Hmm, perhaps it is time for the US government to pay attention to what many have been saying for years. The folks down in Chile have and with what appears to be impressive results.
First, Finance Minister Sergio De Castro made the central bank independent. He ended subsidies and cut government spending. He slashed bureaucrats from 700,000 to 550,000. It was a painful austerity in the absence of a big private sector.
In the first four years of the new government, Chile’s economy surged 32%.
That in itself is impressive but wait, there’s more…
Next, economist Jose Pinera, Chile’s Labor and Social Security Minister, privatized social security. The plan helped the government balance its books and let workers choose between personal retirement accounts or the bankrupt state-run pension system. Workers could keep their own money, invest it, decide when to retire, and, best of all, owned their pensions as property they could leave to heirs. Some 97% of Chileans switched.
Pinera’s privatized accounts not only outperformed the state system by a factor of 10, but the savings they created provided capital to rebuild the country.
It looks like the Friedman approach to economics works in practice.