Grijalva Maza, Luisa Fernanda - Capítulo 3. Slow Transition Towards a new Social Contrac- A Rawlsian Analysis of Pension Privatization in North America Report as inadecuate




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Grijalva Maza, Luisa Fernanda
- Capítulo 3. Slow
Transition Towards a new Social Contrac-
A Rawlsian Analysis of Pension Privatization in North
America
-- Maestría en Estudios de
Norteamérica. - Departamento de Relaciones Internacionales
y Ciencias Políticas. - Escuela de Ciencias Sociales, - Universidad de las Américas
Pue


Teaser



CHAPTER III SLOW TRANSITION TOWARDS A NEW SOCIAL CONTRACT “Discrimination, which generates humiliation, breeds hate, and sets people against people, not only violates our elementary sense of justice but is also incompatible with treating people as ends in themselves.”1 Even though PAYG was implemented world-wide as a basis to democratize retirement and reduce poverty in old age, during the 1980s and 1990s the viability of state-run PAYG pension schemes was severely questioned due to a complete package of problems: demographic changes, the retirement of the baby boom generation in the near future, early retirement and the increasing social security expenditures of industrialized countries in the western hemisphere.2 The result of several analyses was that PAYG pension schemes were basically broke and that the system was not going to be able to sustain pensions for further generations.3 This entire package of problems created a policy maker panic, and as a consequence several solutions were explored and debated. One possibility to solve the pension problem required the complete reform of PAYG, privatizing the system and basing it on a fully funded structure not subject to the problems mentioned above.
This would allow the continuity of a pension system.4 Even though at first light this seems like an adequate solution, this chapter shows that, after a careful analysis using the parameters presented in chapter two, the implications of the new system, commonly known as Individual Accounts (IA), extend far beyond the realm of economic viability. Leaving financial considerations aside, when the IA system was designed, apparently the main purpose was to mitigate financial liabilities created by the PAYG scheme and its 1 Amitai Etzioni, “Forward,” Transformation of the Welfare State: The Silent Surrender of Public Responsibility, Neil Gilbert (New York: Oxford University Press, 2004), xv. 2 Frances Cairncross, “Pension Reform and the Welfare of Pensioners,” Fis...






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