Wednesday, June 24, 2009

s.c. gov went to the wrong side of the andes


South Carolina's Governor Sanford showed up after disappearing for the better part of a week. He said he went to Argentina - a spur of the moment thing. Why? "Sanford has been a fan of Argentina for years. While in Congress and since he's said that nation's Social Security system has a model the U.S. should follow" (source).

Argentina did have a privatized social security system where employees could choose to put a mandatory percentage of income into either the state system or private funds. 83% went with the private funds.

But sorry Gov. There's a problem. Last November Argentine President Cristina Fernandez de Kirchner nationalized the private pension funds. The money is under government control. These funds now buy a lot of Argentine government bonds that were having a bit of trouble finding buyers. Given Argentina's fiscal difficulties, it must be nice to be president with access to other peoples money to "invest" in activities the government otherwise couldn't afford and that the private sector would view as unproductive.

I do not think the Republican governor really wants the USA to follow Mrs. Kirchner's example. He was probably just confusing Argentina with its neighbor on the other side of the Andes Mountains. Chile has a well-functioning, well-performing privatized social security system. In fact their system predates Argentina's and the politicians have kept their hands off the money.

BTW, President Kirchner announced earlier this month that the nationalized social security funds would invest in GM. I bet President Obama wishes we had a nationalized social security system too!

Wait a minute. We already do have a nationalized social security system. It does nothing but buy up US government bonds and support the deficit.

Never mind.

UPDATE:
Double never-mind. Turns out the gov went to Argentina because he fell for a beautiful women. Now that is much more reasonable -- relatively speaking that is.

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