Mr. Piñera is now with the Cato Institute, a
libertarian neo-feudal propaganda mill in Washington, DC that is dedicated to reproducing the Chilean disaster in the USA.
Below is an article that Mr. Piñera published in 1997. My own words are in blue.
America’s Social Security system will go bust in 2010. Mr. Piñera said this 19 years ago. The liars have been saying that Social Security is about to “go bust” since the program started in 1935. They’ll be saying it forever. As political leaders scramble to save it, they’ve overlooked an obvious
free-market neo-feudal solution that works to make rich people richer. They need only look at Chile.
Pay-as-you-go social security systems destroy the link between contributions and benefits, between effort and reward. That is, it makes regular people a bit like rich people. Everyone (especially rich people) tries to minimize what he puts into the system while trying to maximize through political pressure what he can get out of it. That’s why pay-as-you-go plans are
going bankrupt being privatized all over the world.
Chile faced that fake problem in the late ’70s. The bloodthirsty dictator August Pinochet took power a military coup that, with the help of the CIA, went full neo-feudal. Pinochet privatized Chile’s Social Security because he wanted to, not because he needed to.
As secretary of labor and social security, I could have postponed the crisis by playing at the edges, increasing payroll taxes a little and slashing benefits a little. Liar. Chile’s government creates its currency out of thin air. It does not need tax revenue. But instead of making some cosmetic adjustments, I decided to undertake a structural reform that would solve the problem once and for all. Lying P.O.S. You privatized it to make rich people richer.
Chile allowed every worker to “choose“ whether to stay in the state-run, pay-as-you-go social security system or to put the whole payroll tax into an individual retirement account. For the first time in history we have allowed
the common worker the rich to benefit from one of the most powerful and evil forces on earth: compound interest.
You gave them a one-time “choice” in 1981. Everyone who believed your lies now regrets it. Their benefits are only a third of what you promised, and they are less than half of the benefits collected by the few people who did not believe your lies, and who stayed with the government system.
Some 93% of Chilean workers chose the new system. Actually they were coerced by the dictator Pinochet, who you adore. They trust the private sector and prefer market risk to political risk. And they got screwed just as you planned. If you invest money in the market, it could go up or down. Over a 40-year period, though, a diversified portfolio will have very low risk and provide a positive rate of real return. But when the government runs the pension system, it can slash benefits at any time. Meanwhile the private financiers will ALWAYS slash benefits, in order to continually boost profits.
The Chilean system is run completely by private companies. We now have 15 mutual funds competing for workers’ savings. That was 19 years ago. Today, because of mergers and acquisitions, only four companies are running the retirement insurance system. Soon there will be only one. It’s called building a monopoly.
We guaranteed benefits for the elderly — we told those people who had already retired that they had nothing to fear from this reform. We also told people entering the labor force for the first time that they had to go to the new system. Yes, you forced people to submit to your theft.
Today, all workers in Chile are capitalists prey, because their money is invested in the rigged stock market that scams them. And workers also understand that if government tomorrow were to create the conditions for inflation, they would be damaged because some of the money is also invested in bonds — around 60%. So the whole working population of Chile has a vested interest in sound economic policies and a pro-market, pro-private-enterprise environment.
Translation: the system is set up to prevent the government from creating enough money to support a middle class. It’s automatic austerity for workers.
There have been enormous external benefits to the rich: the savings rate of Chile was 10% of gross national product traditionally. It has gone up to 27% of GNP. The payroll tax in Chile is zero. Of course we have an estate tax and an income tax, but not a payroll tax. Liar. Workers still have to pay the tax, but since the government no longer collects the money, you claim that the tax isn’t a “tax.” With full employment and a 27% savings rate, the rate of growth of the Chilean economy has doubled.
Chile has never had full employment, asshole. Also, when China’s economy cooled, and the commodities boom ended, Chile went into a recession, which is made worse because the Chilean peso is not widely accepted outside Chile. The country has a severe trade deficit, and has burned through whatever foreign currency reserves it had. This means that Chile cannot buy imports. The resulting shortages are causing inflation, which the corporate media outlets avoid mentioning.
That does not mean that we do not have any problems in Chile, but I believe that a society based on
individual freedoms neo-feudalism — economic, social and political — is a much more prosperous and lively society for the rich.
Whenever these bastards talk about “increasing your freedom,” watch out. They are preparing to scam you.
Recently, I was invited by Sen. Phil Gramm, R-Texas, to testify before the Senate Subcommittee on Securities. Basically, everyone agreed that a system like this is much more consistent with American values than a system created by a Prussian chancellor in the 19th century.
Here I agree with you. Average Americans are programmed to worship wealth and inequality, which will be enhanced when Medicare and Social Security are privatized.
End of article. The following comments are mine…
Chile was one of the first nations to privatize higher education, and start the student loan scam. This created a student debt crisis, just like the USA, in which millions of people are debt-slaves of rich financiers.
The US-backed dictator Pinochet privatized everything. In 1973 the CIA helped Pinochet take power in a military coup. Pinochet immediately “suicided” President Salvador Allende, and grabbed power as quickly as President Allende’s head hit the floor with Pinochet’s bullet in it.
Pinochet’s first phone call was to Henry Kissinger, followed by a conference call with Milton Friedman at the University of Chicago. Friedman was the father of “free market” economics (i.e. rule by the rich).
Having reduced Chile to a nightmare of inequality, Friedman often referred to the “miracle of Chile,” meaning that the military dictatorship had created a “democratic society.” (For assholes like Friedman, democracy is “tyranny,” while tyranny “democracy.”)
Today Chile is ruled by “market-driven forces” — i.e. the rich own everything that has any value, from pharmacies to gold mines. Pinochet gave it to them with U.S. blessings.
There are non-stop demonstrations by students and young people, but the highly militarized police crush them all.
Chile’s U.S.-trained President, Michelle Bachelet, is a radical opponent of socialism, yet she calls herself a “socialist.” This is a standard pattern worldwide. In order to keep raping the peasants, the rich install extreme right-wing assholes (like Hillary or Obama) who call themselves “socialists” or “progressives.” In some cases (e.g. Chile) they even let a few communists become parliamentarians. When a handful of communists are admitted into parliament, they do an about-face and become radically neo-liberal, but they still call themselves “communists.” The corporate media outlets also call them “communists,” just as they call SYRIZA in Greece “leftists.”
It’s the exact opposite of reality. Extreme right-wing elitists are called “leftists,” while genuinely populist / leftist parties are called “the far right.”
When Michelle Bachelet ran for the presidency a second time, she got votes by promising to bring about free public university education. Once in power, she did an about-face, just like Obama. Bachelet has proposed a labor reform package that, while pitched as a reversal of Pinochet’s destruction of worker rights, further destroys workers’ rights.
The future of the USA is Chile.