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Thursday, August 26, 2004 - 11:08amSanction this postReply
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I respond to this with extreme reluctance, but I think the issue is worth a response. Dr. Pinera is no doubt as energetic in working for liberty as Kilbourne's essay says he is, and I have read his essays on Social Security reform with profit. Pinera is a serious advocate for liberty, and he strikes me as a decent person. But as someone who takes the principle of sanction very seriously, I think there are legitimate questions worth raising about participation in the Pinochet regime that are not addressed by any of the virtues I've just mentioned. I have raised these questions in public with Dr. Pinera before, and have not been satisfied by his response.

Let me emphasize that I have no sympathy whatsoever for Allende and do not regard his government as legitimate, certainly not as of 1973, but not even before that. Still, the question is: was collaboration with Pinochet justified? I think I can speak with at least second-hand experience on this issue, as an uncle of mine was assassinated in Pakistan under the socialist regime of Zulfikar Bhutto, who was then replaced by the right-wing general Zia ul Haq. Zia then went on to persecute the sons of the very same uncle, along with any number of people I know, one of whom suffered a heart attack from the stress, and another of whom was tortured in Zia's torture chambers. I do not think that sanctioning such a person as Zia was justified. For decades I heard the excuse that the human rights violations were anomalies rather than policy under Zia--total nonsense. There are striking similarities between Zia and Pinochet, so I look on the same claim in the Pinochet case with skepticism.

In his original piece for TOC's Navigator, Dr Pinera had written this:

 According to the report of the commission set up by President Aylwin (an antagonistic successor to President Pinochet): In a seventeen-year period, 2,279 people died, including members of the armed forces, terrorists, and possibly innocent civilians. "Most of them," Crozier states, "died during the first months of military rule, when Chile was in effect a combat zone." By way of comparison, 600,000 people died in the Spanish civil war (2 percent of the population), 375,000 in the American civil war (1.1 percent of the population), and 250,000 in the Guatemalan civil war (2.5 percent of the population)—not to mention the 100 million deaths attributed to socialism by The Black Book of Communism. In a country of 12 million, where a third of the voters had initially supported Allende, the toll was so low that clearly there was no systematic policy of human-rights violations such as would have involved hundreds of thousands of deaths.

I had construed this as an oblique admission of Pinochet's complicity in political murder; Dr Pinera disputed this in the exchange mentioned above (via the previous link). Well, the problem is the highly equivocal nature of the passage itself. It quotes a report that concludes that there was a systematic policy of human rights violations, and then concludes that there wasn't one. In a response to me, Dr Pinera insisted that there was no systematic policy, only anomalies. Even if I took that claim entirely on faith, I would still have to find a way of reconciling it with the parts of the report (only in Spanish, to my knowledge) he doesn't discuss.  The numbers he quotes don't settle the relevant issue.

I personally have no vested interest in insisting that Pinochet and his regime were committed to murder, kidnapping and torture. I have not taken any position on the issue and don't pretend to be an expert on Chile. Nor is my concern with Pinera's personal biography. The issue is historical: what kind of regime was Pinochet's regime, and how does one deal with it, if one deals with it at all? The findings of Chile's Truth and Reconciliation Commission really do seem to suggest that there were systematic abuses under Pinochet. Maybe that is not the whole story; maybe that story is distorted. But before Objectivists sign on to "Pinochet wasn't as bad as the leftists say he was," we need to see a rigorously worked-out case that really demonstrates that. I'd be the first to accept that case if I saw it, but I haven't seen it.

(Edited by Irfan Khawaja on 8/26, 11:08am)


Post 1

Thursday, August 26, 2004 - 12:49pmSanction this postReply
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What I have said in my article about Jose Piñera is that he is a great champion of freedom. I, in no way, want to get into a battle re: the Pinochet years. It would only be relevant to my argument if Mr. Piñera's conduct were in question. I have read quite a lot about this time, although I certainly am not an expert on it. However, I don't know of any accusations of criminal behavior re: Piñera. If there was a systematic policy of murder during the Pinochet years, I don't know of anyone who thinks Jose Piñera was either aware of it or involved in it. Regardless of how history treats Pinochet, I stand by my view of how history will and should treat Sr. Piñera.

Post 2

Thursday, August 26, 2004 - 2:12pmSanction this postReply
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My personal recollection of Mr. Pinera is mixed: I recall his exuberant, uplifting presentation at the 1999 TOC Summer Seminar in Vermont. He said he was trying to have his brochure on Social Security reform translated into as many languages as possible. I volunteered to find a qualified Hebrew translator for him so that the brochure could be published in Israel. He was very interested, but when I actually found a translator a couple of months later, he cancelled the project in an abrupt manner, without an explanation. 

Post 3

Thursday, August 26, 2004 - 2:33pmSanction this postReply
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James, would it not be correct to call Pinera's scheme a compulsory one?

I quote from Rita Koslka in her article "A Better Way to Do It," published in the Oct. 28, 1991 Forbes Magazine:
Replacing the old system, then Minister of Labor Jose Pinera put in a plan that requires each of the country's 4.8 million workers to put 10 percent of his pre-tax income into a private pension fund of his own choosing; there are no employer contributions. There are 13 plans to choose from, and workers can switch their funds between plans to get the best returns at the lowest cost.
If this is indeed a fair summary of Pinera's scheme (which I notice your article didn't offer), then whatever the man's many virtues might be, his scheme was not exactly promoting 'freedom's fame', but a government-administered compulsory retirement savings scheme.


Post 4

Thursday, August 26, 2004 - 2:42pmSanction this postReply
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James writes:

 However, I don't know of any accusations of criminal behavior re: Piñera.
And let me emphasize that I'm not making one. In fact, what I know of him suggests that he struggled against the rights-violators in the regime. But it still raises the question of whether one should be involved with certain types of regime at all, even if one's own hands are free of wrongdoing. The point I'm making is not about Pinera the person but about the Pinochet regime.   


Post 5

Thursday, August 26, 2004 - 5:29pmSanction this postReply
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Michelle - I don't know what his reason would be for a change in behaviour. Do you feel you know the reason?
Peter- Politics is not philosophy, it is moving towards your philosophy as fast as the public can handle it. I realize that you understand this, and that his program is compulsory. However, it will clearly create some improvements, and aim people towards a free market vs. government approach. It is not without risk, I know, as when things don't go well, the statists will blame the free market part instead of the statist part of the plan for the failure. I have no doubt that Piñera would like to have gone further towards markets. To me, his approach is reminiscent of Milton Freedman's call for school vouchers in the U.S. Not a perfect solution, but better than the current state of affairs. The reason I am so excited about this program is that I believe it will be a change that everyone will see. People will have some of their money invested, rather than all of it coming from the government. It is the ever famous camel's nose under the tent.
Irfan - I understand your point, but taken to its logical conclusion, one would be unable to do anything in a country like Chile in the 1970's. Sr. Piñera's decisions to align with Pinochet in the 70's I find reasonable.

Post 6

Thursday, August 26, 2004 - 5:58pmSanction this postReply
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James,

Politics is certainly the art of the possible, and Pinera is clearly working within mainstream expectations rather than trying to alter those expectations. I do think you should have described the gist of Pinera's programme in your article and argued for it's compulsory aspects (as you are now doing here) if you could. Without that mention and that argument the article seems disingenuous - unintentionally so, I'm sure.

It's true that Pinera's programme is indeed similar to Friedman's voucher proposal for schools, and as I have an article in the SOLO 'hopper' awaiting publication in which I criticise both that specific programme and that whole approach to reform, I won't pre-empt my criticisms here.

Suffice it to say that to disagree with the need for compulsion is not necessarily to dance around the head of a pin.


Post 7

Thursday, August 26, 2004 - 6:50pmSanction this postReply
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I eagerly await your article on vouchers. Perhaps you are correct that I should have outlined the Piñera plan and spoken more to its weaknesses, but my purpose was more to place him in historical perspective. Ronald Reagan was hated by a lot of Objectivists, including Ayn Rand herself, from all that I've heard. All I can remember from the Objectivists I knew at the time was that he was religious, anti-abortion, and not a true free marketer, and that I was a sellout for thinking so highly of him. I think Ronald Reagan did more politically to advance freedom than any man of the past century. What struck me when I met Jose Piñera was that his political contribution, this time all through one great political idea, could have an effect that over the next century could equal Reagan's in the last century. I realize we still face many crises, but I think that the world will return to classical liberalism over the next century. Philosophically, it will be lead by Ayn Rand. Politically, it could well be led by Jose Piñera.

Post 8

Monday, August 30, 2004 - 12:29pmSanction this postReply
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Irfan and James, I read Jose Pinera's letter and your reply to it, Irfan. As an outsider, I spent several months in Chile studying the Allende/Pinochet years, and read many books in Spanish that are not available in English about those years. Basically, I wanted to know what happened down there, and what the Pinochet years were. First, of all, I can tell you that Pinochet philosophically was very much aligned with the far right, and his personality as well as his regime was authoritarian in nature. He believed he had a mandate from God, believed the individual is subordinate to the fatherland, and certainly was not an advocate of individualism. In his writings, he expresses contempt for communism, and support for capitalism, because "it gives people incentive." The theory is that he went along with the Chicago Boys because he wanted to establish his legacy by making Chile an economic powerhouse. As you can imagine, most of the generals in the junta were less than enthusiastic about a market economy, but were afraid of Pinochet, although at times, like with the privatization of the copper mines, Pinochet backed down because the opposition was too strong.

As for the violence, disappearances, and murders, one has to understand that the military thought they were at war, and thought they would be faced with massive resistance. Apparently, this was drilled into them by their superiors. From my understanding of the situation, most of the casualities were in the first initial seize. Later on, when the regime was established, there were abuses of power, especially by the head of the secret police DINA, Manual Contreras, who is now in prison. After the attempt on Pinochet's life and the death of five of his bodyguards, there was another uprising in violence against leftists.

Quite frankly, I find the Chicago Boy's experiment a very interesting lesson in history. Although Chile is now the flagship country of Latin America in an economic sense, all of the changes were made without a philosophical foundation. The president now is Ricardo Lagos, a socialist, who knew Allende and is from the same party. The Defense Minister is a socialist, as are some of the mayors of the major cities.

What the future holds I don't know. But I do know that when I was there I saw no signs of a philosophical foundation for the market economy. The Conservative Party in Chile is religious, traditional, and opposed to individualism. Possibly, there is hope beyond the horizon. A new Spanish version of Atlas Shrugged was released last year in Argentina, and is probably available in Chile by now.


Post 9

Tuesday, August 31, 2004 - 1:01pmSanction this postReply
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Alan, thank you for this. I need to look at Chile today. Regardless, if the beginnings of a movement to switch retirement programs from government entitlement to individual investment takes hold, the fate of Chile is but a small part of the puzzle.
I know I am out on a limb with my prediction of the importance of Sr. Piñera's work, but I see it as a pretty sturdy limb. We probably won't know the answer in my lifetime, but perhaps we will in the lifetimes of many who read this here.

Post 10

Tuesday, June 27 - 9:17amSanction this postReply
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This 2004 article appeared as a random past article. I did not comment at the time. I posted the following in a Gallery item in 2008. 

 

Some people, including Objectivists, have applauded what Chile did to "privatize" its SS-like system. José Piñera, a key figure in the "privatization", even spoke at the 1999 TOC (IOS) Summer Seminar. While I approve what he did under the circumstances, it would be a mistake to say the U.S.A. should follow suit. The Chile situation was a lot different. It did not have the high ratio of retirees to workers that the U.S. has and is going to get much worse as baby boomers retire. Chile had substantial budget surpluses (the U.S. has big deficits), a payroll tax of about 25% (FICA is 12.4%), and benefit amounts had been greatly eroded by very high inflation. There was a high degree of public dissatisfaction with the old system. 

 

The Wikipedia article on Piñera says the new plan allowed workers to opt out of the government-run pension system and instead put the former payroll tax (10% of wages) in a privately managed Personal Retirement Account (PRA). Thus it is a "forced savings" plan. What it doesn't say is what the payroll tax rate was before the reform. It about 25%. Ergo, to make a similar reform in the U.S.A., firstly the FICA tax rate of 12.4% would need to be hiked by X% (or whatever goes to the PRA) to 12.4% + X%!



Post 11

Tuesday, June 27 - 9:25amSanction this postReply
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Merlin,

 

If I could be dicator for a month or so, one of my decrees would be that SS would be become voluntary.  That anyone could put together an alternative retirement plan, which must be actuarially sound and be insured by an approved insurer to be an official alternative.  Then people chould choose.  It would be up to the marketplace to invent attractive, superior alternatives.  Any kind they want.  I have no doubt that within a generation or two no one would be interested in the the government's SS plan.



Post 12

Tuesday, June 27 - 9:51amSanction this postReply
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Steve, that's easy to say philosophically. The hard problem is people who are already receiving SS benefits or soon will. Whence the money to pay them? Or do you simply say "tough luck, no more money" to many people with SS as their sole or major source of income and who have paid into the system for many years?

 

(Edited by Merlin Jetton on 6/27, 11:00am)



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Post 13

Wednesday, June 28 - 8:08amSanction this postReply
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Merlin,

 

I agree.

 

It is a very difficult problem. 
- We can say where we want to go (no government involvement in retirement at all) 

- We can say very specifically where we are (massive government interference)
- We can point at what went wrong (passing the laws that constituted the interference). 

 

But what would be the best way to transition from here to there?  And how could we bring about such a transition?  Those are the tough questions.

 

People were forced to pay into the system.  They were led to believe that the money of theirs, taken without their permission, was being held for them... in trust, and would be returned when they got old.

But, the fact is that to pay those on SS now, the young will have to be the victims of more and more theft.  There is no good way out. 

 

Keeping the SS system forever would be wrong.  Ending the payments immediately would be wrong.  Therefore you look for the least harmful transition (ending it over time). 

 

You pick an age (say, 40) and say, "If you are over 40, you will be able to draw from SS (or chose a private alternative - up to you).  But if you are under 40, you will get nothing from the government, so find a private means of taking care of your retirement."

 

The bigger practical problem is not what we are talking about here, but rather that the government will go broke before long because of the national debt.  Maybe SS will be the major contributor to that problem.  Or maybe it will be Medicare.  Or maybe it will be all of them together overwhelming the economy's ability to carry such a large burden.

 

That huge problem has its roots in the idea (philosophy) that government should be able to take money from people and spend it on what it deems to be good causes (resulting in big government).  It is the people's failure to understand individual rights and their application in capitalism that is the root problem (and I suspect that we both agree on that).



Post 14

Wednesday, June 28 - 8:50amSanction this postReply
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Steve, I basically agreed with what you just wrote at least twice on RoR years ago, here and here.



Post 15

Wednesday, June 28 - 3:00pmSanction this postReply
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Merlin,

 

I'm sure I read those two posts back when you wrote them, and agreed with them.  My memory isn't what it once was (which wasn't much)... Hell, I don't remember what I've written in the past!



Post 16

Friday, June 30 - 4:13amSanction this postReply
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The government is not going to go broke.  It will never be bankrupt. No matter what you wish for, the problem of the national debt was solved with the creation of the Federal Reserve Bank. Moreover, we saw this work with the Mortgage Crisis and the Bush-Obama bailouts. It is all done electronically. The printers do apparently run off banknotes, but that is mostly to give them sinecure. Although the money supply tripled. Prices today are not three times what they were eight years ago.  

 

The banks did not lend out the magic numbers. They just rebalanced their books.  Similarly, the Federal government, receiving FRNs for their Treasury bonds just rebalances the books. The Federal Reserve banks likewise note the entries.  Not much else changes. 

 

Yes, the slow, eroding inflation continues.  But all of the conspiracy thinking will not explain away the price of gold.  Its number one users are jewelers with money hoaders being a distant - though pervasive - second.  

 

The secret rulers of the world apparently have it under control... at least the money aspect of it...  ISIS and Iran and North Korea, not so much.

 

(Edited by Michael E. Marotta on 6/30, 4:17am)



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Post 17

Friday, June 30 - 5:51amSanction this postReply
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Delusional thinking, Marotta.  Moving electrons about, 'rebalancing their books,' and bailouts will not avoid the reality of simple economics.  The government has not found a magical way to spend massively more than it takes in, and account for an increasingly larger portions of the GDP, not without generating a collapse down the road.  This isn't me wishing for it, which is a stupid and insulting thing to say.  It is just an understanding of basic economic principles.

 

Why would you expect a 3 x increase in the money supply to provide a 3 x in the price of milk?  There are many other factors involved.  And why don't you check the inflation factor since the creation of the Fed - that might open your eyes.

 

You apparently want to demonize anyone who doesn't partake in your fantasy-land views of magical, government borrow-and -spend as a conspiracy nut... that's speaks volumes.



Post 18

Friday, June 30 - 8:54pmSanction this postReply
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The discussion is about social security, and replacing it with market alternatives, as proposed successfully for Chile by Jose Piñera.  The related claims that the US govenment is going to be bankrupt and that the dollar is going to be worthless because of social security are groundless.  

 

I understand the mechanics of inflation.  As I said above, the slow, continuous, and continual erosion of the dollar is a fact. Everything "costs more" even as wages "rise" because the dollar is getting "smaller."  However, the Chicago monetists, led by Milton Friedman, long ago showed other conservatives such as Paul Volcker, Alan Greenspan, and Janet Yellen how to "manage the economy" to prevent, mitigate, and remediate the worst consequences of socialism.  

 

I point out that again even though the money supply tripled with the Bush-Obama bailouts, the general price level did not follow. The banks were prohibited from lending out the new money. 

 

Moreover, the absolute bottom line value behind the U.S. dollar is the willingness of everyone - including the active writers here on RoR - to accept it in payment. That is not going to change.

 

(Edited by Michael E. Marotta on 6/30, 8:57pm)



Post 19

Saturday, July 1 - 12:32amSanction this postReply
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Marotta,

 

What I said was, "...the government will go broke before long because of the national debt.  Maybe SS will be the major contributor to that problem.  Or maybe it will be Medicare.  Or maybe it will be all of them together overwhelming the economy's ability to carry such a large burden."

 

So, are you saying that there is no amount of national debt that would bring about either run-away inflation or a major credit collapse do to an inability to repay the portions of debt that come due?  If that were true, then we should ride that magical unicorn into the sunset for all its worth - borrow a trillion a day!  Two trillion!  Or just print it!  Whoopee, we're all going to be rich.

---------------

 

You said that you understand the mechanics of inflation.  I don't think so.  You said, "... the absolute bottom line value behind the U.S. dollar is the willingness of everyone ... to accept it in payment. That is not going to change."  Why don't you tell the people in Venezuela that the absolute bottom line value behind the the Bolivar is the willingness of everyone to accept it in payment. And then tell them "That is not going to change."



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