How the oligarchy and the newspaper La Prensa have sunk social security

In a recent article published by Rodrigo Noriega’s lawyer in La Prensa newspaper under the title “How to save social pensions”, he himself recommends as part of the solution for the problem of “telling the truth, the whole truth, and nothing but the truth.” Unfortunately, the article is missing a fundamental part of the truth.

The emergence of the problem of the joint pension system, known as the subsystem exclusive defined benefit, is included in the content of Law 51 of December 27, 2005, which stipulated that from 2008 all new payers are enrolled in the so-called mixed system, which is basically a model of individual accounts. This also separated the resources of the two subsystems, breaking up a chain of intergenerational solidarity that financially supported the solidarity system pension. The result is the condemnation of the solidarity pension model to death.

A fake solution he came up with financial oligarchy, approved by the government of Martín Torrijos and propagated bynewspaper La PrensaIt affects not only current insured persons, whom the author of the article estimates at 300,000 people, but also those who are about to retire in the solidarity subsystem. In total, this would be around 816 thousand workers and their families damaged by Law 51.

Another truth that needs to be reminded of the author of the analyzed article is that in 2005, the creators of Law 51 were warned that it is not convenient to break the chain of solidarity, since acting in that direction immediately gave rise to the question: Who? was in charge of paying pensions to those who remained in the solidarity model? It was a well-known transition cost, which at the time was calculated by Utoff and Bravo, at 145.0% of gross national product. As expected, neither the financial oligarchy, nor the current government, nor newspaper La Prensa, repeated this situation. The only important thing for them was to introduce individual accounts, so they were not ready to admit the high social cost of their claims.

If all this is taken into account, to claim, as in the analyzed article, that “we are all to blame for the crisis” is at least more than strange, in our opinion a little related to historical truth.

It should be added to the above that, although it is true, as the author of the article points out, that it is about finding the truth, it is also true that it must be sought by confronting different points of view and referring to the facts. Unfortunately, this principle is not clearly elaborated in the paper.

The author simply takes the results as true, without any critical analysis exercises of the Actuarial Technical Board (JTA) and OIT, which have clear disadvantages.

For example, JTA never showed assumptions you used about economic growth in your projection, while the ILO used the dubious criterion of the production function and the so-called growth accounting.

The author, for example, should face position of the General Council of the University of Panama, which proposes specific financial measures to achieve this with those of the private consultancy firm it used to reach its conclusions, which includes, among other things, raising retirement age. As Gandhi said, “if the things that matter are left out, the truth is obscured.”