During the past decade, concerns have been raised that the

U.S. Social Security system, which was established in 1935 as a way to guard the elderly from poverty, could go bankrupt unless it is reformed. One solution is privatization, an option adopted by Chile in 1981. Chile replaced its state-run system with one in which workers contribute between 10 and 20 percent of their income to pension savings accounts. Twenty private companies invest that money in mutual funds. Bruce Bartlett, a senior fellow at the National Center for Policy Analysis, argues that Chilean privatization has been especially successful. According to Bartlett, most workers have earned a 12 percent rate of return on their investments. He also asserts that privatization has increased productivity and savings. José Piñera, who privatized the state pension system as Chile’s minister of labor, asserts that the system...