Chile pension "reform" -- not so private

Why, it seems like only yesterday when libertarian "think tanks" were extolling the virtues of Chile's privatized pension system.

USA Today called it "a bold move that pays off."

And preznit suggested that Congress "take some lessons" from it.

Well, at least that last bit's true. They'd better take some lessons from it.

SANTIAGO, Chile, Jan. 9 - Michelle Bachelet is a pediatrician and a Socialist, while Sebastián Piñera is a billionaire businessman and a conservative. They may agree on little as the opposing candidates in Chile's election for president, but they concur on one important point: the country's much vaunted and much copied privatized pension system needs immediate repair.

The Chilean system of personalized accounts managed by private funds has inspired a score of other countries since the pioneer effort to create it here 25 years ago. It is endorsed by President Bush, who has called it "a great example" from which the United States can "take some lessons." Here at home, though, dissatisfaction with the system has emerged as one of the hot-button issues in the election, a runoff that will take place on Sunday.

[...]

According to a recent study here, Chile's pension funds, whose number has shrunk to 6 from more than 20 as competition has diminished, recorded an average annual profitability of more than 50 percent during a recent five-year period. Other studies, including one conducted by the World Bank, indicate that pension funds retain between a quarter and a third of workers' contributions in the form of commissions, insurance and other administrative fees.

[...]

But even advocates of an untrammeled free market, like Mr. Piñera, the conservative candidate, are jumping in with criticisms, to the surprise of some here. Mr. Piñera is the brother of José Piñera, the former labor minister who imposed the personal account system during the dictatorship of Gen. Augusto Pinochet. In addition, Sebastián Piñera is backed by the large business groups that control the pension funds and have benefited from the expansion of investment capital the funds have provided.

[...]

José Piñera, who is co-chairman of the Project on Social Security Choice at the conservative Cato Institute, based in Washington, did not respond to e-mail requests for an interview to discuss the changes being proposed here. But his Web site reprinted a recent article in the conservative daily newspaper El Mercurio here that criticized the changes proposed by both candidates as "demagoguery."

I wonder if Cato is paying his Social Security taxes while he's working for them. He'd better hope so.