If Only All Of America Was Based On Chilean Economics

John Tierney's NYTimes editorial today claims that private accounts work for Chileans after comparing what he'll get from social security compared to a Chilean friend of his who has invested under Chile's system of private accounts since 1981. Um, there's a few problems here. One of which might be that those accounts were part of economic program of the Pinochet government with his advisors from the University of Chicago who not only murdered Salvador Allende and thousands of his supporters during and after the 1973 coup but who also destroyed the economy of Chile. Perhaps the biggest reason that the Pinochet government left power, as was the case with several of the dictatorships that came to power in southern South America in the 1960s and 1970s, was that their economies had fallen apart and they didn't want to be blamed for it.

Another small problem which Tierney gives a touch of lip service to is that the vast majority of Chileans are too poor to ever benefit from a system of private accounts. This poverty was in no way helped by the Friedman influenced economic plan that Pinochet implemented after 1973. Tierney claims in 1 sentence that if you are a long-term worker in Chile you will also receive a basic benefit that is superior to the US. However, I am frankly not inclined to believe this. Not only have I never heard this before, but Tierney provides no evidence.

But isn't the point of social security to help ensure basic survival for the poor? Not if you're rich like Tierney it's not. For the Republicans, the actual reason for social security to exist is lost in the debate over how much money we can move to the stock market. Maybe if you're rich like Tierney's friend--a major economist in Chile--you can make a lot of money through private accounts. But you can do that anyway if you're rich!! It's called investing your money. We can fund social security to provide a dignified life for less wealthy elderly people while still allowing Americans who want to invest all the money they want so that they can buy their ivory-covered backscratchers when they're 85.

And if anyone has any evidence, pro or con, about Tierney's claim that the Chilean private account system is superior for poor people than America's, I'd be real curious to hear it.