In a young country, a pay-as-you-go system should yield surpluses, which can be invested in infrastructure and education.
This is the trouble with the present pay-as-you-go system: it relies on future governments to keep their predecessors' promises.
Mr Zedillo reformed pensions, switching from a pay-as-you-go system to Chilean-style individual capitalised accounts for new workers, but with one embellishment.
ECONOMIST: Working in the official economy has its drawbacks
This, the inevitable result of a pay-as-you-go system in an ageing population, is the cause of the programme's long-term financial problems.
Yet Washington leaves Social Security to forever be a pay-as-you-go system, spending all the tax money and keeping the Social Security liability 100% unfunded.
Despite recent turbulence in the markets, returns in Chile over the 17-year life of the scheme have greatly exceeded the derisory returns implicit in the earlier pay-as-you-go system.
What the reform involves is moving from a tax and redistribution, pay-as-you-go system, with no real savings and investment anywhere in the system, to a fully funded, savings and investment system.
This raises problems for pensions (Japan has a pay-as-you-go system) and health care (the number of people with senile dementia is set to reach 2.6m in 2015, up from 1m in 1990).
ECONOMIST: Social conventions and demography add to the sclerosis
Though a dedicated reformer, he shelved plans to overhaul the decaying pay-as-you-go pension system, after public-sector unions, his power base in Pasok, held demonstrations in protest against even the modest reforms he had proposed.
All of these steps would be taken to ensure Social Security's solvency during a transition from the current pay-as-you-go system to a private account system, where less payroll tax revenue would be available to finance benefits.
Overall, what the transition is really financing is the increased savings and investment involved in shifting from a pay-as-you-go system to a fully funded system, just as with eliminating the unfunded liabilities of any underfunded pension plan.
The Ryan-Sununu approach would turn a deadweight, pay-as-you-go liability system into an enormous generator of capital that would significantly increase economic growth in the years ahead--and give participants far more in retirement payment and leave them a real nest egg of capital.
Blacks are stiffed by the current pay-as-you-go Social Security system, because they die younger than whites and so collect fewer benefits.
Such a pay-as-you-go tax and redistribution system does not earn the investment returns that a fully funded savings and investment system would.
The problems with Social Security are now largely known--the declining number of workers versus retirees, the fiscal irresponsibility of pay-as-you-go (it's the public-sector equivalent of a private pension system with no reserves, which, of course, is illegal).
The city of York just announced a plan to install a network of pay-as-you-go charging stations for electric vehicles, the first such system to launch in the UK. York is already home to 12 free charging points, but these are located in lesser-known areas such as private parking lots.
ENGADGET: York announces pay-as-you-go EV charging network, beats London to the punch
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