Krugman cites a 1998 memo from Social Security Administration actuary Steve Goss criticizing some aspects of the methodology that we used and leaps to the conclusion our study is nothing but “damned lies.” ...We answered Goss’s critique (and others) long ago, in our December 11, 1998, report “Social Security’s Rate of Return: A Reply to Our Critics.” This paper has been available on our website for many years now and proves that we did account for Social Security’s progressive retirement benefits formula, as well as disability and survivor benefits and other elements of the program that disproportionately benefit minorities.

In short, we used the same benefit formula that Social Security uses to calculate retirement benefits for our study. We included the cost of a life insurance policy that duplicates the survivors benefits offered by Social Security. Most importantly, we treat disability benefits as a separate program from the retirement and survivors benefit program that we studied.

Indeed, we went so far as to rerun the numbers using an alternate methodology suggested by Goss and found that it reinforced our initial finding that African Americans generally receive a far lesser return on their “investment” of Social Security taxes than whites.

...A major factor in African Americans’ poor returns from Social Security is the sad fact that so many black workers die before they can receive significant benefits. When measured in terms of the proportion of a worker’s pre-retirement income that is paid in Social Security benefits, all lower income workers receive more than higher income workers do. However, they often receive these benefits for a shorter period of time.

Krugman tries desperately to minimize, even dismiss, this problem. “Blacks’ low life expectancy is largely due to high death rates in childhood and young adulthood,” he assures us, before noting that the typical African-American male who makes it to retirement age can expect to collect benefits for only two years less than his male counterpart.

However, the difference between receiving benefits for 14.6 years instead of a white worker’s 16.6 years is 12 percent. A 12 percent “cut” may be no big deal to Krugman, but it often determines whether workers realize a net gain or loss from Social Security. ...fully one-third of African-American men will die between the ages of 50 and 70. Contrary to what Krugman claims, the difference in Social Security rates of return between African Americans and whites is not primarily due to high death rates in childhood and young adulthood...

Rather than acknowledge and consider the inconvenient facts, Krugman resorts to base name-calling. Those who would reform the system to give Americans—and especially African Americans—a better return on their investment and the ability to amass a nest egg that can be passed on to their heirs are charged with “playing the race card” and bigotry.

Paul Krugman was once a respected academic, but sadly, he now stoops to produce superficial and poorly researched propaganda. Krugman’s January 28 attack is no more than an artfully executed piece of propaganda; Only when one examines the facts behind his charges does its veneer of reason shatter.

...the formula determining Social Security benefits is progressive: it provides more benefits, as a percentage of earnings, to low-income workers than to high-income workers. Since African-Americans are paid much less, on average, than whites, this works to their advantage.

...it isn't particularly soft to treat premature black deaths not as a tragedy we must end but as just another way to push your ideological agenda. But bigotry - yes, that sounds like the right word.

I do not support a number of those government's policies, specially those related to human rights, but let us look at the facts. In 1981 it was advertised that the minimum pension (created in 1952) and the assistance pension (created in 1975) programs would continue their support for the old poor. Rohter presents things as if the advertisement was that the old poor would not exist under the new system.

It was also advertised in 1981 that for the first time, the self-employed would be allowed to participate voluntarily in social security. Note that nobody in Chile proposed to mandate the self-employed to contribute for old age, as the United States has done for decades. The reason is a social concern: it would be cruel to force the Chilean self-employed to contribute, because most have low take-home wages anyway, and because if they ever self-financed a minimum pension for old age, they would be excluded from the programs that support the old poor. In 1981 nobody advertised that all the self-employed would have pensions under the new system, but rather those that wanted to contribute would have one (which in fact have been very few). Rohter presents things as if the advertisement was that the self-employed would all contribute under the new system.

I, for one, am proud that we Chilean taxpayers "continue to direct billions of dollars to a safety net", despite criticism by Rohter. According to the Ministry of Planning in page www.mideplan.cl, button Encuesta Casen, button Estadísticas, categoría "Pobreza" (Poverty), the result has been the following (as of the 2000 survey):
 

Age group	65 and more	All ages
% indigent	1.1%	5.7%
% poor	5.6%	14.9%
sum of both lines	6.7%	20.6%

Thus, Chilean social policy has reduced poverty among the old to a third of the national poverty rate. The children (up to age 14), with a 31.1% total poverty rate, deserve a higher priority than the old.

2) The Dagoberto Saez example.

Mr. Saez contributed just 24 years out of a 45 year career, so any earnings-related benefit formula will pay him far less than the target replacement rate. Therefore, it is a welcome aspect of the new pension system that it pays Mr. Saéz just $315 a month. This is still a respectable 33% replacement rate on the last wage and surely a much higher replacement rate on the average career wage as used in the United States.

What a journalist should be inquisitive about is how does the old system manage to pay his colleagues $700 a month.

a) Did he check if the colleagues contributed for 40 or so years, rather than 24?

b) Did he check that the old system calculates the pension on the basis of the average of the last five years of contributions (not 35 as in the U.S. Social Security), encouraging people to game the formula?

c) Did he check the contribution rate paid my Mr. Saez as a proportion of his actual earnings? If he was a government employee, then during the 1950-1990 period he would have enjoyed a partial exemption on contributions, granted by laws that declared that just 25% of the salary was taxable for social security purposes. This trick allowed short run savings to the employer (the government). The workers accepted this because their take-home wage increased (i.e. they could get a bigger increase in the next wage-bargaining round), and in the understanding that later on, when they approached the pension age, their full salary would become taxable and reported, i.e. effectively the full salary would count in the benefit formula based on just the last 5 years of contribution (of course other workers, who did not enjoy this partial exemption, or taxpayers, would cover the largesse. This explains also the “pension damage” reported by Rohter in the last lines). However, if Mr. Saez moved to the new system, where only actual contributions accumulate, these inequitable redistributions would be revealed and stopped.

d) Finally, were readers informed that the fact that the old system pays ZERO to contributors that contribute for less than 10 years, implies that the old system can direct the contribution revenue extracted from those people (whose contributions are taxed at 100%), towards the lucky ones that do complete the 10 years like Mr. Saez colleagues? Note that the number taxed in Chile by this arrangement is much larger than in the United States, because in Chile the share of people in that situation is large because of the exemption for the self-employed to contribute - who in turn are about 30% of employment - and because of many women's interrupted careers when they work at home.

Rohter does not report to readers that Mr. Saez earns 50% more than the average Chilean wage, so his position in the income distribution is like the one of somebody in the U.S. earning about $45,000 a year (far above poverty in low cost-of-living Chile). This may cause a confusion among some readers, because in the United States $950 a month is way below the poverty line.

3) The remarks of the Minister for Labor and Social Security (Mr. Solari, not Scolari).

The Minister says that “it is absolutely impossible to think that a system of this nature is going to resolve the income needs of Chileans when they reach old age”. This is exact, because no Chilean I know of wants to scrap the minimum pension, the assistance pension and other safety nets that have reduced the poverty rate among the old to a third of the general population’s poverty rate. Nobody expects an earnings-related plan to engage in wealth redistribution, apart from the fact that pension benefits are fully subject to the personal income tax, which is highly progressive in Chile. But the Minister is wrong if he means that the system will not resolve the income needs of the middle classes when they reach old age, provided that they contribute, of course.

The article reports that “despite initial projections that the system would be self-sustaining by now, spending on pensions make up more than a quarter of the national budget”. This is wrong. The overall pension system, including minimum pensions and assistance pensions, will never be self-sustaining. The transition deficit in the program of mandatory earnings-related pensions for the middle classes was never expected to fall to zero after just 24 years of transition, but only after 40-50 years.

4) The transition cost/deficit

Readers are told that “the annual cost to the government, as guarantor of last resort, has remained steady at 5-6 per cent of GDP”, just after stating that the transition period has turned out to be longer and more expensive than anticipated. This way of presenting facts suggests that the transition cost has been 5-6% of GDP.

The actual transition cost is much smaller. It is the amount of contribution revenue diverted to the new pension system. This has been about 2% of GDP, as shown by the following table:

Cuadro 11.2 Impacto Fiscal de la transición chilena, 1981-1997
(% of GDP)

Recaudación Aportes Déficit de caja
 

Año	Planes Nuevos	Planes Antiguos
1981	n.d.	3,9
1982	1,7	8,1
1983	1,5	7,6
1984	1,5	7,7
1985	1,5	6,7
1986	1,6	6,3
1987	1,5	5,4
1988	1,8	5,2
1989	2,0	4,6
1990	2,2	4,6
1991	2,5	4,5
1992	2,1	4,4
1993	2,0	4,5
1994	2,0	4,4
1995	2,1	4,2
1996	1,4	3,6
1997	1,2	3,6

Source: Valdés, Salvador (2002) Políticas y Mercados de Pensions: A University Textbook for Latin America, Ediciones Universidad Católica, Santiago, Chile. Source of the data series: Table 5, p. 468, in Acuña, R. y A. Iglesias (2000) "La reforma a las pensiones", Chap. 11 in F. Larraín y R. Vergara editores, La transformación económica de Chile, Centro de Estudios Públicos, Santiago, Chile.

What explains the difference between the actual transition deficit of 2% and 5-6%?

a) Expenditure on the safety net. This expenditure has risen substantially due to real increases legislated in the 1990’s. This expenditure is much larger than the one reported in the fiscal accounts, because the Ministry of Finance has never broken down the expenditure in pensions made by the old system between “minimum pension supplements” and “self-financed earnings related pensions”. If this were done, it would become clear that the sum of expenditures in minimum pensions (adding both the old system and the new), is much larger than reported. It is also in a falling trend as a proportion of GDP, because Chilean real incomes have increased substantially in the last decade, reducing poverty.

b) A static fiscal policy adopted in 1981. The implicit labor tax in the old pension system was substituted by an implicit increase in VAT (or an implicit reduction of other expenditures). The implicit labor tax in the old system appeared as a source of pension revenue in the fiscal accounts, but the implicit increases in VAT and cuts in other programs are outside the pension budget. This budget classification issue inflates the “pension related deficit” reported by the Ministry of Finance.

c) The pension institution for the police and the military runs a permanent cash deficit. This happens for two reasons: (i) a large share of military and police pensions are deferred wages, as in the military in most countries including the United States, and as in many employer-sponsored DB plans, and the plan is financed on a pay-as-you-go basis. DB employer plans attempt to discourage quitting of personnel that has been trained at high cost by the employer (if a jet fighter pilot trained at a cost of $7 million quits to become an airline pilot, the loss is huge); and (ii) the number of Chilean military experienced a bulge in the past due to the military regime and specially to the threats of invasion by Peru and Argentina over 1975-78. After the return to democracy the number of military has fallen again, reducing contribution revenue in those plans.

d) The creation in the 1990s and in 2005 of new pension programs. They benefited those exiled by the Pinochet government that returned to Chile, the survivors of those killed or disappeared by that government, and in 2005 those that reported being tortured to a National Commission on Torture. The general thrust of these programs is sound, but their cost should not be attributed to the transition of the earnings related pensions for the middle classes from PAYG to full funding started in 1981.

5) The military’s pensions

Mr. Rohter gives credence to claims that the military were “careful to exclude fellow soldiers from” the new privatized and fully funded pension system. Did he check whether any country in the world would adopt a pension system for its armed forced where benefits are fully portable to civilian jobs? All of them attempt to discourage quitting of personnel that has been trained at high cost by the employer. If a jet fighter pilot trained at a cost of $7 million quits to become an airline pilot, the loss for taxpayers, and for national security, is huge. The reader was misinformed here.

The average military and police pensions in Chile are way below those of Mr. Saez’s colleagues. Why is this not reported?

6) The system’s administrative cost and the profits of fund management companies.

The reporting here is accurate and cautious, as it should be. The profit rates are very high, as I have shown in independent work. They rose to the current high levels in 1998, after the government introduced regulations that allowed the fund management companies to coordinate in firing their own salespeople, in exchange for an expected cut in commission rates to workers. The firms passed on only half of the cost saving. This arrangement failed because the fund management firms became hostage to political demands because their profits depend now on the government’s support. For example, as the reform of competition has been delayed once more in 2005, the government allowed them one more year of vulnerability to political demands.

It is a fact is that the fund management companies’ profits have never been so high as in the last 5 years, when Mr. Solari has been Minister for Social Security. This is a Chilean failure to manage a complex system. I hope other countries will avoid these mistakes.

Summing up: The readers of the New York Times got much less information than they deserve, overall.

Deconstructing Larry (of The New York Times)

The same journalist that gratuitously insulted the President of Brazil, former trade union leader Lula, by calling him "alcoholic" in print in the NYT, Mr. Larry Rohter (aka Larry Potter for his legendary imagination), has now insulted the intelligency of NYT readers. In fact, that newspaper published on January 27, 2005, his article "Chile's Retirees Find Shortfall in Private Plan", that I will dissect here to expose its fallacies, misrepresentations, innuendos, spelling errors, and other such tricks unworthy of an american newspaper. 

>Under the Chilean program - which President Bush has cited as a model for his plans to overhaul Social Security -the promise was that such investments, by helping to spur economic growth and generating higher returns, would deliver monthly pension benefits larger than what the traditional system could offer.

First mistake Larry. A defined contribution system makes no "promises" about benefits levels, absolute or relative. Those are words of a defined-benefit system. 

>But now that the first generation of workers to depend on the new system is beginning to retire, Chileans are finding that it is falling far short of what was originally advertised 

False Larry. They only parameter originally mentioned as a reference (since it is resultant return, not a promised one), was a 4% real rate of return. Official numbers show that it has been 10.1% real on average during almost 24 years. Indeed, an extraordinary achievement.

>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. 

The government contribution to the safety net of the private system was US$ 70 million in 2004, so far from "billions" as Larry from truth in reporting or as Madonna from chastity.

>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.

As they were in the old system. By design, the private system is only mandatory for employed workers, as the old one was. The rest save on their own, as they did before, or do not save, as they did before. Get it Larry? 

>Even many middle-class workers who contributed regularly are finding that their private accounts - burdened with hidden fees 

Another distortion. There is no "hidden fee" whatsoever. Few financial industries in the world, if any, are more transparenet than the AFP industry, as designed by law.

>that may have soaked up as much as a third of their original investment 

The annual average fee is O.66% of assets managed, lower than most american mutual funds. That is the relevant comparison in a funded system. 

>are failing to deliver as much in benefits as they would have received if they had stayed in the old system. 

Sergio Baeza in a well known study (CEP) has shown that benefits in the private system are between 50% and a 100% higher, on average, than those under the unsustainable promises of the old system.

>Dagoberto Sáez, for example, 

Here they go. The usual discredited trick of finding one person and trying to derive general conclusions from his case. Of course, nobody can check the special circumstances of Mr. Saez, even in he exist. His situation maybe is explained by special circumstances, that always exist. Given what happened to former editor H. Raines-fired-Larry's editors should have abstain from approving this trick after the shameful Jayson Blair case of pure invention of cases. 

>is a 66-year-old laboratory technician here who plans, because of a recent heart attack, 

...the little element of drama of course, irrelevant to the conclusion, to soften the minds of readers 

>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.

With only 24 years! So, if he had worked 40-45, the average working life, and given compound interest, he would have easily achieved a pension higher than his last wage! You found the very wrong example Larry. 

>"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. 

And how many years have they worked? Omitting that crucial piece of information in a pension debate is a joke. 

>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."

First, there were no promises related to level of benefits as explained. Second, the choice to opt out was voluntarily. Third, if he recognizes he made a mistake, in a free society mistakes are paid individually. But probably he did not made a mistake. 

>With many Chileans finding themselves in a situation much like that of Mr. Sáez, people are still looking to the government, not private pension funds, to ensure a secure retirement.

How does he knows that they are "many"? How many days did Larry stayed in Santiago to make that sweeping statement? There are close to 500.000 retirees of the new system and Larry has given us only one case. The equivalent would be to say that because of Jayson Blair "many" NYT reporters are outright liars.

>"It is evident the system requires reform," the minister of labor and social security, Ricardo Scolari, 

The man is called Ricardo Solari, not "Scolari", Larry. Can you trust anything written by a journalist that spend NYT money to dine and drink in Santiago and then cannot even spell well the name of the Minister? My goodness...

>said in an interview here. Chile's current approach based on private pension funds has "important strengths," he said, but "it is absolutely impossible to think that a system of this nature is going to resolve the income needs of Chileans when they reach old age."

What are the "income needs" of Chileans for a member of the Socialist Party of Chile (a party that still has not dropped, as the Spanish one did with Felipe Gonzalez, its Marxist inspiration)? Of course, Larry does not tell NYT readers this "little fact".

>Over all, Chile has spent more than $66 billion on benefits since privatization was introduced. 

That is called "keeping the promises" Larry, paying our grandmothers their checks, even if the old system was bankrupt. Of course, that amounts to $2.75 b. a year in a country with a GDP of $ 80 billion. But Larry thinks he will scare NYT readers adding them over 24 years. 

>Despite initial projections that the system would be self-sustaining by now, 

Whose "projections" Larry? There are no NYT rules to be explict about that?. You detect a desperate man when he switches from facts to "projections". And what is "self sustaining"? You want to kill all the pensioners from the old system?

>spending on pensions makes up more than a quarter of the national budget, nearly as much as the spending on education and health combined.

Again, keeping the promises Larry. Why are you so mad about that? 

>Faced with the likelihood of the gap remaining as it is or, as Mr. Scolari said, "perhaps even widening," 

Who is smoking a not entirely legal substance here? You Larry or your mythical "Scolari"? Unless Chileans will live for ever, that commitment is going down every year. 

>the Chilean government is contemplating a new round of pension changes. Suggestions that have been floated include many also under consideration in the United States and Europe, like reducing benefits or setting a higher retirement age.

So Solari is advocating reducing the benefits of the old system? They have been winning elections for a decade doing exactly the opposite. Interesting piece of information (I hope Chilean newspapers ask Solari about this benefit reduction)

>The problems have emerged despite what all here agree is the main strength of the privatized system: an average 10 percent annual return on investments. 

So, this is a big mystery. A defined contribution system that give you 10% real return and yet Larry tells us "Chileans dont like it". Very, very strange. 

>Those results have been achieved by the pension funds largely through the purchase of stocks and corporate and government bonds - investments that helped fuel an economic expansion giving Chile the highest growth rate in Latin America over the last 20 years.

Of course, Larry, you finally got something right. 

>"The great success of the system is its high profit rate, more than double what was initially projected," said Guillermo Arthur Errázuriz, executive director of the Association of Pension Fund Administrators. "In total, workers have set aside nearly $61 billion, which is invested in the sectors of the economy that show the most potential."

Hear, hear. 

>Among the admirers of the privatized system here is Mr. Bush, who on a visit in November called Chile "a great example" for other countries. On other occasions, he has suggested that the United States could "take some lessons from Chile, particularly when it comes to how to run our pension plans."

A visionary man Larry, despite the NYT endorsing Kerry. 

>Mr. Piñera declined repeated requests to be interviewed for this article. 

Maybe he respects President Lula or maybe he has read enough about the Jayson Blair scandal. Will ask him when he returns from his travels.

>In an article on the Op-Ed page of The New York Times last month, though, he extolled the Chilean system as one based on ownership, choice and responsibility and one that is widely popular because it gives workers a stake in the economy.

What an extraordinary Op Ed Larry! Yous should read every morning and every night. I love the Op Ed page decision of publishing articles from different perspectives than the editorial page and your Latin American "magical realism" dispatches.

>Among other achievements emphasized here by advocates of the privatized funds are the creation of a modern capital market, cheaper credit for companies that formerly could turn only to banks when they wanted to expand, and a brake on deficit spending by the government. 

Hear, hear. 

>"What we have is a system that is good for Chile but bad for most Chileans," said a government official 

What a contradictory statement!

>who specializes in pension issues and who spoke on condition of anonymity, fearing retaliation from corporate interests.

Retaliation to a government official? This is pure nonsense. This is Chile Larry!

> "If people really had freedom of choice, 90 percent of them would opt to go back to the old system."

Well, if he was going to utter such a nonsense, a guess impossible to prove, I understand his demand for anonymity. But that does not excuse you Larry for publishing it.

>Among the complaints most often heard here is that contributors are forced to pay exorbitant commissions to the pension funds. Exactly how much goes to such fees is a subject of debate,

They are "exorbitant"-Larry knows-but he cannot give a number because it is "a subject of debate". Patience My Lord, patience.

> but a recent World Bank study 

There are staffers of the WB writing studies. Which staffers? Which day of the week? I can give you contradictory "WB studies" on this issue.

>calculated that a quarter to a third of all contributions paid by a person retiring in 2000 would have gone to pay such charges.

And those were rebutted by Martin Gerson and Salvador Valdes, and those staffers had to republish the study (in the private sector their salary or job would have been at risk).

>But most Chileans are unaware of how much they are paying to the funds because the lengthy quarterly financial balance sheet they receive "is not comprehensible," according to Guillermo Larraín, director of the Superintendency of Pension Funds, a government agency.

But Larrain is in charge of regulating those sheets. So, what is Larrain doing during his work day that is incapable of solving this infinitisemal problem, if there is one. I fully understand my statement, but I agree it must be also understandable to your Chilean friends Larry.

>"It needs to be replaced by a simple and transparent financial statement," he said, so workers can determine which fund charges the lowest fees.

If so, do it Larrain!

>Government officials like Mr. Larraín and Mr. Scolari acknowledge that "commissions are high and need to come down." They say that "more competition is needed" to foster lower fees. But existing regulations frustrate the creation of new funds - 

As Salvador Valdes wrote in El Mercurio, those regulations were put in place by another Concertacion government, the center left coalition to which belong both Mr. Larrain and "Mr. Scolari". So they can remove them easily...if they do their jobs instead of courting leftists NYT journalists.

>"The dynamic of the market," Mr. Larraín said, "is one of consolidation and concentration." 

With such a confused Superintendent, and such a socialist Minister, would you create a new pension fund? Maybe Mr. Sulzberger should come to Chile to make "exorbitant profits" out of "exorbitant fees". There is total free entry to the industry by law. Citibank is here, Banco Santander, BBVA, ING, etc, etc. Come on Larry!

>Some other problems of the Chilean system stem from factors that do not apply with the same force in the United States and other advanced economies. Nearly half of Chilean workers, for example, are employed off the books in the so-called informal sector, while many others are hired as independent contractors, who are not required to contribute to a pension account and do not do so regularly because they cannot afford it. By the government's own calculations, only about half the work force contributes to a pension fund. "We are aware there is a big hole and that we need to take corrective measures," Mr. Larraín said.

The other half is saving in their own way, investing in their small companies, etc, or unemployed due to the rigid labor policies of the government of Mr. Solari and Mr. Larrain (who incidentally, should by law be supervising the pension funds rather than entering in public policy debates about the coverage of the system, a duty of the Ministry but not of a regulator)

>Because many of the claims initially made on behalf of the privatized system proved exaggerated or inaccurate, 

Which ones Larry? You have not mentioned even one, citing sources of course.

>the transition period has turned out to be longer and more expensive than anticipated. The annual cost to the government, still the guarantor of last resort, has remained steady at 5 to 6 percent of the nation's economic output. 

False, they are much lower. Keeping the promises Larry. Nothing to do with the new private system.

>Chile spends about $2 billion a year to pay retirees from its armed forces, according to Mr. Scolari. The military imposed privatization on the rest of the country, but was careful to preserve its own advantages and exclude fellow soldiers from the system. 

It is $1 billion a year, only 50% of your figure, a negligible exageration to you Larry. And the system was introduced as voluntary. The armed forces damaged themselves by not allowing their members to opt out. They should have, as it was proposed by the reformers in 1980.

>Despite calls that the military be forced to give up its exemption, no civilian government has been prepared to pursue that.

The only civilian governments have been those of La Concertacion, the coalition that includes Mr. Solari. So, why in 14 years they have not solved this problem? A $1 billion problem?

>Proponents of the privatized system argue that those costs will diminish in coming years, as those still receiving benefits from the old system gradually die off. But critics disagree, pointing to the large numbers of younger Chileans in the work force who either do not participate or whose contributions will fall short of the amount required for a minimum pension.

Economic growth during the Lagos years has been 4% on average, down from 7% before, and unmeployment has increased to 10%, due to less growth and demagoguery in the labor market. So, they create the problem....and then adscribe it to the private pension system. How intelectually and politically dishonest!

>This leaves many Chileans in a situation that has led to the coining of a phrase: "pension damage." There is now even an Association of People With Pension Damage, 157,000 members and growing, that consists of Chileans, mostly former government employees, who find that their pensions, based on contributions to the private system, are significantly less than if they had remained in the old system. 

...because the government did not pay contributions on the full salary but on fraction of the salary. They are all government employees.

>"They come to us in desperation," said Yasmir Fariña, the group's president, "because those who stayed in the government system are often retiring with monthly pensions twice as large as everyone else's."

Of course our good Larry ends with another handpicked complaint. 

Summary and Conclusions: After this sort of reporting, no wonder the decline of the NYT. As The Economist titled recently a book review, these are really "Hard Times" for the New York Times.

African-American men who make it to age 65 can expect to live, and collect benefits, for an additional 14.6 years -- not that far short of the 16.6-year figure for white men.

So, Paul, can we assume that since two years life is a negligible matter, you would be happy to give up two years of your life so that an African-American can live two years longer? Or are two years only negligible when they are somebody else's -- and especially when that somebody happens to be an African-American?

Update... Sylvain Galineau notes: "Maybe he'd get it if we put the debate in terms he understands; so let's assume that Social Security benefits are based on height..."

Posted by Donald L. Luskin at 1:31 AM | link    

Thursday, January 27, 2005

Posted by Donald L. Luskin at 11:58 PM | link