October 28, 2004

Viva Piñera

Carlo Stagnaro on the necessary reform of Social security systems in Europe:

The vision Europe needs is Jose Piñera's. Dr. Piñera was minister in Chile in the early 1980s. At that time, he pursued an innovative pension reform that transformed Chilean workers into "workers-capitalists". This is a metaphor Piñera likes, and for good reasons.


Chilean-style reform could succeed in privatizing de facto the pensions, while limiting government spending -- something which is very important in a country like Italy, where the risk is to reduce pension debt by increasing public debt, with no sensible change for the average worker and taxpayer. CERM's Fabio Pammolli and Nicola Salerno, in fact, showed how it may be possible to create an incentive towards a private system, while limiting government expenditure. These measures are a way to make the crisis a bit less incumbent; yet, there's no doubt the iceberg is approaching the European Titanic.