Let us learn from the Chileans!

The condition of our social insurance and retirement systems is, well, everyone can see what it is. Nearly every day the retirees are reminded that they are subsidized by the central government budget, even though such claim is truly baseless. We have constant fights about the method of indexing the benefits to inflation. The system of special privileges for the military, the police, and certain other groups is conveniently ignored. The system pays special assistance to farmers and calls them retirement benefits even though there were no premiums to justify them. The system of retirement benefits is mixed with disability benefits, even though we have just seen successful separation of the two in the Czech Republic.

We are now paying a high price for the waste and corruption of the times when the system produced surpluses of cash, yet such surpluses were not used for creation of investment funds, and instead went to very debatable purposes.

At the same time we see immense inertia and inability of the system to reform itself. In view of that, it is especially important that the Polish readers should become aware of the spectacular success of the Chilean experience, yet again proving the superiority of the market economy over the centralistic authoritarian government management.

The mission of presentation of the Chilean system is done with knowledge and excellence by José Piñera in his book "The political economy of the retirement system in Chile". There is no one more competent in the area of privatization, or more precisely true socialization of the retirement system -- by bringing it to the conscience of all citizens, than the creator of the new system in the country which also went through painful pseudosocialist experiments.

This book by José Piñera should help its readers easily overcome- so common among our citizens- the acceptance of false ideology presenting a citizen as a passive and obedient follower of orders, demeaning of human beings and creating constant demands and hatred. The fundamental issue -- also for the retirement system -- is the creation of a system based on individual freedom, rights, opportunities and responsbilities.

The book you are about to read tells how a privately managed national system of retirement system accounts not only created higher pensions but made ordinary people into capital owners. It also tells how this new system allowed higher economic growth, increased capital stock of the nation and improved the strength of the nation's investment and development.

The book of José Piñera is not only a pragmatic sociological and economical study concerning the structure of retirement and disability system. It is also related to the question of transformation of a centralized communist economy into democratic capitalism based on freedom and market economy. This is a treatise against the welfare state demagogery and against the illusion of benefits of socialism.

The history of the Chilean pension reform should provide enough material to think for those who try to stop such a reform from happening in Poland. Despite the far distance from Poland to Chile, despite difference in culture and tradition -- the reality of the social and political climate is quite similar. The proponents of the reform in Chile were also hit below the belt.

We must fight for a pension reform in the Chilean style. This is a great opportunity to improve the lives of the existing and the future generations. We should not lose this opportunity.

This is why we must read this book not only as an interesting, fascinating reading. This is also a theoretical, practical, and political map into the future, for which we must be grateful to the author.

Poznan, July 26, 1996