Herman Cain lives!
The late great Republican Tea Party leader, CEO, and former chairman of the Kansas City Federal Reserve was derided in his 2012 presidential campaign for his "Chilean Model" proposed during a debate -- a plan to replace the failing Social Security system with private accounts, as had been done in Chile in the 1970s.
In reality, he had an enduringly good idea that would have saved the rapidly depleting U.S. Social Security system just as it saved Chile's, and made every saver in the U.S. richer. But the left demonized it without a hearing, hating the idea of the little guy (instead of the government) controlling his own retirement funds.
Now President Trump has picked up the torch.
According to Politico:
It's the best idea of all to come out of the Trump administration.
I've followed this story for years -- some fifty nations with failing social security systems have adopted it, and all of them have suceeded. There even was a version of it tried in Galveston among its government workers -- which had the same success.
As I wrote in a page one news story at Investor's Business Daily in 2011:
Instead of paying a 12.4% Social Security tax as we do here, Chilean workers must pay in 10% of their wages (they can send up to 20%) to one of several conservatively managed and regulated pension funds. From the accumulated savings, they get a life annuity or make programmed withdrawals (inheriting any funds left over).
Over the last three decades these accounts have averaged annual returns of 9.23% above inflation. By contrast, U.S. Social Security pays a 1% to 2% (theoretical) return, and even less for new workers.
Yes, it was great news for workers -- making ten times what they'd get with the government system, which was effectively a black hole of mismanagement, waste, and fraud, as Elon Musk's DOGE found out in spades.
But the gains didn't stop with workers. The cash in savings formed a vast pool of capital to invest in and develop the country. As Businessweek wrote in 2005:
Drivers in Chile don't have to wait until they're 65 to enjoy their pension benefits. Every day thousands do so when they speed from Santiago to Viña del Mar along the Rutas del Pacífico toll road, which opened on Apr. 13 with funding from the country's deep-pocketed pension funds. A billboard reminds passing motorists: 'Your savings are financing this highway, and this highway is financing your retirement'.
Chile still has the largest pool of private capital for national development, though I imagine free-market Argentina will catch up fast.
The U.S. could have the same thing, just by copying the model, what Herman Cain called "the Chilean Model." Now it looks like it's happening, and leftists are screaming into the wind about how "bad" it is.
Here's Sen. Chris "margarita man" Van Hollen screaming bloody murder and making a fool of himself again:
Can't make this up: Trump's billionaire Treasury Secretary admitted, on camera, that parts of their Big Ugly Betrayal of a bill are a ‘back door for privatizing Social Security.'
— Senator Chris Van Hollen (@ChrisVanHollen) July 31, 2025
These people love to say the quiet part out loud: they are coming for Social Security.… pic.twitter.com/rVW5QREC88
Let's not forget bawling Sen. Chuck Schumer:
You hear this??
— Chuck Schumer (@SenSchumer) July 31, 2025
“A backdoor for privatizing Social Security.”
That’s what Trump Treasury Secretary Bessent is bragging is in their Big, Ugly Betrayal of a bill. pic.twitter.com/Rx7bWGM23l
Too late goofuses, deal's done.
Bessent is a smart guy and knows what works. He also apparently knew that leftist yelling could scupper the idea as it did when Presidents Clinton and Bush tried to get the idea off the ground and were shouted down and then retreated.
Trump doesn't retreat. And better still, he has the bill already passed, so it's going to happen.
As Bessent said, it's the "backdoor" to the privatization, but it's not going to change anything about Social Security which will continue to shrivel as before, owing in no small part to Democrats signing up every illegal they could find to help drain its benefits.
Now a new system is forming, parallel to the failed Social Security system, and nobody can stop it.
In Chile, Jose Piñera wrote in his memoirs (unfortunately, still only in Spanish, called El Cascabel al Gato) that he encountered similar issues trying to get people to sign up for the new private savings system in the 1970s, and leftists there also opposed it, but he countered with a heavy public education program, speaking to Chileans every night on the radio explaining how their private savings gave them control over their retirements; they could retire early or late; they could save a lot or a little; they could pick this fund manager or that one, or change midway if they liked.
Not surprisingly, when the time came to sign up, many more Chileans than expected chose the private system over the public. The public option was left there for those who still wanted it, but as it was bankrupt, there would be no new sign-ups.
That public education made a difference and was a major reason why it was so successful.
Bessent is on the same track with this remark:
“Why are we on the verge of Caracas on the Hudson in New York?” Bessent asked an audience at a Breitbart event in Washington, referencing the rise of democratic socialist Zohran Mamdani, who won over young voters in New York City’s mayoral race. “Why is this guy getting traction? Because young people are disillusioned with the system.”
It makes me wonder if he read Piñera's memoirs -- or had a few conversations with him. He sounds just like him understanding the importance of educating the public -- and in allowing investments they control educate them even more.
In the post-DOGE era, it's an idea whose time has come. President Trump has done what other presidents couldn't do and what Democrats tried to destroy. The stellar results from a newly enriched youthful class of investors will speak for themselves.
Somewhere, Herman Cain is smiling. Viva Herman Cain!
Photo illustration by Monica Showalter with use of image by Gage Skidmore, via Flickr // CC BY-SA 2.0 and Pixabay Pixabay License images.