Here’s a Cautionary Tale of Pension Privatization From Chile
There are still people/businesses trying to privatize Social Security. Kevin Drum writes:
Among free-market fans, Chile’s privatized pension plan has long been held up as a model for us to follow. The problem, as the Financial Times notes today, is that it’s performed pretty dismally. Daniel Gross suggests that it was all well-intentioned, but for some reason just didn’t work out:
There’s one thing Gross and I agree about: net returns of 3 percent during the booming market of the past 35 years is indeed a disaster. It’s the “just turned out” part that deserves closer scrutiny. Sadly, I can’t read Spanish and therefore can’t inspect theprimary source for this debacle, but there’s no way that management fees indistinguishable from highway robbery just happened to happen. This may not be corruption in the sense of fund managers embezzling trillions of pesos for hookers and blow, but it’s certainly corruption in the more refined sense of deliberately allowing the financial sector to enrich itself at the expense of workers who are required to give them their money.
Why is this becoming a big issue now? . . .