Camila Vallejo has been hailed as a Chilean icon for the student movement and for local politics by both critics and supporters. (Manuel Venegas/Alejandro Bonilla)
Time magazine struck a cord a week ago by naming “The Protester” – an anonymous, undistinguishable, yet familiar character embodying an assorted mix of demonstrators from the ranks of the Occupy (You Name It) movement against corporate greed, while also encompassing the freedom fighters of the Arab world, and marchers from India, Spain, Greece, and Russia – as its Person of the Year 2011.
The prestige of being selected for this honor is impressively enduring, with tons of buzz surrounding the election of Marc Zuckenberg in 2010, or the conspicuous absence of the late Steve Jobs.
GOP Presidential nominee Herman McCain’s economic plan involves a “9-9-9 system” he loves to mention, and most of us watching the debates can only make fun food-related puns about it. However, McCain has also mentioned more than once that he wants to reform Social Security with a model similar to Chile’s AFP system. Chile has a private national pension plan created during the dictatorship in the 80s. As a Chilean-American, when me and my family heard this for the first time, we had very mixed feelings about it. Here’s where I’ll explain how this system is not as awesome as it sounds to a GOP candidate; although a good model copied by various nations, it runs as smoothly as our health care system.
Administradoras de Fondos de Pensiones (AFP) is privately administered and regulated by for-profit corporations, with regulation laws set up by the government, in which workers contribute a set up percentage each year. It was an innovative program at the time, particularly in South America. At the time it created a financial boom, a solution to a unorganized system of pensions. Although these sweeping reforms worked well in the economy, particularly after the end of the dictatorship in the late 80s, they came with a high social cost and other problems:
The government also helps those that do not meet pension fund requirements, but these pensions tend to be much lower and cannot compete with private pensions. The 2008 reform gave more incentives to join, included self-employed workers in the program, gave housewives a pension for their work, gave more room for the government to help meet pension goals, and made it easier to contribute. These reforms were introduced by then-President Michelle Bachellet, which by the way, is a socialist.
Let it be noted that a huge reform like the one in 2008 was needed to help fill the gaps the private funds were creating. We don’t need a system that will make socio-economic gaps. We need to reform what we have now.