Townhall...
What
Democrats Must Ignore or Deny
By Mona Charen
7/19/2011
To
be a Democrat means to live in
denial. Consider all of the things you must ignore or explain away.
The
PIGS. Not the chauvinist pigs
whose transgressions preoccupied 1970s feminists, but PIGS as in
Portugal,
Ireland, Greece and Spain -- nations facing sovereign debt crises
because they
pursued exactly the sort of policies Democrats favor for this country.
The PIGS
share bloated government sectors (In Greece, the government employs 33
percent
of workers.), generous unemployment packages, high minimum wages, dire
pension
obligations and a shrinking tax base. Each week brings fresh news of
turmoil in
the streets.
Here
is a June account from CBS News
that Democrats will want to ignore: “To see a country truly on the
brink of
financial ruin, look no further than Greece. On Wednesday, its
parliament cut
public services and raised taxes to fend off bankruptcy and probably
spare the
world another mass economic meltdown, at least for now. ... As
parliament did
what it could politically, protesters turned Athens into a war zone.”
The
protests are understandable (if
not excusable). When debt-ridden states face bankruptcy, it is always
at a time
of economic distress. In good times, after all, tax receipts increase.
So just
when jobs are scarce and times are difficult, just when a greater than
usual
number of people are collecting unemployment and other benefits, the
government
is forced to impose austerity.
Would
it have been better to have made
smaller reductions in benefits earlier? Yes. Would it have been even
more
desirable not to accustom so many citizens to government largesse?
Don’t ask a
Democrat.
Also
in economic intensive care is
Portugal. Here’s the Los Angeles Times account: “Analysts expect that
Lisbon
will ultimately need up to $115 billion in loans and guarantees. The
amount
would be covered fairly comfortably by the bailout fund created by the
EU last
year to address the widening euro debt crisis, but would come with
stringent
conditions that Lisbon rein in public spending. Last month, Prime
Minister Jose
Socrates failed to win parliamentary approval for a fourth round of
austerity
measures within a year, which prompted him to resign and his Socialist
Party-led
minority government to collapse.” Democrats will not want to dwell on
the fact
that the European Union will not be bailing out the United States. In
fact, no
one will be available to bail out the U.S.
Chile.
At the other end of the
economic spectrum, Democrats must ignore Chile’s remarkable success
with
privatizing social security. Thirty years ago, facing a pension
overhang
similar to our own, Chile adopted a policy that nearly all Democrats
regard
with horror -- they privatized their pension system. Not all at once.
Those who
were already retired were grandfathered into the existing system. New
workers
were required to participate in the private retirement account program.
All
other workers were offered a choice to remain with the old system or
choose the
new one. Ninety-three percent chose private accounts, conservatively
managed.
How
has it turned out? Over the course
of three decades, despite ups and downs in the market as well as
terrible
earthquakes, these accounts have averaged returns 9.23 percent above
inflation.
Social Security, by contrast, averages returns of about 1 percent. In
the
United States, the elderly are wards of the state. Each Chilean, by
contrast,
has ownership of his account. He or she can pass any unused portion on
to children
and grandchildren. When New York Times reporter John Tierney worked out
his own
Social Security contributions on the Chilean model, he found that his
privatized pension would have been $53,000 a year plus a one-time
payout of
$223,000. The same contributions paid into the American Social Security
system
would have paid him $18,000 a year.
Chile’s
free market policies have made
it one of the wealthiest nations in the Western hemisphere, with the
highest
nominal GDP in Latin America. Their pension reform has so far been
copied by 30
nations.
Perhaps
Chile, so far from Washington,
D.C., is too easy to ignore. But what about Galveston, Texas? It seems
that 30
years ago, far-sighted leaders took advantage of an opt-out clause
(since
removed) in the Social Security law and put county employees into
private
pension accounts. Galveston’s employees take home pensions with 7
percent
annual return compounded over 30 years compared with Social Security’s
1
percent.
Democrats
must, simply must, deny that
privatization provides far superior outcomes, because the truth is that
independent, self-sufficient, non-needy citizens have little use for a
party
whose entire rationale is “Let Me Take of You” by taxing someone else.
Read
it at Townhall
|