In the last four decades of neoliberal counter-revolution, which throughout the world have led to the erosion of labor rights, concentration of income, financial instability and privatization of public services, one of the areas in which the maelstrom has been taken to a more absurd extreme has been the privatization of social security. In three dozen countries, it was a good idea to remove the administration and application of discounts and the payment of pensions from the public sphere and place them in the hands of the private financial sector, maintaining the obligation of discounts but reducing or eliminating the dimension of redistribution. solidarity to the detriment of the individual capitalization component.
Fortunately, this option was not widespread: between 1981 and 2014, the privatization of the mandatory pension system was carried out in 14 countries in Latin America, 14 countries in Eastern Europe and in two African countries, Ghana and Nigeria. Thirty is not small, but it is a small minority among the approximately two hundred countries on the planet. Interestingly, this option has never been adopted in any of the more central economies from which neoliberalism originally originated, such as the United Kingdom or the United States.
After almost four decades of experimentation in this field, the verdict could hardly be clearer. The list of problems and disadvantages of this system is long and enlightening. I use the list of chapters in a report from the International Labor Organization on this topic, in order not to forget any of them: stagnation or decrease in coverage rates; deterioration of pensions; increasing income and gender inequality; pressures on state budgets resulting from system transition costs; high administrative costs; capture of regulatory and supervisory functions; concentration of the sector; little effect on the development of capital markets; transfer of financial and demographic risks to individuals; and deterioration of social dialogue.
In such a way it became obvious that it is a bad idea to place the compulsory pensions of an entire population in the hands of the private sector, reducing protection, increasing insecurity and benefiting only the financial sector itself, which from the year 2000 to the present eighteen (60% ) of these thirty countries decided to reverse privatization, bringing the social security administration back to the public sphere. Many, such as Bolivia (2009), Hungary (2010), Poland (2011) or Russia (2012), did so in the wake of the international financial crisis, when the unsustainability of this solution became especially evident.
But it is not easy to get out of the neoliberal trap. The governments of two of these countries, Argentina and Bolivia, are currently facing lawsuits filed by international banks and insurance companies, which intend to be compensated for the profits they no longer have in the following decades as a result of the reversal of privatization in 2008 and 2009. BBVA, MetLife and NN Insurance International seek millionaire indemnities not for the costs they have borne, but for the profits they no longer have over the entire future horizon.
If these claims, which are being tried in an international investment arbitral tribunal and not in the judicial systems of the countries themselves, are met, this means that Argentina and Bolivia will have to pay many millions of dollars to these companies, making their services vulnerable. to fill the pockets of international investors even more. It also means, in practice, the neutralization of the sovereign power of States to take the decisions they consider most appropriate for the good of the citizens. It also means that governments that are in power for a period of time may unacceptably compromise the future of their public finances and social protection systems for decades. It is precisely because of all of this that it is unacceptable that a petition is currently running, promoted by a hundred economists and development experts, in order to call for these claims to be ignored.
Whether this happens or not, this case will always serve as a warning. The privatization of essential public services is not only a problem in terms of efficiency and equity: it also means the emptying of sovereignty and the creation of unacceptable risks of vulnerability of States at the judicial level.