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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Stock Market Drop Exposes The Dangers Of Privatizing Social Security
he stock market continued a period of volatility on Monday. Media reports sounded the alarm as the DOW opened 1,000 points down and other indexes took huge hits, only to climb back up a bit later in the day. While that performance, which had some people calling it black Monday, may have knocked a good deal of money out of peoples 401(k) retirement accounts, Social Security benefits remain by and large untouched by such fluctuations.
Some Republicans, however, are interested in changing that.
In June, presidential candidate Jeb Bush said that he thinks the next president will have to try to privatize Social Security. Others have gotten behind the idea as well: Sen. Rand Paul (R-KY) drafted a plan in 2013 that included partial privatization, and Sen. Ted Cruz (R-TX) is in favor of using private accounts. Rep. Paul Ryan (R-WI) has included privatization in his budget blueprints.
The market drop, and ones before, expose the dangers of such a plan, which usually entails diverting some or all of the money workers contribute to Social Security through their paychecks into private investment accounts. That would put individuals in charge of making smart enough investment choices in the market to make big enough returns to support themselves in retirement.
http://thinkprogress.org/economy/2015/08/24/3694668/stock-market-social-security-privatization/
Wounded Bear
(58,712 posts)They privatized the gov't retirement system, and when the market went tits up, millions were divested of their benefits.
Pure neo-liberal economics.
enid602
(8,652 posts)That was Argentina.
Wounded Bear
(58,712 posts)Not in stead of. IIRC Naomi Klein discussed both in her landmark book, Shock Doctrine.
Of course, neither got much press in our Corporate dominated media.
You almost have to go to the foreign press to get any real reporting these days. Did I say almost?
Octafish
(55,745 posts)The author was a Chicago Boy helping implement the scam for Pinochet:
President Clinton and the Chilean Model.
By José Piñera
Midnight at the House of Good and Evil
"It is 12:30 at night, and Bill Clinton asks me and Dottie: 'What do you know about the Chilean social-security system?' recounted Richard Lamm, the three-term former governor of Colorado. It was March 1995, and Lamm and his wife were staying that weekend in the Lincoln Bedroom of the White House.
I read about this surprising midnight conversation in an article by Jonathan Alter (Newsweek, May 13, 1996), as I was waiting at Dulles International Airport for a flight to Europe. The article also said that early the next morning, before he left to go jogging, President Bill Clinton arranged for a special report about the Chilean reform produced by his staff to be slipped under Lamm's door.
That news piqued my interest, so as soon as I came back to the United States, I went to visit Richard Lamm. I wanted to know the exact circumstances in which the president of the worlds superpower engages a fellow former governor in a Saturday night exchange about the system I had implemented 15 years earlier.
Lamn and I shared a coffee on the terrace of his house in Denver. He not only was the most genial host to this curious Chilean, but he also proved to be deeply motivated by the issues surrounding aging and the future of America. So we had an engaging conversation. At the conclusion, I ventured to ask him for a copy of the report that Clinton had given him. He agreed to give it to me on the condition that I do not make it public while Clinton was president. He also gave me a copy of the handwritten note on White House stationery, dated 3-21-95, which accompanied the report slipped under his door. It read:
Dick,
Sorry I missed you this morning.
It was great to have you and Dottie here.
Here's the stuff on Chile I mentioned.
Best,
Bill.
Three months before that Clinton-Lamm conversation about the Chilean system, I had a long lunch in Santiago with journalist Joe Klein of Newsweek magazine. A few weeks afterwards, he wrote a compelling article entitled,[font color="green"] "If Chile can do it...couldn´t North America privatize its social-security system?" [/font color]He concluded by stating that "the Chilean system is perhaps the first significant social-policy idea to emanate from the Southern Hemisphere." (Newsweek, December 12, 1994).
I have reasons to think that probably this piece got Clintons attention and, given his passion for policy issues, he became a quasi expert on Chiles Social Security reform. Clinton was familiar with Klein, as the journalist covered the 1992 presidential race and went on anonymously to write the bestseller Primary Colors, a thinly-veiled account of Clintons campaign.
The mother of all reforms
While studying for a Masters and a Ph.D. in economics at Harvard University, I became enamored with Americas unique experiment in liberty and limited government. In 1835 Alexis de Tocqueville wrote the first volume of Democracy in America hoping that many of the salutary aspects of American society might be exported to his native France. I dreamed with exporting them to my native Chile.
So, upon finishing my Ph.D. in 1974 and while fully enjoying my position as a Teaching Fellow at Harvard University and a professor at Boston University, I took on the most difficult decision in my life: to go back to help my country rebuild its destroyed economy and democracy along the lines of the principles and institutions created in America by the Founding Fathers. Soon after I became Secretary of Labor and Social Security, and in 1980 I was able to create a fully funded system of personal retirement accounts. Historian Niall Ferguson has stated that this reform was the most profound challenge to the welfare state in a generation. Thatcher and Reagan came later. The backlash against welfare started in Chile.
But while de Tocquevilles 1835 treatment contained largely effusive praise of American government, the second volume of Democracy in America, published five years later, strikes a more cautionary tone. He warned that the American Republic will endure, until politicians realize they can bribe the people with their own money. In fact at some point during the 20th century, the culture of self reliance and individual responsibility that had made America a great and free nation was diluted by the creation of [font color="green"] an Entitlement State,[/font color] reminiscent of the increasingly failed European welfare state. What America needed was a return to basics, to the founding tenets of limited government and personal responsibility.
[font color="green"]In a way, the principles America helped export so successfully to Chile through a group of free market economists needed to be reaffirmed through an emblematic reform. I felt that the Chilean solution to the impending Social Security crisis could be applied in the USA.[/font color]
CONTINUED...
http://www.josepinera.org/articles/articles_clinton_chilean_model.htm
OP: The Chicago Boys in Chile: Economic Freedom's Awful Toll
yeoman6987
(14,449 posts)Very few actually lost real money if any. But SS should not be invested although I am grateful the 401K's are. Keeping money in a bank account is about the dumbest thing an invester could do.
GummyBearz
(2,931 posts)I'm glad my 401k rolled over in cash a few weeks ago. A few of my "no way in hell" buy orders got filled yesterday when the dow was down 1K. It was just luck though.
yeoman6987
(14,449 posts)I always remember Joe Kennedy took out his money right before the stock crash and he was able to then but stocks really low which added to his portfolio. Many wealthy lost everything. I didn't add regular people losing money in the stock market because I don't think it was used by most back in the day. I could be wrong but I think regular people used banks if they had anything left at the end of the month which most didn't I predict. Most we small farmers who barely survived day to day.
raccoon
(31,120 posts)Gothmog
(145,562 posts)Matariki
(18,775 posts)How I wish I had some sort of guaranteed pension rather than potentially losing half or more of my savings a few years before retirement.
Yavin4
(35,446 posts)We should not privatize SS because the Wall Street predator class will steal the money. Pure and simple. They will find a way to steal that money for themselves. That's what they do. That's who they are.
Wounded Bear
(58,712 posts)But it is a reason. I know people who were near retirement age when the '08 Crash destroyed much of the value of their 401k's. In many cases, it caused drastic changes in plans set and implemented over many years. Many lost houses, among other assets. In any event, there was real pain and suffering.
Suddenly, retirement became time sensitive, being decided more by where the markets are at the time and less on the persons age/condition. Doesn't sound much like freedom to me.