Conclusions and Recommendations of the Evaluation of Four Decades of Pension Privatization in Latin America: Promises and Reality

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November 2020
Paper author(s): 
Carmelo Mesa-Lago

The controversy over fully-funded systems of privately administered pensions has existed for over three decades, but their antecedents are even older. The neoliberal ideas of Milton Friedman, Nobel Laureate in Economics and founder of the University of Chicago School of Economics, were antagonistic to the Keynesianism that had prevailed on the economic policy of nations since the Great Depression. In his most influential non-academic book, Capitalism and Freedom (1962), Friedman popularized the notion of the key role of the market (the state must refrain from intervening in the economy except when absolutely necessary; the market generates the best results and the state the worst failures), the basis of privatization and deregulation public policies. As an advisor to Margaret Thatcher in the UK and Ronald Reagan in the US, his ideas had strong support in these countries and spread to the world. A group of students in Chicago—many of them Chilean—were disciples of Friedman and hence called the “Chicago Boys”; they played a crucial role in Pinochet policies. The so-called Washington Consensus supported the neoliberal policies of structural adjustment in Latin America that were implemented by the IMF and the World Bank (Williamson, 1990).


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