Privatize SS now just look at Chile!
Fine lets look at Chile since Herman Cain and Sharon Angle seem to think America should fix Social Security by privatizing it.
After all SS benefits will drop as the payroll taxes that pay for Social Security decline. I expect the catfood commission to suggest that since stock prices are so low we can fund SS by privatizing it and we can all get rich if we Privatize Now!
Yes this will boost the stockmarket as billions in SS money flows into the stock market however just like low interest rates created the housing bubble by attracting billions from home buyers who boosted home prices past rational levels privatizing SS will create a similar short term bubble .
The Obama/GOP plan works by first creating an imaginary Shock Doctrine event then they use the shock to pass stupid plans that help them but screw us.
They already own stock which they will sell us as the *cough * Rational Market boosts stock prices past rational levels as billions of dollars of Social Security money suddenly has to buy stocks suddenly.
But back to Chile’s SS success first of all a Lefty is responsible for it.
“After socialist candidate Salvador Allende won the election, he promised to deal with the issue head-on. In fact, at the beginning of 1971, he sent Congress a project for a constitutional amendment that would allow him to nationalize outright all mines, and to transfer all present and future copper fields to the state. Congress passed this amendment on July 11, 1971, by a unanimous vote, and based on it, on July 16, 1971 law 17.450 was promulgated, and became effective immediately. The event was celebrated as the Day of National Dignity (Spanish: Día de la Dignidad Nacional).”
“The nationalised Chilean mines were kept under state control after the Pinochet’s 1973 Chilean coup d’état, despite the junta’s pro-U.S. leanings and this is still the case, largely because of public sentiment and because Codelco is a major contributor to the Chilean Exchequer. Codelco pays income tax, all dividends go to the government and it also pays a 10% tax on the export value of copper products and associated byproducts according to Law 13,136.”
If foreign owned companies owned Chile’s Copper mines there would be no 10% tax on Chile’s copper exports helping fund the government.
Imagine what the American stock market would be like if half of our exports were copper like Chile and went from less than 2835.4 a ton in 2002 to 9442.3 a ton thats more than a 3 times price increase.
“Chile’s economy is based on the export of minerals, which account for about half of the total value of exports. Copper is the nation’s most valuable resource, and Chile is the world’s largest producer”
But wait John Tierney of the New York Times loves Chile’s Privatized SS and says
After comparing our relative payments to our pension systems (since salaries are higher in America, I had contributed more), we extrapolated what would have happened if I’d put my money into Pablo’s mutual fund instead of the Social Security trust fund. We came up with three projections for my old age, each one offering a pension that, like Social Security’s, would be indexed to compensate for inflation:
(1) Retire in 10 years, at age 62, with an annual pension of $55,000. That would be more than triple the $18,000 I can expect from Social Security at that age.
(2) Retire at age 65 with an annual pension of $70,000. That would be almost triple the $25,000 pension promised by Social Security starting a year later, at age 66.
John promises for the future are based on projected revenue Chile’s revenue from half their exports has more than tripled if anything the people are getting screwed with low benefits.
Next John it was only in 2005 that people were writing articles like the one below about Chile’s Privatized Social Security if the price of copper drops they will write these articles again. Benefits are dependent on revenue if we Privatize SS then when the stock market drops we face these problems.
Tell me John will half of America’s exports triple in value the second we Privatize SS? Privatizing SS does not magically create wealth out of thin air John.
Chileans are finding that it is falling far short of what was originally advertised under the authoritarian government of Gen. Augusto Pinochet.
For all the program’s success in economic terms, the government continues to direct billions of dollars to a safety net for those whose contributions were not large enough to ensure even a minimum pension approaching $140 a month. Many others – 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.
Even many middle-class workers who contributed regularly are finding that their private accounts – burdened with hidden fees that may have soaked up as much as a third of their original investment – are failing to deliver as much in benefits as they would have received if they had stayed in the old system.
Dagoberto Sáez, for example, is a 66-year-old laboratory technician here who plans, because of a recent heart attack, to retire in March. He earns just under $950 a month; his pension fund has told him that his nearly 24 years of contributions will finance a 20-year annuity paying only $315 a month.
“Colleagues and friends with the same pay grade who stayed in the old system, people who work right alongside me,” he said, “are retiring with pensions of almost $700 a month – good until they die. I have a salary that allows me to live with dignity, and all of a sudden I am going to be plunged into poverty, all because I made the mistake of believing the promises they made to us back in 1981.”
In conclusion John, Herman, Sharon if you want America to Privatize Social Security like Chile has done and have the same benefits in good times and problems in bad times like Chile.
First you must have a 10% tax on half of our exports like Chile has Chile funds its government in part with this tax that means they don’t have to cut spending or raise other taxes to pay for all government spending including Social Security.
Second you must Nationalize half of our export business to get the same level of efficiency that Chile’s government does from its copper mines. Remember they are the world’s largest producer of copper not us.
Before you get angry and scream Free Markets are more efficient let me remind you we deregulated the airline industry and as the joke goes in investing circles “How do you make a small fortune investing in the airline business?…Start with a large fortune “.
Bush and Clinton removed Depression era government regulations on the banks and we got the Bush Banking Crisis. For Profit schools, Prisons, Mercenary Armies, and Spies the postal service vs UPS cost for shipping a package heck! They all cost more and a google search on any of those topics will list tons of articles describing their failure’s and higher costs compared to government run programs.
Third you would need for the value of half of America’s exports to triple in value.
Now then I know you are against taxes and government running things never mind all the Real World facts I mentioned. But do you really think an organizational change in how Social Security is funded will magically triple the value of half of America’s exports?