WASHINGTON — Social insurance first took root under the German "Iron Chancellor" Otto von Bismark, and later flowered for millions of destitute, Depression-era Americans.
But it has reached its fullest bloom under a more exotic flag, during a breezier time - modern-day Chile.
Despite sharp opposition, Chilean leaders in 1981 enacted a social-security system that has pulled the public retirement program back from the edge of insolvency and helped millions of Chilean workers clamber from penury to prosperity.
The program has won endorsements from former domestic opponents like Chilean labor leaders and foreign skeptics, such as Federal Reserve Chairman Alan Greenspan. It's gaining support as a model for reform of Social Security through privatization.
The model is simple. Instead of the pay-as-you-go scheme conceived by Bismark and adopted as the centerpiece initiative of the New Deal, Chile's program requires workers to put 10 percent of their income into a retirement account of their choosing.
They control it. They own it.
Since enactment, the system has yielded average annual returns of 10.9 percent above inflation, says Jose Pinera, who launched it as Chile's labor minister. And such solid returns follow a low-risk portfolio approach.
Consequently, even though the Chilean stock market has plunged 35 percent this year, the average personal pension has fallen just 2.5 percent, says Mr. Pinera.
"My slogan is," he says, "a revolutionary reform with a conservative execution."