First, we spoke about Chile's economic miracle.
Second, we spoke about Chile's retirement system, a program that we should look as we modernize Social Security.
The CATO Institute posted an analysis of Chile's program:
"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 to benefit from one of the
most powerful forces on earth: compound interest.
Some 93% of Chilean workers chose the new system. They trust the
private sector and prefer market risk to political risk. 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.
The Chilean system is run completely by private companies. We now have 15 mutual funds competing for workers’ savings."
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