22 thoughts on “USA: economist Milton Friedman, 1912-2006

  1. 22,000 at the gates of Fort Benning, human rights activists
    Posted by: “Compañero” companyero@mindspring.com chocoano05
    Mon Nov 20, 2006 9:06 pm (PST)
    Sunday, November 19, 2006 at 12:30 PM
    Fort Benning, Georgia

    Over 22,000 people are marching here at the gates of Fort
    Benning in a beautiful and massive funeral procession led
    by Latin American torture survivors and social justice
    movement leaders, among them Renato Antonio Areiza from
    the Colombian Peace Community of San José de Apartadó.
    Last year, Renatos´s sister was murdered by troops under
    the command of an SOA graduate. This gathering, our
    largest and most diverse ever, stretches over the length
    of Fort Benning Road, with thousands holding crosses,
    stars of David and other symbols of hope and resistance.
    As musicians sing out “Deyanira Areiza” and the names of
    hundreds more victims of School of the Americas (SOA/
    WHINSEC)-sponsored violence, the crowd responds,
    “Presente!”

    Along the procession route people have begun to transform
    the fences surrounding the protest site into expressions
    of hope and remembrance, placing their symbols in and
    around the three-layer chain-link barriers erected by the
    city of Columbus and military personnel.

    Thirteen people just went through a hole in the fence and
    carried their protest onto the military base in acts of
    nonviolent civil disobedience. Two of the human rights
    activists that engaged in the civil disobedience action
    were part of the 1000 Grandmothers organizing effort. The
    military police just arrested and handcuffed the
    linecrossers and are guarding the breached fence to
    prevent others from entering the base.

    Cathy Webster, a 61 year-old peace activist and
    grandmother from Chico, California, was among those
    arrested by the military. “As a grandmother, I feel deep
    compassion and an urge for protection for the vulnerable,
    the young, and families,” said Cathy Webster. “It breaks
    my heart to know about the continual murders and
    disappearances of countless people in Latin America. SOA
    trains the perpetrators of these crimes.”

    For UP-TO-DATE NEWS, please visit our homepage at

    http://www.SOAW.org.

  2. I despised Milton Friedman. The public mourning for him was disgusting. Thanks for your friendly comments by the way. I’m sorry you’ve had trouble commenting there. I’ve suspended blogging for the time being. I’ve had some personal problems come up and I have to take care of them. I will continue to check here frequently.

  3. Chile’s Retirees Find Shortfall in Private Plan*

    by LARRY ROHTER
    The New York Times
    January 27, 2005

    SANTIAGO, Chile – Nearly 25 years ago, Chile embarked on a sweeping
    experiment that has since been emulated, in one way or another, in a
    score of other countries. Rather than finance pensions through a system
    to which workers, employers and the government all contributed, millions
    of people began to pay 10 percent of their salaries to private
    investment accounts that they controlled.

    Under the Chilean program – which President Bush has cited as a model
    for his plans to overhaul Social Security – the promise was that such
    investments, by helping to spur economic growth and generating higher
    returns, would deliver monthly pension benefits larger than what the
    traditional system could offer.

    But now that the first generation of workers to depend on the new system
    is beginning to retire, Chileans are finding that it is falling far
    short of what was originally advertised under the authoritarian
    government of Gen. Augusto Pinochet.

    For all the program’s success in economic terms, the government
    continues to direct billions of dollars to a safety net for those whose
    contributions were not large enough to ensure even a minimum pension
    approaching $140 a month. Many others – because they earned much of
    their income in the underground economy, are self-employed, or work only
    seasonally – remain outside the system altogether. Combined, those
    groups constitute roughly half the Chilean labor force. Only half of
    workers are captured by the system.

    Even many middle-class workers who contributed regularly are finding
    that their private accounts – burdened with hidden fees that may have
    soaked up as much as a third of their original investment – are failing
    to deliver as much in benefits as they would have received if they had
    stayed in the old system.

    Dagoberto Sáez, for example, is a 66-year-old laboratory technician here
    who plans, because of a recent heart attack, to retire in March. He
    earns just under $950 a month; his pension fund has told him that his
    nearly 24 years of contributions will finance a 20-year annuity paying
    only $315 a month.

    “Colleagues and friends with the same pay grade who stayed in the old
    system, people who work right alongside me,” he said, “are retiring with
    pensions of almost $700 a month – good until they die. I have a salary
    that allows me to live with dignity, and all of a sudden I am going to
    be plunged into poverty, all because I made the mistake of believing the
    promises they made to us back in 1981.”

    With many Chileans finding themselves in a situation much like that of
    Mr. Sáez, people are still looking to the government, not private
    pension funds, to ensure a secure retirement.

    “It is evident the system requires reform,” the minister of labor and
    social security, Ricardo Scolari, said in an interview here. Chile’s
    current approach based on private pension funds has “important
    strengths,” he said, but “it is absolutely impossible to think that a
    system of this nature is going to resolve the income needs of Chileans
    when they reach old age.”

    In formulating proposals in the United States for individual accounts,
    advocates of partial privatization of Social Security have sought to
    overcome some of the problems in Chile. They have suggested, for
    example, setting low limits on the fees that fund managers will be
    allowed to charge and continuing to provide a major part of retirement
    income through the traditional system of guaranteed payments.

    [NOTE FROM ME: Have you ever heard of BAIT AND SWITCH? While
    it could happen that at the beginning the government might
    limit fees Wall Streeers could charge for private accounts,
    there would certainly -- and almost immediately -- be enormous
    pressure on the government to LIFT the ceiling on those fees
    and PERMIT higher fees, much higher.]

    The program in Chile differs from the voluntary model that President
    Bush is considering. Participation here has been not voluntary for
    people entering the labor force since 1981.

    On the other hand, Chile was careful before it started its private
    system to accumulate several years of budget surpluses, in contrast to
    the recent large deficits in the United States.

    The Chilean example also makes clear that introducing private accounts
    does not solve a lot of the problems faced in the United States, Europe
    and Japan, where pay-as-you-go systems remain the principal means of
    government retirement support.

    Over all, Chile has spent more than $66 billion on benefits since
    privatization was introduced. Despite initial projections that the
    system would be self-sustaining by now, spending on pensions makes up
    more than a quarter of the national budget, nearly as much as the
    spending on education and health combined.

    Faced with the likelihood of the gap remaining as it is or, as Mr.
    Scolari said, “perhaps even widening,” the Chilean government is
    contemplating a new round of pension changes. Suggestions that have been
    floated include many also under consideration in the United States and
    Europe, like reducing benefits or setting a higher retirement age.

    The problems have emerged despite what all here agree is the main
    strength of the privatized system: an average 10 percent annual return
    on investments. Those results have been achieved by the pension funds
    largely through the purchase of stocks and corporate and government
    bonds – investments that helped fuel an economic expansion giving Chile
    the highest growth rate in Latin America over the last 20 years.

    “The great success of the system is its high profit rate, more than
    double what was initially projected,” said Guillermo Arthur Errázuriz,
    executive director of the Association of Pension Fund Administrators.
    “In total, workers have set aside nearly $61 billion, which is invested
    in the sectors of the economy that show the most potential.”

    Among the admirers of the privatized system here is Mr. Bush, who on a
    visit in November called Chile “a great example” for other countries. On
    other occasions, he has suggested that the United States could “take
    some lessons from Chile, particularly when it comes to how to run our
    pension plans.”

    The main architect of the Chilean system is José Piñera, who was labor
    and social security minister from 1978 to 1980 during the Pinochet
    dictatorship. Mr. Piñera is now chairman of the International Center for
    Pension Reform, co-chairman of the Cato Institute’s Project on Social
    Security Choice, and he has been a board member of several Chilean
    corporations.

    [NOTE FROM ME: Here's Josh Marshal's comment on José Piñera:
    "The case for the program is so strong it seems that José
    Piñera, the labor and social security minister under Pinochet,
    who ushered in the program, refused to even discuss it with
    The New YorkTimes. That despite the fact that he's had a
    sinecure at Cato for years as their big phase-out macher.
    He's the Co-Chair of their Project on Social Security
    (Privatization) Choice

    "Perhaps the most telling line in the whole piece: "Among
    other achievements emphasized here by advocates of the
    privatized funds are the creation of a modern capital market,
    cheaper credit for companies that formerly could turn only to
    banks when they wanted to expand, and a brake on deficit
    spending by the government.

    "And which of those things has anything to do with retirement
    security exactly?"
    http://www.talkingpointsmemo.com/ (scroll down)]

    Mr. Piñera declined repeated requests to be interviewed for this
    article. In an article on the Op-Ed page of The New York Times last
    month, though, he extolled the Chilean system as one based on ownership,
    choice and responsibility and one that is widely popular because it
    gives workers a stake in the economy.

    Among other achievements emphasized here by advocates of the privatized
    funds are the creation of a modern capital market, cheaper credit for
    companies that formerly could turn only to banks when they wanted to
    expand, and a brake on deficit spending by the government.

    Critics respond that the privatized system has been less successful in
    ensuring a dignified retirement for the elderly.

    “What we have is a system that is good for Chile but bad for most
    Chileans,” said a government official who specializes in pension issues
    and who spoke on condition of anonymity, fearing retaliation from
    corporate interests. “If people really had freedom of choice, 90 percent
    of them would opt to go back to the old system.”

    Among the complaints most often heard here is that contributors are
    forced to pay exorbitant commissions to the pension funds. Exactly how
    much goes to such fees is a subject of debate, but a recent World Bank
    study calculated that a quarter to a third of all contributions paid by
    a person retiring in 2000 would have gone to pay such charges.

    But most Chileans are unaware of how much they are paying to the funds
    because the lengthy quarterly financial balance sheet they receive “is
    not comprehensible,” according to Guillermo Larraín, director of the
    Superintendency of Pension Funds, a government agency. “It needs to be
    replaced by a simple and transparent financial statement,” he said, so
    workers can determine which fund charges the lowest fees.

    In recent years, the number of pension funds has been winnowed to 6 from
    a high of 22 in the early 1990’s. They have enjoyed record earnings, so
    much so that foreign banks and insurance companies are investing in the
    industry. While the pension fund association puts the average annual
    return on assets just under 30 percent, government figures show profits
    of 50 percent in 2000, with some independent studies suggesting the
    funds did that well over the five-year period ended in 2003.

    Proponents of the system justify the high returns as an appropriate
    reward for the risk they undertake. But a recent World Bank report,
    “Keeping the Promise of Social Security in Latin America,” minimized
    that, noting that through the 1990’s, only three large companies
    accounted for half of all shares traded on the Santiago stock exchange
    and that pension funds tend to follow a herd instinct and invest in the
    safest choices on the market.

    Government officials like Mr. Larraín and Mr. Scolari acknowledge that
    “commissions are high and need to come down.” They say that “more
    competition is needed” to foster lower fees. But existing regulations
    frustrate the creation of new funds – something that seems just fine to
    pension funds that have become a powerful political and economic force.

    “The dynamic of the market,” Mr. Larraín said, “is one of consolidation
    and concentration.”

    Some other problems of the Chilean system stem from factors that do not
    apply with the same force in the United States and other advanced
    economies. Nearly half of Chilean workers, for example, are employed off
    the books in the so-called informal sector, while many others are hired
    as independent contractors, who are not required to contribute to a
    pension account and do not do so regularly because they cannot afford
    it.

    By the government’s own calculations, only about half the work force
    contributes to a pension fund. “We are aware there is a big hole and
    that we need to take corrective measures,” Mr. Larraín said.

    Because many of the claims initially made on behalf of the privatized
    system proved exaggerated or inaccurate, the transition period has
    turned out to be longer and more expensive than anticipated. The annual
    cost to the government, still the guarantor of last resort, has remained
    steady at 5 to 6 percent of the nation’s economic output. (By
    comparison, in 2003, Social Security outlays in the United States
    totaled 4.2 percent of the gross domestic product.)

    Chile spends about $2 billion a year to pay retirees from its armed
    forces, according to Mr. Scolari. The military imposed privatization on
    the rest of the country, but was careful to preserve its own advantages
    and exclude fellow soldiers from the system. Despite calls that the
    military be forced to give up its exemption, no civilian government has
    been prepared to pursue that.

    Proponents of the privatized system argue that those costs will diminish
    in coming years, as those still receiving benefits from the old system
    gradually die off. But critics disagree, pointing to the large numbers
    of younger Chileans in the work force who either do not participate or
    whose contributions will fall short of the amount required for a minimum
    pension.

    For those remaining in the government’s original pay-as-you-go system,
    the maximum retirement benefit is now about $1,250 a month. The National
    Center for Alternative Development Studies, a research institute here,
    calculates that to get that same amount from a private pension fund,
    workers would have to contribute more than $250,000 over their careers,
    a target that has been reached by FEWER THAN 500 of the private
    system’s 7 Million PAST AND PRESENT contributors.

    [NOTE FROM ME: I would read that last paragraph again and
    again.]

    This leaves many Chileans in a situation that has led to the coining of
    a phrase: “pension damage.” There is now even an Association of People
    With Pension Damage, 157,000 members and growing, that consists of
    Chileans, mostly former government employees, who find that their
    pensions, based on contributions to the private system, are
    significantly less than if they had remained in the old system.

    “They come to us in desperation,” said Yasmir Fariña, the group’s
    president, “because those who stayed in the government system are often
    retiring with monthly pensions twice as large as everyone else’s.”

    Read this at:

    http://www.nytimes.c…094&partner=homepage

  4. Outsourcing Public Highways to Private Interests
    Posted by: “bigraccoon” bigraccoon@earthlink.net redwoodsaurus
    Mon Mar 12, 2007 6:31 pm (PST)
    OUTSOURCING PUBLIC HIGHWAYS TO PRIVATE INTERESTS

    Over the past few years, the federal government has rolled out
    the welcome mat for private road companies. The 2005 highway
    bill changed the tax code to allow private firms to raise
    tax-exempt financing for road projects, something that only
    governments were able to do up to now. (For congressional pork
    buffs, this was the same legislation that contained Alaska
    Republican congressman Don Young’s “bridge to nowhere,” and
    that, by way of homage to Young’s wife, Lu, was named the Safe,
    Accountable, Flexible, Efficient Transportation Equity Act – A
    Legacy for Users, a.k.a. SAFETEA-LU.) The bill also expanded
    eligibility for a transportation subsidy program that includes
    loan guarantees and lines of credit, and created a pilot program
    that lets participating states use tolling to finance interstate
    highway construction and invite private-sector participation on
    the projects. “It’s a very, very sweet deal,” says a veteran
    congressional transportation committee staffer who requested
    anonymity because of his role advising members on highway policy.

    On June 29, 2006, Mitch Daniels, the former Bush administration
    official turned governor of Indiana, was greeted with a round of
    applause as he stepped into a conference room packed with
    reporters and state lawmakers. The last of eight wire transfers
    had landed in the state’s account, making it official: Indiana
    had received $3.8 billion from a foreign consortium made up of
    the Spanish construction firm Cintra and the Macquarie
    Infrastructure Group of Australia, and in exchange the state
    would hand over operation of the 157-mile Indiana Toll Road for
    the next 75 years. The arrangement would yield hundreds of
    millions of dollars in tax breaks for the consortium, which also
    received immunity from most local and state taxes in its
    contract with Indiana. And, of course, the consortium would
    collect all the tolls, which it was allowed to raise to levels
    far beyond what Hoosiers had been used to. By one calculation,
    the Toll Road would generate more than $11 billion over the
    75-year life of the contract, a nice return on MIG-Cintra’s
    $3.8 billion investment.

    The deal to privatize the Toll Road had been almost a year in
    the making. Proponents celebrated it as a no-pain, all-gain way
    to off-load maintenance expenses and mobilize new
    highway-building funds without raising taxes. Opponents
    lambasted it as a major turn toward handing the nation’s common
    property over to private firms, and at fire-sale prices to boot.

    The one thing everyone agreed on was that the Indiana deal was
    just a prelude.

    http://www.motherjones.com/news/feature/2007/01/highwaymen.html

  5. …Close the SOA
    Posted by: “Compañero” companyero@bellsouth.net chocoano05
    Sat Nov 3, 2007 8:21 pm (PST)

    1000 Grandmothers March Again In Georgia November 18 Calling For
    Closure of Controversial Facility for Latin Americans

    St. Augustine’s grandmothers are joining grandmothers across the
    nation in preparation for the annual mobilization to close the
    Western Hemisphere Institute for Security Cooperation/ School of the
    Americas (WHINSEC/SOA) at Ft. Benning, Georgia on November 16-18,
    2007.

    The grandmothers and their supporters will join tens of thousands of
    people at the US Army base to bring attention to the notorious
    training facility and to demand closure of the school.

    Last year a campaign to bring 1000 Grandmothers to the gates of Ft.
    Benning began in Chico, California. Thousands of white-kerchief’d
    grandmothers swelled the throng at the demonstration, voicing
    “Presente!”. Six grandparents trespassed on the base in an act of
    nonviolent civil disobedience. Each spent time in prison, with
    sentences ranging from 2 to 6 months.

    Despite a shocking human rights record, this school continues to
    operate with US taxpayer money. America’s grandparents are neither
    afraid, nor hesitant to speak forcefully to what they clearly see:
    our own nation divided, militaristic and subsidizing other nations’
    militarism. As shepherds of the next generations we have a stake in
    how our country relates to the rest of the world.”

    Inspired by the Holly Near song “1000 Grandmothers” that calls on
    the strength, wisdom and courage of the elders to end violence,
    grandmother Cathy Webster of Chico, California relayed the call to
    the grandmas of America . Webster served two months in jail for her
    actions with fifteen others at the military base during the
    demonstration in 2006.

    The School of the Americas, now called Western Hemisphere Institute
    for Security Cooperation, made headlines in 1996 when the Pentagon
    released training manuals used at the school that advocated torture,
    extortion and execution. Despite this admission and hundreds of
    documented human rights abuses connected to soldiers trained at the
    school, no independent investigation into the facility has ever
    taken place. New research confirms that the school continues to
    support know human rights abusers.

    More information about the School of the Americas can be found on
    the SOAWatch website at http://www.soaw.org.

    I spoke at the demonstration at the gates of Fort Benning last year
    and will be going again this year. I hope you might consider joining
    me. It’s an important and inspiring event.

    Thanks.

    Peg.

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