Slower still than Slovakia . . .

I just read a Cato dispatch by Marian Tupy stating that the nation of Slovakia (of former Checko- fame) has voted to privatize a good third of its retirement social security system. (Tupy, whom I've had the opportunity to meet, was born in Slovakia.)

Two things about this:

First, Slovakia is a nation with a strong tradition of state support for citizens in their retirement, ideas about economic liberty are far less advanced there than in the U.S., and by any measure, the transition costs of such a change will be much higher there than in Western countries. Still, they've conjured up the political will to pull off such an important measure.

Second, their plan to privatize is both more aggressive than President Bush's (he only wanted to privatize 1/3 of 1/2 of the U.S.'s social security system and failed to push even this through a Republican-controlled Congress) and more intelligent. Under Bush's plan, none of the privatization effort would ever have gone to reducing the eventual costs of the transition. Under the Slovakian version, fully a third would be. To wit:

Social security contributions in Slovakia amount to 28.75% of gross wages. Workers can now put 9% into their personal retirement accounts and 9% goes to the old system. The balance covers other types of insurance or administrative costs.