(Jim Clark) – For about a month after Sharron Angle’s convincing win in the GOP primary election for US Senate she was hammered by Democratic Senator Harry Reid’s relentless negative advertising. His tactic of taking Sharron’s statements out of context cost her dearly in the polls.
She had a post election lead of 9 points according to the Rasmussen poll which flipped to a 7 point deficit by mid July as a result of the advertising onslaught. Perhaps the most damaging “half-truth” was Reid’s stark claim that Angle wants to phase out Social Security.
By mid July Angle’s campaign had purchased statewide air time and run ads clarifying that she favored privatizing Social Security, just as the Bush Administration did, and would support a retirement system such as Chile’s. By the 1st of August she had pulled even in the polls and she and Reid remain neck and neck as of this writing.
Last Sunday Northern Nevada’s largest daily newspaper ran an article by columnist Emma Sepulveda headlined: “Retirement system in Chile a poor model to replace Social Security”. Sepulveda has been associated with left-wing political causes and is a good friend of Harry Reid. However she is a UNR professor and more importantly she hails from Chile so I figured she had something important to say.
Unfortunately Sepulveda’s biases dominated the article.
She began by saying “Angle has changed her mind” and “no longer wants to eliminate the Social Security system” but wants it privatized. In fact Angle did not change her mind but finally refuted Reid’s misleading ads. Sepulveda then launched into a litany of everything she perceives to be bad about the system including that it was instituted by Chilean Dictator Augusto Pinochet. That’s a little like condemning Volkswagens because they were Adolph Hitler’s idea.
She concluded her column by suggesting that Angle “ask around (for) much needed information about topics that are important . . . “
Since I learned nothing about the Chilean system from Sepulveda I did some independent research. In 1981 Chile, guided by conservative US Economist Milton Friedman, instituted a system where civilian workers set aside 10% of their earnings and invested them in one of a choice of mutual funds. 97% of salaried workers are in the system which, by the end of 2007, had accumulated the equivalent of $100 billion US dollars, or 70% of Chile’s gross domestic product. A report by the University of Pennsylvania’s Wharton School of Business found that “the reforms have reduced fiscal liabilities, helped develop Chile’s financial sectors and improved the equity of the pension systems”.
In the US Social Security system workers and employers together contribute 15.3% of employees’ income into a fund that gets raided by Congress whenever it builds up any cash which is then exchanged for low earning government IOUs. Contrast that with the Chilean system where workers’ contributions are in individual accounts, invested in managed funds, and are the personal assets of the workers.
One investment in the US that compares with the Chilean system is state sponsored college savings accounts permitted under Section 529 of the Internal Revenue Code. State agencies offer a choice of no-load mutual funds as investments. Although the stock market has wilted during the current recession my five grand kids’ college accounts have still increased 80% in 8 years, about equal to the Chilean experience of 10% per annum real rate of return since 1981 according to the Wharton report. Chilean retirees have several options but most choose to take lump sum distributions and purchase annuity contracts to provide secure retirement income.
Seems to me that the one who needs to seek “much needed information about topics that are important” is Ms. Sepulveda.
(Jim Clark is President of Republican Advocates, a vice chair of the Washoe County GOP and a member of the Nevada GOP Central Committee. He can be reached at firstname.lastname@example.org)