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Where Did Paul Ryan Find Inspiration for 'Reforming' Social Security? A Brutal Military Dictatorship, Naturally

The basis for Ryan's big plan was hatched under the radical right-wing Chilean torture regime of 1973 military coup leader Augusto Pinochet.

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Ironically, privatized pension fund systems tend to cost much more, in administrative overhead, than government-run paygo systems, and the government-approved private pension funds under the Piñera Plan tended to take a substantial bite of investor's money.

Two decades into the "experiment", many retirees on the plan were discovering, to their dismay, that their privatize pension fund investments only paid half of what retirees on the grandfathered government "paygo" system were getting in retirement benefits.

Further, only about half of Chileans were covered under either system. By 2006, Chile's hybrid pension system had become so inequitable and dysfunctional that, by bipartisan Chilean political agreement, the system underwent a major overhaul, to add major subsidies for the poor.

So, the irony is that the radically laissez faire privatization scheme favored by Paul Ryanno longer even exists in Chile. In its pure libertarian form, the original Chilean pension privatization scheme, which featured no economic redistribution whatsoever, failed - at least according to Chilean popular consensus  

Moreover, implementing Chilean pension privatization was only possible under a draconian torture regime that, because of its brutal disregard for its own people and democracy, was able to make radical, disruptive structural changes to Chile's economy.

Three decades later, those changes have helped create, despite high rates of economic growth, some of the worst  income inequality in South America. By some accounts, Chile has  bifurcated into two nations - one rich, one poor, with two school systems.

For the past two years Chile has seen  widespread protests over perceived inequality in Chile's education system, that was also partially privatized under Pinochet.


In 2008, according to a leaked Wikileaks U.S. diplomatic  cable dated December 18, 2008, Paul Ryan visited Chile. The cable states, "Rep. Ryan noted he was impressed with the Chilean pension system."


Researcher Bruce Wilson is the co-founder, with journalist Frederick Clarkson, of the website Talk2Action, which covers the intersection of religion and politics.