economy, are self-employed, or work only seasonally—remain outside the system altogether. Combined, those groups constitute roughly half the Chilean labor force. Only half of workers are captured by the system."
- The brokerage firm CB Capitales calculated (see English language discussion by Stephen Kay of the Federal Reserve Bank of Atlanta here) that when commission charges are taken into consideration in Chile, the total average return on worker contributions between 1982 and 1999 was 5.1 percent-not 11 percent as calculated by the superintendency of pension funds. That report found that the average worker would have done better simply by placing their pension fund contributions in a passbook savings account.
There is unexpectedly heavy dependence on an inadequate safety net. Stephen J. Kay of the Federal Reserve Bank of Atlanta recently found that investment accounts of retirees are much smaller than originally predicted-so low that 41 percent of those eligible to collect pensions continue to work.
- Even the military does not participate in the privatized system. While the military imposed the private accounts on all other workers entering the labor force after 1981, it continues to receive pensions under the old, favored governmental system.
There are unexpectedly high transition and supplementary costs. The transition costs of shifting to a privatized system in Chile averaged 6.1 percent of GDP in the 1980s, 4.8 percent in the 1990s, and are expected to average 4.3 percent from 1999 to 2037. Those costs are far higher than originally projected, in part because the government is obligated to provide subsidies for workers failing to accumulate enough money in their accounts to earn a minimum pension.
- The New York Times revealed in an article earlier this year that under the old pay-as-you-go system, the maximum monthly benefit is $1250. Under the privatized system, a worker would have to contribute more than a quarter of a million dollars over the course of his or her career to receive as much in retirement benefits each month. Just 500 of the seven million participants in private accounts, has been able to do so.
Oh, and another thing... Chile has been moving AWAY from this failed privatized system because IT DOESN'T WORK! That's why Chile began discussing reform in 2006 in the form of implementing guaranteed benefits for people left out by the private system.
The new $2 billion-a-year program will expand public pensions to groups left out by private pensions - the poor and self-employed, homewives, street vendors and farmers who saved little for rResponding to growing complaints that the privatized pension system here is failing to deliver adequate benefits, the Chilean government has recommended that it be supplanted by a system in which the state would play a much larger role. The current system is a favorite of free-enterprise enthusiasts, including President Bush.
The changes, part of a reform package scheduled to go to Congress early next year, include a guaranteed minimum pension for the country's poorest citizens, even those who have never contributed to the private system. [...]
In recent years, that pioneering privatized system has been emulated by a score of other countries and praised by leaders of many others. Mr. Bush, for example, proposed using the Chilean model as the basis for a reshaping of Social Security, calling the system here ''a great example'' and saying the United States could ''take some lessons from Chile.''
But dissatisfaction with the inability of the system to provide the benefits promised when Gen. Augusto Pinochet imposed it in 1981 has been rising, and became an issue in this year's presidential campaign.
As things now stand, about half the Chileans in the labor force will not qualify for a pension or will receive only a minimum payment, for a variety of reasons that include their not having paid into the system for the minimum 20 years.
So now, it looks like this.
[Sharron] Angle referred to Chile on Thursday in North Las Vegas while explaining previous statements that the United States should phase out its current system.
However, the pension system established in 1981 by right-wing Chilean dictator Augusto Pinochet is no longer a fully private system.
Chile's system was revamped in 2008 to expand public pensions for groups left out of its system, including low-income seniors.
The tea party favorite challenging Democratic Senate Majority Leader Harry Reid says the current U.S. system is broken.
Reid and Democrats say Angle's ideas about Social Security are extreme.
So the fact of the matter here is that Military Dictator Augusto Pinochet scrapped the public pension program favored by the previous democratically elected government (that he violently overthrew against the will of the people!), and instead pushed for this privatized system that ended up denying benefits to nearly half of the Chilean people, costing the Chilean government far more than Pinochet's economic advisers had originally promised, and ultimately had to be reformed in 2008 (in the form of restoring public pensions, creating something similar to the Social Security benefits we enjoy here!) so fewer Chileans would have to "retire" to abject poverty. George Bush tried to shove this miserable failure down our throats in 2005, but it didn't work. However, Sharron Angle and her fellow "Tea Party, Inc." extremists are now trying to distort the facts on Social Security to try to scare us into copying Chile's mistakes! What the hell are they thinking!
I guess this is why more and more Nevada seniors want to stick with the sane, proven, sensible leadership of Harry Reid.
Last I checked, I never heard him endorsing insane and unworkable Social Security privatization schemes copied directly from some brutal, tyrannical Latin American military dictatorship!