The forgotten lesson of Thanksgiving

November 24, 2016

Happy Turkey Day, everyone.

I remember in grammar school we used to be taught the “lessons of Thanksgiving,” including such wonderful things as sharing and gratitude. It seems one lesson never gets taught, though, and so reporter John Stossel wrote to remind us of it in this 2010 article:

Had today’s political class been in power in 1623, tomorrow’s holiday would have been called “Starvation Day” instead of Thanksgiving. Of course, most of us wouldn’t be alive to celebrate it.

Every year around this time, schoolchildren are taught about that wonderful day when Pilgrims and Native Americans shared the fruits of the harvest. But the first Thanksgiving in 1623 almost didn’t happen.

Long before the failure of modern socialism, the earliest European settlers gave us a dramatic demonstration of the fatal flaws of collectivism. Unfortunately, few Americans today know it.

The Pilgrims at Plymouth Colony organized their farm economy along communal lines. The goal was to share the work and produce equally.

That’s why they nearly all starved.

They nearly starved because too few people were willing to work hard to make the land productive enough to feed everyone, knowing they could still draw from the communal pot regardless of their (lack of) effort. Hence, not enough food was produced and the Colony nearly died.

But it didn’t. Having seen the failure of communalism and a planned economy, the colony’s leaders decided to divide the land into plots of private property and make each family responsible for their own livelihood. The results, as reported by Governor Bradford were amazing:

“This had very good success,” Bradford wrote, “for it made all hands very industrious, so as much more corn was planted than otherwise would have been. By this time harvest was come, and instead of famine, now God gave them plenty, and the face of things was changed, to the rejoicing of the hearts of many.”

In other words, private property and a free market made prosperity possible, while Socialism nearly got everyone killed.

Read the rest before you settle down to turkey and football (and the inevitable food coma), and let’s keep this forgotten lesson in mind.

Enjoy the day, folks!

(Crossposted at Sister Toldjah)


“You cannot legislate the poor into freedom”

November 15, 2016

Still holds true after 85 years:

Adrian Rogers redistribution

Source: Someone on Twitter or Facebook, can’t recall whom.

But it’s the thought that counts.


(Video) Pop Quiz: Can government run the economy?

August 8, 2016

Okay, it’s a trick question. The answer is “yes” and “no.” Yes, the government has the power to regulate almost all the economy (especially since the horrific Wickard v. Filburn case).

But it is also an emphatic “no,” because government rarely does a good job. In fact, government regulation often does more harm than good. A much better alternative is to let the economy run itself in a free market.

For Prager University, Steve Forbes explains why:

Now put down your pencils, close your exam books, and turn them in as you leave.

Class dismissed.


Minimum Wage Mandates Help Workers…into the Unemployment Line

December 17, 2015

Progressive city councils (Hello, Seattle and Los Angeles!) and state governments (Hiya, California!) have a lot to answer for: pricing out of the job market the very people they claim to want to help — young people and the poor.

International Liberty

As you can see from this interview, I get rather frustrated by the minimum wage debate. I’m baffled that some people don’t realize that jobs won’t be created unless it’s profitable to create them.

You would think the negative effects of a higher minimum wage in Seattle would be all the evidence that’s needed, but I’ve noted before that many people decide this issue based on emotion rather than logic.

So even though we have lots of evidence already that wage mandates cause joblessness (especially for minorities), let’s add to our collection.

Here are some excerpts from a Wall Street Journal column by Professor David Neumark from the University of California Irvine.

Economists have written scores of papers on the topic dating back 100 years, and the vast majority of these studies point to job losses for the least-skilled. They are based on fundamental economic reasoning—that…

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If We Want Prosperity, Prices Should Be Determined by Markets rather than Politicians

November 8, 2015

What more can I say, except “Exactly!”

International Liberty

The communist economic system was a total disaster, but it wasn’t because of excessive taxation. Communist countries generally didn’t even have tax systems.

The real problem was that communism was based on central planning, which is the notion that supposedly wise bureaucrats and politicians could scientifically determine the allocation of resources.

But it turns out that even well-meaning commissars did a terrible job. There was massive inefficiency and widespread shortages. Simply stated, notwithstanding the delusions of some left-wing economists (see postscript of this column), the system was an economic catastrophe.

Why? Because there were no market-based prices.

And, as explained in this video from Learn Liberty, market-based prices are like an economy’s central nervous system, sending signals that enable the efficient and productive allocation of resources in ways that benefit consumers and maximize prosperity.

And just in case it’s not obvious from the video, a price system can’t…

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#RaiseTheWage: We tried to warn you, Seattle, but you wouldn’t listen, and so…

October 30, 2015
"But at least we won the election! Obama!!"

“But at least we raised the wage! Obama!!”

We really did try to warn them: Increasing the minimum wage beyond economically sustainable(1) levels will lead to bad, albeit predictable consequences, such as job losses:

Seattle, which recently passed a $15 minimum wage, has seen the loss of 700 restaurant jobs despite the rest of the state seeing huge increases, according to a Wednesday report.

In its report, the American Enterprise Institute looked at restaurant job growth in both Seattle and the rest of Washington. The state itself has gained 5,800 industry jobs since January. Seattle, however, lost 700 jobs in the same time. The state minimum wage is $9.47. Back in June Seattle passed its own minimum wage of $15 an hour. The city ordinance is designed to phase in over the course of several years. It will reach $15 an hour by 2017 for most employers.

“One likely cause of the stagnation and decline of Seattle area restaurant jobs this year is the increase in the city’s minimum wage,” the report speculated. “It looks like the Seattle minimum wage hike is getting off to a pretty bad start. Especially considering that restaurant employment in the rest of the state is booming, and nearly 6,000 more restaurant workers are employed today than in January.”

As I’ve said before:

Labor is a cost, because the business owner has to provide wages and, often, benefits that cost him more money. When a government mandate increases that cost, the business owner has three choices: pass the cost along to the customer, who may decide it’s too much and stop shopping there; cut employee hours and stop hiring to save on labor costs, thus costing potential jobs and putting a burden on workers still employed; and, finally, just decide it’s not worth it anymore and close up shop. In the low-margin bookseller business, Borderlands’ owner chose the last course as the only one viable.

That was in San Francisco. In Seattle, it looks like restaurant owners decided on some mixture of cutting labor hours, or perhaps moving out of Seattle altogether. In at least one case, workers asked to reduced their hours, so they wouldn’t lose their jobs… and their government subsidies.

Of course, this is to the benefit of areas with lower labor costs around Seattle; at least some of them absorbed those jobs and the tax revenue from people looking for better prices.

Meanwhile, assuming those restaurants didn’t close, let me introduce you to your new server:

Welcome to the future

Need no wages

The progressive elites running Seattle (and San Francisco and New York and Los Angeles and…) almost certainly feel good for fighting for “economic justice” and “fairness.

It’s a shame the average working stiff has to suffer for their egos.

PS: The ideal minimum wage is zero.

Foonote:
(1) One of the progressive left’s favorite environmental-justice words. Maybe we should use it so they can start to understand economics.


(Video) Is Capitalism moral?

September 14, 2015

The short answer is “yes, far more so than any other system.” Via Prager University, Walter Williams of George Mason University explains why:

You’d think this would be obvious, but too many people fall for the siren’s song of “economic justice,” or whatever the leftist claptrap of the week is.


The Free Market Works in Health Care…When It’s Allowed

April 9, 2015

Best thing we can do to rein in healthcare costs is a) Get rid of Obamacare and b) return insurance to its traditional roe of protection against catastrophe.

International Liberty

I’ve often complained that government-created third-party payer is the main problem with America’s healthcare system, and I was making that point well before Obamacare was imposed upon the country.

The issue is very straightforward. In a genuine free market, people pay “out of pocket” for routine expenses. And they rely on insurance only in cases where they may face large, unexpected costs.

But in our current healthcare system, thanks to Medicare, Medicaid, and the tax code’s healthcare exclusion, most of us buy services with other people’s money and that dramatically distorts incentives.

Here’s some of what I wrote about this messed-up approach back in 2009.

…our pre-paid health care system is somewhat akin to going to an all-you-can-eat restaurant. We have an incentive to over-consume since we’ve already paid. Except this analogy is insufficient. When we go to all-you-can-eat restaurants…

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(Video) 1948 cartoon: “Make Mine Freedom!”

July 7, 2014

Here’s a neat animated short from almost 70 years ago that does a darned good job showing the differences between a society based on individual liberty and the free market, on the one hand, and those based on statism (Socialism, Communism, and Fascism) on the other. It makes good use of humor to get its point across:

Nowadays, I think we could add another “-ISM” to that patent medicine’s list of ingredients: the religious totalitarianism of Islamism.

Via Dan Mitchell, this was part of good post on how the Left was wrong about unemployment insurance.

(Crossposted at Sister Toldjah)


#RaiseTheWage: Seattle businesses push back against minimum wage increase

July 6, 2014
"But at least we won the election! Obama!!"

“But at least we raised the minimum wage!”

Rick Moran at PJMedia has an article up about an effort on the part of Seattle business owners to get a measure on the ballot that would roll back the city’s recently passed $15 per hour minimum wage to a more “reasonable” $12.50. You can go there to get the details (there are accusations of fraud in the petitions to get the measure on the ballot), but here is a portion in which a Seattle business owner describes the very real impact raising the minimum wage has on his and other businesses:

That favorite coffee shop that you go to? That great neighborhood restaurant? That store where you buy your books, pet food, art supplies, or clothes? Each of those businesses survives on around a 5 percent net profit margin. That means that at the end of the year, after all the expenses—the payroll, the supplies, the inventory, insurance, rent, etc.—we all will end up with only about 5 percent income in our pockets if we’re doing a half-decent job. Maybe a bit more, maybe a bit less—but you get the idea. This does not leave a small local business with much room to absorb even a small increase in costs, much less the 60 percent increase demanded by the well-meaning but ill-researched and biased reporters and neighbors involved in this discussion.

Here are some more boring facts:

Payroll is approximately 30 percent of my entire costs at Liberty, the bar I own (the average in this business seems to be 30 to 35 percent). If the minimum wage goes up to $12.50 an hour (a reasonable middle ground some have proposed), that would be an increase of 34 percent, which means just to stay even I’d have to raise prices 10 percent across the board—the labor’s percentage increase in total cost to operate Liberty.

If the minimum wage goes to $15 an hour, I’d have to raise my contribution to payroll by 18 percent. So my costs would have to rise by no less than 18 percent, just for payroll—and that’s before my vendors’ increases in costs have to be considered, which I believe will be around another 5 percent, and that’s before Liberty adds any profit.

So it’s not impossible to imagine that costs for business like mine in Seattle will go up by no less than 20 percent.

Those increases are way more than my income. Again, my profit is around 5 percent. And it’s not just me, that’s across the board—for restaurants, for bars, for clothing stores, for pet stores, for art supply stores—many of whom have set costs and are competing with online retail. This makes it very difficult for them to adjust their purchasing.

So, what are this business owner’s options? That’s his problem, not the Seattle city council’s.

Thomas Sowell has often observed that politicians almost never feel the economic consequences of the decisions they force on the rest of us. While they’re buying their way to reelection by handing out goodies and making themselves feel good by supposedly “fighting for the people,” someone else has to pay the cost — in this case, the businessman who takes less profit, the worker who gets fewer hours, or the consumer who pays higher prices.

I left a comment to Moran’s post and I want to share part of it here. It’s anecdotal, but I think it illustrates the very real effects of politicians thinking they can ignore the laws of economics:

A friend supervises minimum wage, hourly employees in an educational setting. Our minimum wage [in California] has just gone up to $9 per hour. She has told me that she knows for a fact her budget for hiring will not increase, so she has to cut employee hours and, perhaps, eliminate a couple of jobs. Now, someone explain to me again how this increase actually helped these workers? But it sure made the pols in Sacramento feel good about themselves.

Those employees are student workers, often from minority groups, who work to help pay their way through school. And they are very real victims of progressives’ “good intentions.”

(Crossposted at Sister Toldjah)


Be Thankful for Capitalism and Rich Entrepreneurs

June 3, 2014

Earned vs. unearned wealth, free market vs. statist.

International Liberty

In previous columns, I’ve explained why a wealth tax is a very bad idea. And I’ve also pontificated on why leftists are wrong to pursue policies of coerced equality.

So it goes without saying that I’m a big fan of a new Wall Street Journal column by John Steele Gordon.

He writes that the anti-wealth ideology animating the political elite is based on a fundamental misunderstanding of how large fortunes are generated.

He starts by pointing out that many of today’s richest people earned their money as a result of the microprocessor, a technological development that has dramatically improved the lives of ordinary people.

The French economist Thomas Piketty, in his new book “Capital in the 21st Century,” calls for an 80% tax on incomes over $250,000 and a 2% annual tax on net worth in order to prevent an excessive concentration of wealth. That is a monumentally…

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Obama minimum wage edict leads to job losses at military bases

April 29, 2014
"But at least we won the election! Obama!!"

“But at least we won the election! Obama!!”

Democrats and their Leftist allies are desperate to find any issue to run on in the coming elections, other than Obamacare. One of their tactics has been to try to gin up class warfare based on raising the minimum wage. They argue that it will help the poor, raise living standards, and, of course, be more “fair.” Republicans, conservatives, and libertarians, on the other hand, contend that increasing the cost of labor will only mean higher prices to the consumer, fewer jobs for the marginally skilled, and be particularly harmful to minorities. This video is a good example of how minimum wage laws kill jobs.

Needless to say, I come down on the side of those opposed to the Democrats’ demands for a minimum wage increase. But honest, intelligent people (1) can reasonably disagree.  To help solve this disagreement, a real-world, real-time example would be nice. Fortunately (or unfortunately, as the case may be), we have one. As Byron York reports in The Washington Examiner, President Obama’s edict raising the minimum wage for federal contract employees on military bases is leading to the closure of fast-food restaurants on those bases, thus costing jobs:

Obama’s order does not take effect until January 1, 2015. But there are signs it is already having an effect — and it is not what the president and his party said it would be.

In late March, the publication Military Times reported that three McDonald’s fast-food restaurants, plus one other lesser-known food outlet, will soon close at Navy bases, while other national-name chains have “asked to be released from their Army and Air Force Exchange Service contracts to operate fast-food restaurants at two other installations.”

Military Times quoted sources saying the closures are related to the coming mandatory wage increases, with one source saying they are “the tip of the iceberg.”

And increasing the minimum wage isn’t the only way Washington is increasing the cost of labor:

The administration is making it very expensive to do business on military bases, and not just because of the minimum wage. Under federal contracting law, some businesses operating on military installations must also pay their workers something called a health and welfare payment, which last year was $2.56 an hour but which the administration has now raised to $3.81 an hour.

In the past, fast-food employers did not have to pay the health and welfare payment, but last fall the Obama Labor Department ruled that they must. So add $3.81 per hour, per employee to the employers’ cost. And then add Obama’s $2.85 an hour increase in the minimum wage. Together, employers are looking at paying $6.66 (2) more per hour, per employee. That’s a back-breaking burden. (Just for good measure, the administration also demanded such employers provide paid holidays and vacation time.)

As I wrote above, the natural business response to this is to either raise prices for the consumer, or cut back on employee hours — or cut jobs altogether. Well, guess what? York reports that military contracts do not allow the businesses to raise their prices above what’s common in the outside community. So, even though Obama is raising wages well above the prevailing standard, employers are forbidden to recoup their costs. What does that leave?

Closing the business altogether.

If there’s no chance for profit, why stay open? When you add up the numbers for all four major services, we’re looking at potentially 10,000 jobs going up in smoke. Not to mention the ripple effect in the outside communities.

Here we have a current, ongoing example of how raising the minimum wage harms people by killing jobs. (3) How then, is the Democratic proposal a good idea?

I’m waiting. smiley well I'm waiting

 

Footnote:
(1) Thus excluding Democratic pols and activists.
(2) How fitting.
(3) Yes, military contract law made the situation worse by forbidding compensatory price increases. So, increasing costs for the consumer –including minimum wage earners!– is a good thing? And what’s to say the Obama administration, if they got their way on the minimum wage, wouldn’t try to extend price controls when the inevitable complaints arose? We are talking dyed-in-the-wool statists, after all. One bad policy, raising the minimum wage, inevitably leads to more bad policy. Just look at the history to-date of Obamacare.

(Crossposted at Sister Toldjah)


Greetings from Obamaland…Oops, I Mean Greece

March 29, 2014

It’s easy to mistake the two; Obama has us well down the same road.

International Liberty

As much as I condemn American politicians for bad policy, things could be worse.

We could be Greek citizens, which would be very depressing. Indeed, you’ll understand why I put Obamaland in the title after you read today’s column.

Simply stated, Greece is a cesspool of statism. The people seem to be wonderful (at least outside of polling booths), but government intervention is pervasive and atrocious.

Here’s an example. As I was coming in a taxi from the airport to the city yesterday, we passed some sort of protest. There were a couple of hundred people at the rally and probably about 50 riot cops.

I naturally wondered about the situation, expecting that it was radical statists or some of the crazies from Golden Dawn. But the cab driver explained that it was pharmacists.

So why are pharmacists protesting? I found out from some of the locals at…

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Time for a Free-Market Postal System

March 25, 2014

Revisiting one of my pet peeves: privatizing our hugely inefficient and money-losing postal service. In this case, Mitchell presents Britain’s success at doing just that.

International Liberty

It’s not often that I agree with the Washington Post, but a government-run monopoly is not the best way to get mail delivered.

Moreover, it’s not often that I agree with the timid (and sometimes reprehensible) Tory-led government in the United Kingdom, but they just put the Royal Mail into the private sector. And that’s something deserving of loud applause.

Here’s a slice of the big news from the Financial Times.

The goal of privatising Royal Mail had defeated governments for 40 years. …Even prime minister Margaret Thatcher balked at the political risk of selling off a public service that carried the Queen’s head on its stamps. This time, the legislation went through parliament.

My Cato colleague, Chris Edwards, is suitably impressed.

Here’s some of what he wrote for Cato-at-Liberty.

Britain privatized its Royal Mail in 2013, proceeding with an initial public offering of shares that raised about…

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Social Democratic Sweden headed for private health insurance?

January 22, 2014
Wave of the future?

Wave of the future?

The poster-child for European social democracy seems to be learning that government-controlled healthcare just doesn’t work. Via Reason:

According to Sweden’s insurance trade industry organization, Svensk Försäkring:

“The number of private health care insurance policies has increased in recent years. In 2011 about 440,000 people had private health care insurance. Most of these people have their policy paid by their employer.”

The trend continues, with the English-language The Local reporting last week that “One in ten Swedes now has private health insurance.” The site also says, “More than half a million Swedes now have private health insurance,” though that seems to refer to the growth in the number of policies, with many more of the country’s 9.5 million people actually covered by private insurance.

Why the growth? From The Local:

“‘It’s quicker to get a colleague back to work if you have an operation in two weeks’ time rather than having to wait for a year,” privately insured Anna Norlander told Sveriges Radio on Friday. “It’s terrible that I, as a young person, don’t feel I can trust the health care system to take care of me.'”

In a separate article about Sweden’s shrinking welfare state, The Local also noted that “visitors are sometimes surprised to learn about year-long waiting times for cancer patients.”

There’s more about Sweden’s move away from Socialism and toward free-market solutions. I’ve written about this trend myself, with regard to education and prosperity in general.

Like many people living on either coast, I have friends who are downright Europhiliac — anything Europe does is better, wiser, and more fair than what’s done in the United States, and we should move toward their model.

I can’t wait to tell my progressive friends how Sweden proves they’re right.

(Crossposted at Sister Toldjah)


A Manifesto for Free Markets in Health Care

December 27, 2013

A radical proposal, but I’m willing to give it a shot.

International Liberty

Not counting humor-oriented pieces such as this and this, it’s been nearly a month since I’ve written about Obamacare.

To make up for this oversight, today we’re going to look at a way out of the Obamacare mess.

But the goal isn’t simply to repeal the President’s bad policy. That merely gets us back to where we were in 2009. We need to figure out how to restore market forces to healthcare, and that means undoing decades of misguided government intervention.

Fortunately, we have a roadmap thanks to John Cochrane, a Cato adjunct scholar and Professor at the University of Chicago. Writing in the Wall Street Journal, he explains how radical deregulation is the right approach.

He starts with an essential point that “settled law” doesn’t mean unchangeable law.

…proponents call it “settled law,” but as Prohibition taught us, not even a constitutional amendment is settled…

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The Chilean Miracle Shows that Economic Liberty is the Best Way of Helping Ordinary People

June 9, 2013

But try to explain to progressives that privatized Social Security accounts, school choice, and other free market are empirically far better for the average citizen than statist solutions, and they’ll look at you as if you’re at best mad and, more likely, downright evil.

International Liberty

I’m in Vienna, Austria, for the annual European Resource Bank meeting.

I had the pleasure last night of listening to Jose Pinera speak about economic reform in Chile, particularly the system of personal retirement accounts.

He shared a chart that conclusively shows why good economic policy makes a difference.

Chile Miracle

Wow. Look at how much faster the economy has grown since the communists were ousted in 1975 and replaced by a pro-market government.* And the poverty rate has plummeted from 50 percent to 11 percent!

Simply stated, economic reform has been hugely beneficial to poor and middle-class people in Chile. Something to remember as we try to rein in the welfare state in America.

Let’s look at some more data. A couple of years ago, I shared this chart showing how Chile had out-paced Argentina and Venezuela. In other words, Chile’s performance is ultra-impressive, whether examined in isolation or…

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March 30, 2013

This is a very interesting study. I’m sorry to say my beloved California comes in only at second place in “most un-free” states, behind New York. Come on, Sacramento! I’m sure you can do more to screw this place up! I have faith in you.

International Liberty

Sometimes I myopically focus on fiscal policy, implying that the key to prosperity is small government.

But I’ll freely admit that growth is maximized when you have small government AND free markets.

That being said, our goal should be to expand freedom, not merely to have the largest possible GDP.

Which is why the Freedom Index is a good complement to Economic Freedom of the World.

It shows, for instance, that Singapore may be ranked #2 for economic freedom, but it is only #39 when you look at all freedoms.

We also have a comprehensive ranking of economic and personal freedom for the 50 states.

Here are the full rankings from the newly released Freedom in the 50 States from the Mercatus Center, showing North Dakota as the state with the most freedom, with South Dakota (#2), Tennessee (#3), New Hampshire (#4), and Oklahoma (#5) also deserving…

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March 9, 2013

Try as I might, I just cannot get some of my liberal friends to understand that punishing productive behavior with higher taxes is just bad policy. They just fall back behind their magic word, “fairness.” Sigh.

International Liberty

I’ve spent a lot of time debunking class-warfare tax policy, and I’ve certainly explained ’til I’m blue in the face that big government facilitates a pernicious form of corruption that enriches powerful and well-connected insiders.

But I haven’t spent much time addressing the topic of income inequality, which is connected to those two other issues.

U.S. News & World Report just weighed in on this issue, citing a leftist video designed to build support for redistributionist policies.

Occupy is by now forgotten (if not gone), but the top 1 percent came roaring back into view this week with a viral video that has been seemingly inescapable for anyone on Facebook or Twitter. The slick, graph-heavy animation shows the results of a 2011 study that found not only that Americans vastly underestimate wealth inequality in the U.S. but that current inequality is very far from what most Americans see…

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September 29, 2012

Chile is a good model for what we should do; the problem is to get the Left to listen to facts, rather than their ideological fantasies.

International Liberty

I wrote back in July about the remarkable transformation of Chile into a prosperous market economy.

In that post, I noted that Chile was a pioneer in the shift from unsustainable tax-and-transfer entitlement schemes to savings-based personal retirement accounts. And with good reason. That system, which has been in place for more than three decades, is hugely successful.

We should do the same thing in America, and we should do it yesterday, if not sooner.

But Chile’s success is driven by more than just pension reform. And I want to mention something remarkable about what’s happening with school choice in that country.

First, some background. I’m currently at a Cato Institute donor retreat, where I had the chance to talk to Jose Pinera, who is now the Co-chairman of Cato’s Project on Social Security Choice, but who also was the person who implemented the pension reforms in his…

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