Editorial
Investor's Business Daily
January 6, 2011
With similar problems for Social Security looming in 2015, it behooves the U.S. to watch this mess — and to avoid repeating it.
Social Security: Europe is trying to dig out of its budget hole by seizing private pensions. It's a last-ditch effort to preserve socialism at the expense of the very assets that would sustain its future growth.
In Hungary, Poland, Bulgaria, Ireland and France, big government, a demographic death spiral and weak tax revenues have left fiscal coffers in trouble. Unwilling to stand up to voters — or rioters — most governments have little taste for doing the right thing: cutting their budgets.
So, they're going after pensions to make up for shortfalls. Public and private pensions co-exist in European countries. In some cases, public ones resemble our own Social Security, stressing budgets.
But instead of privatizing pensions, as Chile did in 1980 — which would have turned these obligations into assets — three former stars of European emerging markets have come up with heavy-handed incentives to turn private savings public. It's a step backward.
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