March 21, 2005


The Siren of Santiago: How a Pinochet protégé helped charm Bush into privatizing Social Security. (Barbara T. Dreyfuss, March/April 2005, Mother Jones)

President Bush's enthusiasm for Social Security privatization may have had its start on a yacht off the Italian island of Elba in June 1997. As the vessel cruised the Tyrrhenian Sea, José Piñera, once the labor minister for Chilean military dictator Augusto Pinochet, told another passenger—a close friend of Bush's—how he had taken Chile's equivalent of Social Security private. Two months later, Piñera got an invitation to the Texas governor's mansion, where he dined with Bush and Ed Crane, founder and president of the Cato Institute, a libertarian think tank based in Washington, D.C. Afterward, says Crane, they retired to the library for further discussion about privatization.

Crane credits Piñera's ardent comments that night with convincing Bush to advocate replacing part of Social Security with Wall Street investments. As he recounts it, "Bush said, 'José, you make a very compelling case. I do believe that privatizing Social Security is the most important issue facing the nation.'" Policy analyst Peter Ferrara, who in 1981 wrote a highly influential Social Security primer for Cato while studying the Chilean system, and who has been a leading figure in the debate over the program's future, agrees: "I believe that [conversation] was the whole genesis of the president's commitment to personal accounts."

Bush isn't the only politician captivated by the suave, urbane Piñera. "He's kind of the Pied Piper of Social Security privatization," says Crane. Senator John Sununu (R-N.H.), author of a key Republican bill creating private accounts, introduced Piñera at a forum, declaring, "No one has done more to empower workers to save and invest for retirement than José Piñera."

In the two decades since he left the Chilean government, Piñera has been instrumental in persuading countries across Europe and Latin America to turn public retirement systems over to the marketplace; since 1995, he has been the codirector of Cato's Project on Social Security Choice, one of Washington's most vigorous pro-privatization efforts. And because he is positioned as an outside expert, Piñera is expected to take on an increasingly high-profile role in helping the Bush administration and congressional Republicans campaign to privatize the program.

Well, Chile does owe us one for helping save them from Allende.

Posted by Orrin Judd at March 21, 2005 6:50 AM

Reading between the lines you get the usual lefty mantra "Bush is a simpleton who is being led by others (on the fanatic fringe) with regard to social security".

Posted by: AWW at March 21, 2005 8:14 AM

Privatization is bad because Pinochet did it. I suspect the idiots over at Mother Jones are similarly opposed to toll-free limited access highways because Hitler built them.

Posted by: bart at March 21, 2005 8:31 AM


Posted by: Barry Meislin at March 21, 2005 8:59 AM

I had never known. So now Pinochet gets credit for more than just shooting Communists

Posted by: Lou Gots at March 21, 2005 12:12 PM