Cato Daily Dispatch for December 1, 2004
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Cato Scholar Outlines Chile's Individual Account SuccessReport: NYC Schools Need $5.6 Billion
Bush Defends Iraq Policy in Canada
Cato Scholar Outlines Chile's Individual Account Success
In today's New York Times, José Piñera, co-chairman of Cato's Project on Social Security Choice, outlines the benefits of Chile's personal retirement account system, a program he designed as Chile's secretary of labor and social security.
"Since the system started on May 1, 1981, the average real return on the personal accounts has been 10 percent a year," Piñera writes. "The pension funds have now accumulated resources equivalent to 70 percent of gross domestic product, a pool of savings that has helped finance economic growth and spurred the development of liquid long-term domestic capital market.
"... For Chileans, their retirement accounts represent real property rights. Indeed, the accounts, not risky government promises, are the primary sources of security for retirement, and the typical Chilean worker's main asset is not his used car or even his small house (probably still mortgaged) but the capital in his retirement account. "Since they have a personal stake in the economy, workers cheer the stock market's surges rather than resenting them, and know that bad economic policies will harm retirement benefits. When workers feel that they themselves own a part of their country's wealth, they became participants and supporters of a free market and a free society."
Report: NYC Schools Need $5.6 Billion
"In a report that could transform New York City's public schools, a court-appointed panel has found that an additional $5.6 billion must be spent on the city's schoolchildren every year to provide the opportunity for a sound, basic education that they are guaranteed by the State Constitution," the New York Times reports.
In "Money And School Performance: Lessons from the Kansas City Desegregation Experiment," education writer Paul Ciotti analyzes that city's experiment with increased education spending. "Kansas City spent as much as $11,700 per pupil -- more money per pupil, on a cost of living adjusted basis, than any other of the 280 largest districts in the country," he writes. "The results were dismal. Test scores did not rise; the black-white gap did not diminish; and there was less, not greater, integration.
"The Kansas City experiment suggests that, indeed, educational problems can't be solved by throwing money at them, that the structural problems of our current educational system are far more important than a lack of material resources, and that the focus on desegregation diverted attention from the real problem, low achievement."
Bush Defends Iraq Policy in Canada
"President Bush, addressing Canadians in a speech in Nova Scotia, acknowledged today that the war in Iraq has estranged some of America's closest friends, but he stoutly defended his foreign policy decisions and said building democracy in the war-torn nation is in the world's interest," the Washington Post reports.
In "Old Folly in a New Disguise: Nation Building to Combat Terrorism," former Cato foreign policy analyst Gary T. Dempsey writes: "A realist approach to combating terrorism ... does not hinge on nation building or making the world safe for democracy. It hinges on a policy of victory and credible deterrence. The point is to prevent terrorism by making its sponsors and accomplices fear the costs.
"... Nation building, therefore, is the wrong prescription. It is likely to create more incentives, targets, and opportunities for anti-American terrorism, not fewer."
Wyatt DuBois, editor, wdubois@cato.org