Privatization Doesn't Work — Anywhere

From the Secretary-Treasurer, William Lucy

George W. Bush is traveling around the country trying to convince everyday Americans that it's a good idea to privatize Social Security and jeopardize their retirement.

But when they prepare his speeches, the President's speechwriters omit two truths. One, the Bush administration's Social Security scheme is far from original. It's been tried in other countries, including Chile, the United Kingdom, Australia, Mexico and Argentina.

Two, none of the privatization programs found abroad can be called successful. Indeed, at least two of them were outright failures.

AMERICAN INGENUITY. Although George W. Bush may have squandered much of the deep respect we enjoy around the world with his misleading statements about the war in Iraq, this country can continue to be credited with having a spirit of compassion when it comes to our most vulnerable citizens. Social Security is a manifestation of that spirit — and of the belief that, after a lifetime of work, American workers should be guaranteed a basic retirement benefit. Though I wasn't old enough to follow the debate, I can assure you that our great Pres. Franklin Delano Roosevelt didn't check to see what England was doing. Or Chile. Or Argentina.

He knew in his heart and soul that Americans deserved the best this nation could provide. Roosevelt envisioned a system where workers paid into the system during their productive years and were paid by the system during their golden years. It's a system that has worked for decades, and one this union is fighting fiercely to preserve.

After all, global alternatives are far from encouraging.

FLIP-SIDE FAILURE. The Bush administration touts Chile as the model for pension reform — talking up what appear to be the country's high returns on individual accounts. But if you examine the flip side of the country's pension-reform record, you'll see a different picture.

Chile has cut social spending and benefits, and raised taxes in order to pay for the program — and those transition costs will continue until 2050. Management fees have reduced the high rates of return to nearly zero. And by their very nature, individual accounts have increased the gap between the haves and have-nots, and left retirees extremely vulnerable to market downturns.

Do we really want to follow in that country's footsteps?

BLOODY AWFUL. Across the pond, Great Britain's citizens haven't fared better under pension reform. In fact, it seems that the only people reaping the benefits of a 1984 reform are the private firms selling the investment plans.

Thanks to fees and charges, pensioners are seeing their lump-sum pension reduced by up to 30 percent upon retirement. The situation has gotten so bad that the United Kingdom is strongly considering reforms. One model? The United States' very own, current Social Security system! Now how's that for irony?

Brits bought into what was being sold to them decades ago by the Conservative Party and then Prime Minister Margaret Thatcher. They were promised an end to the "nanny state" and a chance to reap the benefits of the entrepreneurial system. Undoubtedly, they — like many Americans today — thought they would gain "control" of their retirement dollars by backing pension reform. Nothing could be further from the truth.

In our country, over 175 million workers contribute to Social Security, with 47 million receiving benefits. Without the program, over 40 percent of retired Americans would live in poverty. Social Security is the best protection against poverty this country and its working men and women have ever had. It is therefore the responsibility of this union — and the entire House of Labor — to hand George Bush and his plan a stunning defeat.